When an accident causes extensive or costly damage to your vehicle, it's possible your vehicle will be declared a total loss.
Our total loss procedures take into consideration our business experience, state laws and regulations, and customer expectations, making the process fast and easy. If we declare your vehicle a total loss, our claims representatives will manage this process for you and answer any questions you have.
What is a Total Loss?
In general, we declare your vehicle a total loss when the cost to return the vehicle to pre-accident condition would be as much - or more - than the actual cash value of the car.
|Your vehicle's actual cash value:||$10,000|
|Cost to repair:||$3,000|
No, this would not be a total loss, because the cost to repair is less than the vehicle's actual cash value.
|Your vehicle's actual cash value:||$3,000|
|Cost to repair:||$4,000|
Yes, this would be a total loss, because the cost to repair is greater than the vehicle's actual cash value.
We may also declare your vehicle a total loss when the repair cost, plus the salvage value (money we would recoup when selling your vehicle through a licensed salvage vendor) exceeds the vehicle's actual cash value, or if state regulations warrant it. (What is salvage?).
|Your vehicle's actual cash value:||$7,000|
|Cost to repair to pre-loss condition:||$6,800|
|Cost to repair + salvage value:||$7,500|
Yes, this would be a total loss because the cost to repair the vehicle to pre-loss condition, when added to the salvage value, is more than the vehicle's actual cash value.
We would also declare your vehicle a total loss if it could not safely or physically be repaired to its pre-accident condition.
If your car is declared a total loss, we won't pay to repair it. Instead, we'll make a payment for the actual cash value of the vehicle. Depending on the individual situation, payment for the vehicle will be made to the owner, the lienholder(s), or both. We will then sell your vehicle as salvage through a licensed salvage dealer.
How much will we pay you for a vehicle declared a total loss?
We will pay you what is known as the actual cash value (ACV) - this is the market value of the vehicle taking into consideration pre-loss condition, options and mileage.
To determine what we will pay you for a total loss, we do what many consumers do to find how much their car is worth. To some extent, this is governed by state regulations, but in general, this is our process:
First, we determine your vehicle's market value. We may look at guidebooks, get quotes from dealers and look at ads online and in the newspaper to gather information about the value of models similar to yours in your market. Adjustments may be made to account for differences in mileage and accessories. This gives us a starting point.
Then, we assess the condition your car was in prior to the accident. Cracked windows, dented, scraped or rusted parts, and other excessive wear and tear or damage, such as a badly stained interior, will decrease your car's value.
We subtract the value of prior damage and excessive wear and tear from your vehicle model's market value to calculate actual cash value of your vehicle. Then, we subtract the amount of your collision or comprehensive deductible (if you are insured with us, this is the deductible you selected when you purchased your auto insurance policy). The result is the amount we pay for a total loss.
|Your vehicle's actual cash value:||$15,000|
|Payment for your total loss:||$14,500|
What if you disagree with the total loss value?
What's the likelihood that you'll have a total loss?
Total losses do not occur frequently. During a year only 8 percent of our customers have any claim at all and about 17 percent of vehicles that have a claim are declared a total loss. The likelihood that you will have a total loss is minimal.
Will you still owe money on your loan or lease?
After we declare your vehicle a total loss, you might still owe money on your loan or lease if the actual cash value of your vehicle is equal to or less than what you owe.
Purchasing Loan/Lease Payoff coverage prior to the accident can provide some financial security for you in case your vehicle is declared a total loss. Loan/Lease Payoff coverage, commonly referred to as "gap" coverage, may pay the difference between the actual cash value of your vehicle and what you still owe on your loan or lease, less your Comprehensive or Collision deductible. However, the payment made under this coverage may not exceed 25 percent of the actual cash value.
What happens if you disagree with the total loss value the company arrives at?
We generally will ask you to provide documentation to back up the reason for the disagreement. We then review the documentation for accuracy and applicability to the total loss vehicle. If the documentation is credible and it affects our assessment of the actual cash value, we will adjust our offer. If there is still disagreement, our policy contract describes how an appraisal can be arranged to resolve the differences.
Is there a pre-determined threshold that's used when deciding if a vehicle is a total loss - for example, if the cost to repair a vehicle reaches a certain percentage of the ACV?
No, except in states that mandate or set specific thresholds.
What happens to your vehicle after we declare a total loss?
Generally, we sell totaled vehicles at salvage auctions or to a licensed salvage dealer.
In all cases, we comply with the appropriate laws or regulations that require obtaining salvage titles or branding/marking the title. When we obtain salvage at the conclusion of a total loss settlement, we sell it through licensed salvage vendors. We do not directly sell vehicles determined to be a total loss to private individuals.
Can vehicle owners keep their salvage vehicle? If so, does it need to be retitled to indicate it is salvage?
In some cases we may allow an owner to keep a vehicle after it's declared a total loss. In these cases, we deduct the amount we would have reasonably expected to obtain for the salvage.
If the owner retains salvage in a state requiring reporting and/or re-titling of owner retained salvage, we comply with these requirements. Depending on state laws, the vehicle owner or the insurance company may be required to change the title to a salvage title.
Check with your Claim Representative if you are interested in keeping your vehicle.
Please Note: Some services described above are only available to customers who purchased coverages such as Comprehensive, Collision, Rental Reimbursement, Medical Payments, etc., before their loss. Coverage is subject to the terms of your policy. Please refer to your policy to verify which coverages you have.
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