Salvage Vehicles

How Car Insurance Companies Determine Total Loss

Shock followed by anger followed by vows to shop for a new car insurance company is the usual reaction after being informed that your trusted vehicle has been declared a total loss.

But before you begin shopping for a new provider, keep in mind that this was not a glib decision. Car insurance companies have trained experts in assessing car damage and repair before they dub them salvage vehicles.

After your accident, a trained claims adjuster will carefully inspect your entire vehicle―inside and out, top and bottom. He or she will then calculate an estimate based on parts and labor costs. This estimate will then be weighed by your insurance company in comparison to the actual cash value of the vehicle. If the repair costs are between 51% and 80% of the car's actual cash vehicle it will be declared a total loss.

After Your Vehicle Has Been Declared a Total Loss

You'll have several options:

• Accept an insurance company check, based on the car's actual cash vehicle, and use it towards the purchase of a new vehicle.

• Keep the vehicle and pay for repairs out of your own pocket.

• Use the vehicle for parts.

• Sell the vehicle.

• Seek a second opinion if you disagree with the total loss assessment, or even file a complaint with your state's insurance department.

If you decide to sell the car, use it for parts, or try to rebuild it, be sure to check with your local DMV for state regulations. For instance, if you opt to keep the vehicle, depending on your state, you may have to turn in the current title in exchange for a salvage title.