When is a Car Considered Totaled?
After a car accident, you may be told that your vehicle is “totaled.” When is a car considered and what does this mean for you?
A car is typically considered totaled when the cost to repair it exceeds a certain percentage of its actual cash value (ACV). This refers to the value of the car before it was damaged. This percentage varies by state and insurance company, but it’s often around 70% to 80% of the car’s ACV. In Texas, the actual cash value of your vehicle is based on the retail value of your vehicle according to the National Automobile Dealers Association (NADA) guide or an equivalent used car guide, such as Kelley Blue Book.
Once the cost to repair the car exceeds this threshold, the insurance company may declare it a total loss. Insurance companies will often make the decision whether or not to total a car on their own. They will use a number of factors, including the vehicle’s age, condition, mileage and resale value. They will also look at the selling price of similar vehicles in your area.
They will typically pay you the ACV of the car, minus any deductible you owe. Keep in mind that the specific criteria for declaring a car totaled can vary based on factors like state laws, insurance policies, and the extent of the damage.
Comprehensive coverage and collision coverage help pay to replace a totaled vehicle. These coverages are not always required, though. If you’re leasing or financing your vehicle, you will need them, but if your car is paid off, they’re optional. So if your vehicle is totaled, you may have to pay out of pocket to buy a replacement vehicle if you don’t have adequate coverage. However, Texas is an at-fault state, so if another driver is at fault, their liability insurance may reimburse you for your vehicle’s ACV.
Keep in mind that if your vehicle is financed, you’re still responsible for paying off the loan if your vehicle is totaled. The insurance company will typically send payment directly to the lender. If there is a balance, you’re responsible for paying the remaining balance on the car loan.
Adding gap coverage to your car insurance policy can protect you from having to pay a lender out of pocket for a totaled vehicle. Most lenders actually require it. This covers the difference between what you owe on your vehicle and its ACV at the time of the accident.
Contact a Personal Injury Lawyer
Car insurance can be complex. Depending on the damage to your vehicle, you may want your car to be totaled. In some cases, you may want to continue driving it.
A Houston car accident attorney from The West Law Office, PLLC can help you understand the ins and outs of insurance and how it can affect the outcome of your auto crash. Schedule a free consultation to learn more. Call 281-347-3247 or fill out the online form.
Source:
allstate.com/resources/car-insurance/what-if-car-totaled
