Total Loss Car Accident

Why is My Car a Total Loss?

You have car insurance for a reason. After an accident, major weather event, or unfortunate incident, your car might be badly damaged. Depending on how extensive that damage is, the insurance company could tell you that your car is a total loss. You may not be ready to hear it. If you love your car or it’s a rare or hard to find model, you might’ve preferred if your car was repaired instead of written off. How does the auto insurance provider decide on total loss vehicles? 

It’s Simple Math

A claims adjuster is assigned to your claim whether for auto accidents, vandalism, acts of God, or otherwise. They need to do an assessment between your car’s pre-accident value and the cost of repairing the damage.  Every insurer has their own calculation but here’s the basic structure. 
  • Your car’s pre-accident value is assessed with an industry-approved method like Kelley Blue Book. 
  • The actual cost to repair your car is determined. 
  • The current, unrepaired value is evaluated. 
  • The additional costs such as rental vehicles and subleted repairs are factored in. 
If repairs will cost more than 70 percent of your car’s pre-accident value, there’s a good chance it’s considered a total loss. The insurer will pay your claim out, take possession of your totaled vehicle, and sell it at a salvage auction. 

What If I Still Owe Money on My Car Loan?

If your car is written off, the lienholder on your car loan is paid out first. Any money left over, or positive equity, will come to you.  If your car loan is higher than your payout amount, you’ll be stuck paying the remainder of your loan without owning the car anymore. The exception is if you’ve purchased GAP insurance, or guaranteed auto protection insurance, to cover the negative equity.