What Does It Mean If My Car Was Totaled?

When a major piece of art goes up for auction, it is typically sold for significantly more value than when it was originally purchased. That is a clear example of how an item goes up in value the longer it is owned. That is not the case with most cars. The value of your vehicle began depreciating the moment you drove it off the dealer’s lot.

Overall, your car’s value is determined by some of the following factors:

• Mileage
• Condition
• Color
• Options and add-ons
• Where you reside
• Accident history

How much your car is worth at the time of an accident will determine the level of compensation you can receive from a claim. What does it mean if your car was totaled? That will be the final determination about the post-accident value of your car.

Car Value Versus Repair Costs

One of the ways to determine if your car should be totaled is if you can drive away from the accident scene, but that is not always a clear indication. A minor fender bender could also leave tires flattened, requiring a tow. According to the Maryland Insurance Administration, an insurance company involved in the accident claim must declare a car as totaled if the repairs would cost more than 75% of the car’s value at the time of the accident.

It is important to remember that you’ll never recoup the price you paid for the car. Your insurance compensation will be about making you whole again. In others, what would you lose financially if you were to sell your car on the day of the accident instead of getting into a wreck?

Potential Insurance Payout

Before there is any settlement offer, the insurance company involved in the claim will send an adjuster to inspect the car. That adjuster will go to where the car has been towed. They might also consult with a mechanic to confirm their findings.

If another driver caused your accident, their insurance will pay for the totaled value of your vehicle. That will come out of the liability coverage that is mandated by the Maryland Department of Transportation. If your car is hit by a driver who doesn’t have insurance, your policy could kick in.

With comprehensive car insurance, you are entitled to the value of your vehicle, minus the deductible, for a car that is deemed totaled. Comprehensive car insurance would also pay for if your car was stolen and damaged beyond repair.

If you carry uninsured motorist (UM) insurance, (which is also mandated), that can pay for your car’s value only if the negligent driver was not covered.

What Happens If Your Totaled Car Is Financed?

What if you’re still paying on your car loan, and it gets totaled in an accident? In that scenario, the insurance company will send a payment that is equal to your car’s value directly to your lender. When the loan is satisfied, you will receive the remaining balance.

For example, if the value of your totaled car is $20,000, but you still owe $15,000, the lender will get that amount, and you’ll get $5,000. Your gap insurance will pay the difference if your loan exceeds the car’s value. Gap insurance is not mandatory, but most lenders require you to take out a policy to cover any unexpected loss. It is the same reason why mortgage companies require homebuyers to carry homeowners’ insurance.

Getting the Maximum Value for Your Car

In the aftermath of many collisions, it is obvious that a car’s repairs would cost more than its current value. When making a claim, it is essential to maximize the value of that car. An insurance adjuster would only consider the make, model, and mileage. They would rely on sources like the Kelly Blue Book, which is a recognized source for determining a car’s current resale value.

However, the Kelly Blue Book value might not consider any recent improvements or upgrades you made to the car. If you can back up those improvements with receipts, you might be able to add them to the final amount. When there is a challenge to the insurance company’s estimate, an experienced car wreck lawyer, like the attorneys working at Belsky and Horowitz, LLC, can help you achieve the maximum value for your totaled car.

Call to set up a consultation to discuss your accident today.