Car Totaled in California: You Have Options

If unfortunately you end up in a serious accident, your insurance company may declare your vehicle a “total loss” or “totaled”. A car is totaled if the cost to repair it exceeds its current value as determined by industry statistics. Insurance companies tend to use databases such as CCC Information Services. For most insurers, the vehicle will be considered totaled if repairs add up to 75% or 80% of market value.  Insurance companies may use factors like age of vehicle, mileage and general condition to figure out the car’s actual cash value. 

Before you decide to accept a settlement amount, be sure to use resources that can easily be accessed online to validate the actual cash value.  For example, use Kelley Blue Book, the National Association of Automobile Dealers guide and Edmunds’ True Market Value appraiser to name a few.  You can always contact dealers to obtain an estimate as well.  You will need this information if you decide to appeal the settlement offer and request for an adjustment.  Whichever database, site, or appraisal source is used, remember, the insurance company has an obligation to restore you to your pre-accident status, vehicle-wise that is.

At the end of the day, if you and the insurance company still can’t resolve your differences, you may have the right under your policy to get an independent appraisal.  In California, the Department of Insurance offers an Automobile Claims Mediation Program, which helps resolve disputes about total losses and other physical damage claims.  Although there is no cost for consumers, the amount of claim must exceed $7,500 and the disputed difference between the policy holder and the insurance company must be at least $2,000.

Sometimes there are good reasons why people might want to keep their vehicle even when it is declared a total loss by the insurance company.  Whether your reasons are sentimental or financial, you can negotiate a deal to buy back the vehicle from the insurance company.  This transaction typically will subtract from the final cash settlement offer whatever the insurer could have received for the wrecked vehicle from a salvage yard.

For instance, if your car is worth $5,000 but the repairs would be $5,800, and you want to buy it back, you would get the $5,000 cash value, minus what a salvage bidder offered -- $1,000 or so – and your deductible. You pay the salvage bid, because that is the money the insurer could have recouped by totaling the car and selling it to the salvage yard.

If what is left over is sufficient to repair your vehicle or you are willing to come out of pocket because you don’t want to part with the vehicle, you can then get it fixed on your own.  But, wait, in California, like in most states, you still will need to deal with the issue of the insurance company reporting the car as totaled to the Department of MotorVehicle.  The title on the vehicle will then show salvaged, which is a way of informing future buyers that the car was severely damaged and totaled at one time.  Additionally, the repairs you get done on the vehicle must pass DMV inspection before it can be re-registered. Although the insurance company may continue to cover it, there might be restrictions that could include eliminating coverage for any future accident repairs.   

Few people want to hear after an accident that an insurance adjuster has pronounced their vehicle a total loss, but it happens.  If it happens to you, the team at Pacific Preferred Insurance Agency hope that this article has helped by making the experience a little less painful and more informed to make the best decision for your own unique situation. We always suggest that you discuss with your agent questions you may have as it relates specifically to your policy.