By David W. Crump
The claims adjuster just called and they have totaled your beloved car. Most people are emotionally attached to their ride but you must overcome emotional bias and make rational choices. What happens next and what choices do you have? Here is a guide to the process if your car is totaled.
Often, the adjuster’s call telling you that your auto has been totaled is unexpected. The cost of repairing autos has risen significantly and the value of many used cars has dropped. This has changed the economics and causes damaged autos to be totaled at much lower levels than in the past.
When you get this call, you will need to decide if you are going to accept the insurance company’s offer or retain your auto. If you accept the buy-out, are you getting a fair offer? If you keep the auto to repair yourself, what are the issues?
Link: Auto Insurance
The Downside of Fixing Your Ride
It was your dream car and you can’t visualize not fixing it. If you decide to retain your totaled auto, here are the downsides:
- Never fixed right – Can your car be fully fixed and brought back to the same level? Will the doors close tightly? Will your repaired auto rattle and shake?
- Salvaged Title – If your auto was totaled because of safety issues, you will get a salvaged title which will make it hard to insure and hard to re-sell.
- Insurance Coverage – Most insurers will only total a vehicle once. If you fix it, you normally can’t get the comprehensive and collision coverages you want to protect it in case of a future accident.
- Safety & Performance – Vehicles are often totaled after serious engine, suspension and frame damage. Safety and performance can be degraded and not recovered fully with repairs.
- Salvage – The insurance company will deduct for their expected salvage proceeds of the totaled auto.
I have several clients who also point out reasons to retain a totaled vehicle. Here are some reasons that do make sense:
- Cosmetic Damage Only – Vehicle’s performance and safety are not compromised. The usefulness of the vehicle is unchanged or can be economically recovered with a partial repair.
- Collector Auto – The vehicle’s value is far in excess of the market value because it is discontinued and rare.
- Older Auto – A vehicle economically totaled, too old and too low in market value to justify even a modest repair. Vehicle’s performance and safety are not compromised.
While I do see an occasional good reason to retain a totaled vehicle, generally it is better to accept the adjuster’s professional decision and not retain an auto that has been totaled. Remember that your insurance company has calculated the economics of repair vs. totaled and your vehicle has failed their test. This is particularly true if the vehicle has had substantial damage to any of the main operating systems such as the engine, suspension, body frame or any safety related equipment. I would bias the choice toward letting go.
You have decided to accept the offer on your totaled vehicle and release it to the insurance company. Your insurance adjuster will send you a package with the legal paperwork to assign them title and transfer ownership. This will enable them to sell the vehicle for salvage.
Be sure to remove all personal items. Often forgotten are the garage door opener and the CD in the CD player. Since the auto is being junked, strip out all the service records, auto manual, etc. You want to be sure to cleanse your auto of any identifying items that could trace the salvaged auto back to you or that might risk identity theft. Don’t forget the trunk, under the seats and any hidden compartments.
If you have a vehicle rented as part of the claim’s adjustment, you generally have a very limited number of days that will be paid by the insurance company after your auto has been totaled. Unless you want a big auto rental bill, you need to be shopping for your next ride.
If you are not going to replace the auto, be sure to call your insurance agent to cancel coverage on the totaled vehicle after it has been released to the insurance company for salvage. No reason to pay for insurance protection after ownership has transferred.
Did You Get a Fair Price?
Most insurance companies use an independent service to determine the value of a totaled vehicle. Normally, the value determined is completely fair and acceptable. Here are some tips to assess if you are being offered a fair price for your totaled auto or to challenge an offer you feel is too low.
Look up your vehicle via Kelley Blue Book or other services that offer free price information on used autos. It is only a guide, but it is a starting point in understanding the true value of your auto.
Shop local auto dealers and make a list of what similar vehicles they have for sale. You are looking for vehicles that are roughly equivalent to yours (within one model year). Be sure to record the mileage and other attributes of the surveyed autos. This can also double as your shopping list when you are ready to replace you totaled auto. Then, ask your adjuster to include any vehicles you found that help your case in the assessment of value.
Be sure that the claims adjuster is aware of any special equipment or major repairs that have been done to your vehicle. Your offer should include an adjustment for these items. You may need to provide invoices or other proof of these vehicle improvements.
Your offer should include compensation for tax, title and fees. Check for it. Your offer should be based on what your vehicle is selling for in your local market. Ask to look at the data used to determine the vehicle value and challenge any comparison from beyond your local area.
Having your vehicle totaled can be a new beginning rather than a bad ending. Moving on by accepting a fair offer is often the right choice.
David Crump, Ross Gray Insurance Agency