What Does It Mean When the Insurance Company “Totals Out” My Car?
Your car will be “TOTALED” if it costs more to repair your car than what your car is worth. When this happens, the insurance company will total it out and pay you the fair market value.
(Example: If it costs $4,000 to repair your car, but your car is only worth $3,500, the insurance company probably won’t fix your car. They will “total it” and pay you the worth of the car, $3,500.)
How Does the Insurance Company Determine the Prices of Repair and the Worth of My Car?
- Usually, you have to wait to get a copy of the police report to find out the information about the other driver’s insurance coverage. Once you have the report, you can make a claim with the other driver’s insurance. If the other driver has not reported the accident to his/her own insurance company, you will have to set up a new claim. This can take a while. Once the claim is made, the other driver’s insurance company will send a property damage adjuster to look at your vehicle and determine if the vehicle is totaled or repairable. They will estimate the amount it will cost to repair your car and compare it to your car’s worth.
IMPORTANT TIP: I recommend getting your own property damage estimate of the vehicle’s repair cost from a local body shop. Usually, estimates from these shops are free. It’s important to do this because you want to document all the damage caused to your car by the accident. You can also submit this information to the insurance company to compare against their own damage estimate. Sometimes, the at-fault insurance company may not take into account all of the damage from the accident.
2. Once you have your property damage estimate, you’ll want to compare the cost to repair your car versus the vehicle’s fair market value, or worth.
IMPORTANT TIP: You can get an idea of your car’s value is by checking sites like KellyBlueBook.com or NADA.com.
If the cost to repair your vehicle is higher than the car’s value, the insurance company will total it out and pay you the fair market value. Having a good understanding of the fair market value of your car, and the cost of repair will help you not be taken advantage of by the insurance company. Insurance companies will always look for a way to pay you the least amount of money.
How Much Should the Insurance Company Pay Me for My Totaled Out Vehicle?
If the insurance company decides to total out your car instead of fixing it, they are going to make an offer for the loss of your vehicle. They will base their offer on the current fair market value, or your vehicle’s worth. The insurance company may use sources such as kbb.com (Kelley Blue Book) or NADA.com (National Automobile Dealers Association). You should check these websites too, to get an idea of what your vehicle is worth, and if they are offering a fair amount to total your car.
Using KBB or NADA: Try to find a vehicle that matches make and model of yours, and that has similar features and mileage, and see what prices they are listed at. Those prices can give you a gauge of what the fair value of your vehicle is. You can submit these examples to the insurance company if they are trying to low-ball you with less than the value of your car.
WARNING – Before Your Cash that Check! Sometimes, the insurance company will try to lump together your property damage claim and your personal injury claim into one check, without you really know the extent of your injuries, or if you are ready to settle your personal injury claim. You should double-check the documentation before signing or cashing anything to make sure you aren’t closing out both claims. During a free consultation, you can get an accident attorney near you to look at the documents and check before you cash the money, to make sure you are not closing both claims on accident.
What If I Owe Money On My Car, but It’s Totaled?
GAP insurance is just that. It pays the “gap,” which is the difference between the totaled-out value of the vehicle and the additional amount owed on the vehicle. So, in essence, your vehicle is paid off. Although this type of insurance can be expensive, it can provide very worthwhile protection in the event your car is totaled. I would recommend that if you have a large loan on your vehicle, it makes sense to have GAP insurance to protect you.
Disclaimer: It is important to note that this is general information, and should not be considered “legal advice.” I have been handling personal injury cases for many years, and can offer general answers to common questions, but please do not construe anything on this website to be legal advice about YOUR CASE. Each case is different! An attorney can only give legal advice when he or she understands the facts involved in your case.