Most collisions are pretty minor. Even if there are loads of dents and scratches, it’s nothing that an experienced Phoenix collision repair center can’t put right. Unfortunately, however, some accidents can be really bad to the point that your car looks like it is damaged irreparably.
The situation described above is what most people think of when they hear the phrase “totaled car”. But what you think of a totaled car and what your insurer considers a totaled car could be completely different things. The truth is there is no clear cut definition of what a totaled car is. That’s because even though a car may be repairable by a Phoenix collision repair center, your insurer may believe that it is cheaper to write the car off rather than repair it. This is particularly common with older cars. An insurer isn’t going to bother paying out on a 10-year old sedan, for instance. But it may pay out for repairs on a brand new sports car, even if it’s more damaged than the sedan.
How do insurance companies define totaled cars?
At this point, you may be thinking that the whole concept of totaled cars doesn’t make much sense. After all, if a car is repairable, it isn’t totaled, right? Wrong. When a car is considered a “total loss” (this is what totaled means) it doesn’t mean that it can’t be repaired. Rather, it means that the insurance company doesn’t deem it worth repairing. The insurance company calculates this by comparing the cost of the collision repairs with the market value of the car. If the car costs more to repair than it is worth, then the insurer will write off the car rather than pay for the repairs. It’s why in the example above the sports car will get repaired even if the damage is greater and more expensive to repair.
Do you get money to replace your car?
The good news is that if your car is totaled, your insurer will give you money for a new car. For many people, this is actually a lot easier than having to get their car repaired. So, how much money do you get? Typically, your insurer will give you the pre-crash value of your minus your deductible. Note, this does not mean your insurer will give cash equivalent to the value of your car when you bought it. Rather, it will use a service like Kelly Blue Book to calculate the resale value of your vehicle based on its age, condition and mileage. The insurer will also issue a salvage certificate for your car. This means that it is now impossible to get your car repaired, even if it is possible.
What happens if the totaled car was leased?
Lots of people take out auto loans and that means that a fair share of the cars that get totaled each year are not privately owned. Unfortunately, things can get pretty messy if you still owe a significant amount on your car when it gets totaled. Typically, the lender will be reimbursed first. You will usually have to repay the lender in full, even if the amount you get from the insurer doesn’t fully cover the amount you owe. This is why many people take out gap coverage on their insurance policy so that they aren’t left out of pocket if they total their leased vehicle.