Determining Your "Totaled" Car Claim Payout
A totaled car usually occurs after a serious accident. Total loss for a car means that the accident causes repairs that exceed the total value of the car before the accident. Only about 5-10 percent of insurance claims wind up as totaled cars. This isn't always due to severity of crashes, but some older used cars are not worth that much. Damage to something crucial to your car, such as your engine and transmission could be worth more than the whole used car. A totaled car will then be in possession of the insurance company once they give your payout. They will then sell it for salvage parts to a salvage dealer, or in rare cases, allow you to salvage the car yourself.
You have to wonder how people are learning to drive today, given the amount of totaled car insurance paid out across the industry for just accidents involving teens alone. The AAA has put the total figure paid out for accidents among kids at $34 billion per year.
Illustrating the Scale
There is really no agreement on any segment of the driving population except teens, where AAA has noted that the aggregate payout on accidents is in the $34 billion range. It’s not easy to find the payout for the rest of the driving population, between 20 and over 75, so you have to put estimated figures on it such as these:
- 20 to 60 years of age: About 5 percent
- 60 to 75 years of age: About 10 percent
- 75-plus: about 20 percent
The total aggregate you see is about 35 percent, and note something interesting: drivers in the 75-plus category are in roughly the same category as teens. This was the result of a study a couple of years ago. The numbers here are just an attempt at updating things. We used the following factor to determine total layout for totaled vehicles during the year. It is a factor of 35 percent and covers drivers up to and over 75. This puts, according to this rather arbitrary factor, the national yearly layout at just under $50 billion per year, a huge figure and one reason insurance premiums are so high.
Determining a Total Loss
In order to determine whether your car will be totaled or not, you have to use the Kelley Blue Book or NADA, or an online service such as CarsDirect. Any of these sources will give you the average payout for damage. The guideline you use here is the amount of your vehicle's payoff. If your car's damage is over that figure, then it doesn't pay your carrier to repair the vehicle, so they will issue a check for the payoff value. Remember, though, that you will have to wait until the adjuster has had a chance to take a look at your vehicle, so this could take a bit of time.
Updates and Additions
In determining total loss that you have sustained, as well as the total loss the car has sustained, remember to include any improvements that you have made to the vehicle and be sure you notify your carrier of those improvements. These could include improved wheels and tires (an option today that can hit $3,000 wholesale, per wheel/tire), as well as a better entertainment system and improvements to the speakers and audio system.
Your carrier will read the report of the adjuster, as well as check out the damage pictures and if they find that the damage will be costlier to repair, even though you have upgraded your vehicle, then the car will be declared totaled and you'll be receiving a car insurance payout check. For example, a 2005 Chevy Cobalt carries a book value of about $5,300 which means that if it was involved in an accident where the cost to fix it would run to $6,000 or $7,000, then the insurance carrier will just write a check for the book value.