Who Decides if a Car is Totaled?
Totaled is a shorthand term for “total loss”. A car is considered totaled when it is a total loss after an accident has occurred. In essence, it means that it is damaged to the point that deciding to repair it will cost more than a hefty proportion of its pre-totaled value. Mainly, it will be considered as totaled if repairing the damage no longer makes any economic sense. Most of the time, the cut-off is at a range from seventy to seventy-five percent. Under these circumstances, a car is declared as a total loss. But, even when a car is declared as totaled, there is still a chance for the scrap metal or other salvageable parts to be off value.
Insurance companies look at various costs associated with the damaged car when they are in the process of deciding whether it is totaled. They look at the cost of repair, the diminished resale value, rental reimbursement for driver, and other associated costs. If all these aspects add up to a larger cost than the pre-wrecked car’s actual cost, then it is considered totaled. When a car is declared as a total loss, an auto appraiser can evaluate the damage of the wrecked vehicle and determine its remaining value.
Cars which are considered as totaled are usually older models. Older models tend to have a very low resale value. Hence, when extreme damage is done to an older model the cost of replacing the parts and its installation can easily be more than the value of the car before it was wrecked. Again, auto appraisers will be able to estimate the cost of repairs.
Basically, your insurance company will decide whether your vehicle is totaled. In order to determine this, they will ask for the assistance of an auto appraiser, who will compare the value of repairing the wrecked vehicle against its value when it could still be used. If the value for repairing it is costs more than a large proportion of the pre-wrecked value, then your insurance company and the auto appraiser will declare it as totaled.
When a totaled car is covered by insurance, the owner will receive in cash the value of the pre-wrecked car. This money can be used to purchase a new car of the same value. For this reason, most people decide not to even attempt to repair totaled cars. Once a car has been declared as totaled, the owner will be asked to the sign the title of the vehicle over to the insurance company. Usually, the insurance company will sell these cars at an auction. The person who buys the car will be responsible for what will next happen to it next. Some vehicles end up in the scrap yard, and others are taken apart so that their parts can be of use to other vehicles. The car can also be possibly bought by a party who will use it for an automotive class. Sometimes, if economically practicable, the buyer will repair the damage and sell the car with what we call a ‘salvage title’.