Total Loss Vehicle Disposal Options

by Don Elliott on May 16, 2012

After an accident, drivers face a number of choices. Recovering from injury, missed days at work, financial responsibility and vehicle repairs are a few of those choices. What to do with the damaged car is another choice that needs to be made fairly quickly.

Immediately following a bad accident, the police generally take charge of the situation. The police officer is required to complete an accident report when the estimated damage exceeds certain limits. Often, the investigating officer has to make a guess at the amount of damage to each of the cars involved in the crash. His estimate is really just a guess, based on some experience but not a number that directly relates to the cost to repair or replace any of the cars.

Initially, the police triage the crash site, caring for injured people and clearing the roadway. Tow trucks haul away the non-drivable cars to a designated storage facility. What happens next can cost plenty of money if not approached rationally.

In most states, damage ranging from 51 to 80% of actual cash value will determine that the vehicle is a total loss and the insurance carrier establishes that the cost to repair the car exceeds the actual cash value. Older cars reach the total loss status much faster than newer cars. More expensive newer cars might require extensive repairs before the total loss threshold is reached.

The insurance company of the driver who was at fault in the accident will move quickly to settle the claim. To save everybody storage costs, the car will be moved to a neutral storage facility, often a salvage auction, while decisions are being made. An appraiser will complete an estimate on behalf of the insurer. If the car is determined to be a total loss, a settlement will be offered to the owner of the car. Part of the estimate establishes the salvage value of the car.

Disposing of total loss vehicles is a tricky business. The total loss title brand must be reported to the National Vehicle Title Information System, a federal government agency that protects consumers from fraud and unsafe vehicles. Your insurance company is required by law to handle the notification. The following scenarios could occur.

The insurance company may keep the car. This occurs when a relatively new car is damaged so badly that it is declared a total loss and cannot be driven. Scrap yards buy the cars, either directly from the insurers or at salvage auto auctions. The insurer figures in the salvage used car value as revenue from the car auction when calculating the settlement.

The car owner keeps the car. It might be advantageous to keep an older car that has been that has been totaled. The car may still be drivable, but the cost to return in to its pre-crash or weather related damage condition exceeds its total value. In this case, some minor repairs might be enough to keep the car on the road until a replacement vehicle can be arranged. The insurance company will provide a cash settlement that will go towards repairs or for another car.

In some cases, straight talk with the insurance company is required when a car is on the border between repairable and a total loss. Regardless of everyone’s best intentions, major repairs might not return the vehicle to parity with its pre-crash condition, leaving the insured owner with something less than a fair replacement. Weigh the options and read more about total loss after an accident before making your decision.

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