We all have heard of vehicles declared as a total loss after being damaged or collapsed in an accident. But sometimes even if an accident, automobile is functional the insurer may declare it as a total loss only because of evidently minor damage or a bent framework.
As a result, vehicle owners often wonder about the factors that are considered by insurers before "totaling" an automobile. The rules and regulations associated with the act of ‘totaling’ a vehicle doesn’t need to be very complicated. This guide will help you find to understand when a car can be declared as ‘totaled’ and it will also explain how insurers assess the damaged automobiles, and how a vehicle is treated when it is considered as a total loss.
When a car is deemed a “Total Loss”?
When an insurer decides to ‘total’ an accident damaged car most of the policyholders are perplexed. This is particularly true in cases when an automobile has an apparently small damage. Basically, when the cost of repair of a vehicle exceeds its actual cash value (ACV), it is considered to be a total loss. When it comes to assessing the value of a vehicle following an accident, numerous factors are taken into consideration by the insurers.
These factors include; the car’s condition, age, equipment and features, kilometers travelled, reduction in value and the its fair market value. The insurers usually make a comparison between the repair costs and the actual cash value of the automobile. The cost of repair is then divided by the actual cash value and it is known as the total loss threshold. When the total loss ratio reaches a specific percentage, the insurer will consider the car as "totaled".
The total loss threshold value is already established by the government in some of the states. Generally the percentage falls somewhere between 60%-100% (75% being the most common). An insurer cannot consider a vehicle as a total loss in states where the total loss threshold is determined by law, unless the threshold reaches the threshold limit determined by the state. While an insurer may set up their own total loss threshold in other states.
When an automobile has been declared a complete loss, the insurer generally files a form with the state declaring that the automobile has been totaled (or salvage). A totaled or salvage vehicle is no longer in a good working condition and can’t be driven on the roads.
High-tech or modern vehicles are expensive to repair
The modern or high-tech vehicles are generally expensive to repair because of their complexity. Most of their functions are highly complicated and computerized. This makes the process of diagnosing and repairing a problem after an accident very time-consuming and full of hassles. In addition, auto repair shops need to stock sophisticated tools which are very costly to buy and maintain. Auto mechanics need extensive knowledge and training in order to perform even the most basic tasks.
The type of materials used in modern vehicles also influences the cost of repair. Generally, lightweight materials are used in modern automobiles to enhance their fuel economy. It protects the passengers from collapsing in an accident. However, when it comes to repairing such materials it could be fairly difficult. Unlike older vehicles, dents in a crushed panel of a modern vehicle cannot be hammered. Instead, the whole panel requires to be replaced. All these things quickly increase the costs of repairs and consequently a number of automobiles are considered as totaled than fixed.
Salvage Vehicle
Typically, all the automobiles that are declared as ‘totaled’ have some salvage value. In most cases the insurer pays the actual cash value to the car owners and keep the damaged car. The insurer then gets a salvage title or certificate for the car from the state. A salvage title works as an evidence of legal ownership and change any previous titles to the automobile. After getting the salvage certificate the insurer may sell the totaled car to an auto salvage organization.
If you wish, you can usually keep the totaled automobile after paying the salvage value to the insurer. But remember you cannot drive a salvage automobile unless you get it fixed and re-register it as a revived salvage auto. If you intend to re-register your vehicle, it should pass a thorough inspection performed by your state inspection authority. However, if you don’t want to keep the vehicle only to use it for parts and components, you can get a no repairable certificate for it.
However, if you contact the salvage yards nearby, then you might get the free car removal service which will save lots of your money.
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