If your vehicle is damaged in an accident, you must file an insurance claim with your Pa. car insurance company. After the accident, your car may be damaged beyond repair, in which case a “total loss” claim is filed. A car is a deemed a “total loss” if:
- Damage to the car is so great that it can’t be repaired safely;
- The cost of repairs is more expensive than the value of the car itself; or
- The amount of damage is severe enough that state regulations require the car to be declared a total loss.
In the state of Pennsylvania, a car is considered a total loss if the cost of the repairs exceed 80% of the book value of the car.
What is the purpose of a total loss claim?
The purpose of a total loss claim is to compensate you–the vehicle driver–for the cost of replacing your totaled car. The exact amount of a total loss settlement depends on the estimated worth of the totaled vehicle, and the estimated cost of purchasing a like-model car of the same year.
Your insurance company’s claims adjuster will inspect your vehicle to determine whether the car is a total loss.
What does an insurance company pay for a total loss?
That depends on the terms of your coverage, but if your policy covers a total loss, the insurance company will pay the actual cash value (ACV) of the vehicle (plus state fees and taxes) less any deductible. It will then take ownership of the vehicle and sell it to a salvage buyer (or you may be able to keep the vehicle yourself).
How is the value of the car determined?
You can determine this amount by using dealer quotes and/or newspaper ads, other auto sales publications, online web sites, etc. In addition, the insurance carrier should pay you sales tax on the value of your vehicle, and pay the unused portion of your registration fees. The value of your car will be based on a comparison of recent sale prices of similar vehicles in your local area. The pre-accident condition of your car will also be taken into account, including:
- Vehicle options
- Any pre-existing damage (not caused by the accident)
What if you want to keep your total-loss car?
For a variety of reasons, you may want to keep your total loss vehicle rather than turning it over to the insurance company. You may have the option of purchasing your damaged vehicle as salvage. In that case, you may need to pay the insurance carrier the amount they would get if the vehicle was sold to a salvage company. Essentially, the insurance company will pay actual cash value of the vehicle LESS your deductible and less a fair salvage amount.
If you would like to retain your totaled vehicle, you might be required to obtain a salvage title. Contact your local DMV office for more information regarding salvage title requirements.
Who gets paid for the total loss?
The payment for total loss depends on whether you own, lease, or finance the vehicle.
v If you own the vehicle, you will get paid.
v If you lease, the leasing company gets paid.
If the vehicle is financed and the finance company is listed on your policy or on your title, then several different outcomes are possible:
v The financing company gets paid and if the settlement amount exceeds what you owe the financing company, you will receive the balance.
v If the settlement amount is less than what you owe, you’ll be responsible for paying the rest of the loan balance.
v Make sure to always purchase “gap insurance.” This is optional coverage designed to cover your unpaid balance in this type of situation.
v Check with your insurance company or agent to see if you have gap insurance, or if it is available to you.