What If My Car Is "Totaled"?

A vehicle that costs more to repair than it was valued before the loss is called a "Total Loss".

The fair market value of your car is determined by the current price for a car similar to yours as listed by area car dealerships, newspapers, dealer surveys, and car value guidebooks such as the Kelley Blue Book.

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The insurance company will compare the resale value of your car before the loss (fair market value) to the estimated cost of repairing your car (plus rental charges and salvage value) and pay you whichever amount is less.

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When your car is declared a total loss, you have two options:

  1. You can accept the total loss and salvage value of your car by signing your car over to the insurance company.

    You will then be required to sign the title and odometer reading statement. You may also be asked to sign a power of attorney to allow the insurance company to dispose of your car.

  2. You can accept the total loss value of your car less the salvage value and keep your car.
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Additional information

Every car labeled a total loss by an insurance company is not beyond repair. If your totaled car is still derivable or can be repaired, does it make sense to buy the car from the insurance company, fix it and keep driving it?

The one-size-fits-all answer is "probably not." However, in a few specific cases it may make some sense.

For an older vehicle, if most of the damage is cosmetic, the car would probably be repairable and just as safe to drive as before the accident. In such a case, keeping it would be an option to consider.

If you make that choice, do so with your eyes open. Know what the repair costs will be and ensure that your insurance company will re insure the car once it's fixed.

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