Accident Insurance

Reader’s Question:

When an insurance company declare that my car is totaled, how the does the company cover my accident insurance and do I get to keep my car?

Robert

Sunnyvale, California

If you have been involved in a car accident, you will inevitably have to deal with your insurance company and this situation happens to people most the time but every situation is unique and it is good that you understand your rights. However, the laws and procedures of accident insurance are also unique in every state and in every insurance company. Insurance companies in most states have the authority to declare if the vehicle is in “total loss”. The insurance company may decide to allow you to keep your car provided that the word “salvaged” may appear on the title and this prohibits you to operate the car illegally on roads and highways.

“Totaled” means that a car is so damaged that the cost of the repair would be more than the actual worth of the car. Some companies consider the vehicle a total loss when the damage exceeds 51% of the vehicle’s actual cash value (because of added storage costs, rental car, etc.), other companies only considers a total loss when the damage reaches up to 80% of the ACV.

A vehicle is only worth the Fair Market Value determined by the insurance company using the procedures defined and according to your policy. However, if by any chance you don’t agree on the ACV and FMV your insurer determined, you are allowed to bring an independent appraiser at your own expense or seek advice from a lawyer.

Accident insurance offers you to either take the money they will offer or keep the car and have it repaired (if that option is available). You can take the ACV minus the deductibles and what the insurance company may receive at the salvage yard, and fix the car yourself.