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How Insurance Companies determine a total loss

How Insurance Companies Determine a Total Loss

At Koester Automotive and Collision Center, every day we work with insurance providers to determine if a vehicle can be properly repaired. In some cases, a car has to be totaled. This means that the insurance company has determined that the car will not be repaired. Customers often ask how insurance companies determine a total loss. Below we detail what the term “totaled” means, how insurance companies arrive at the decision to total a vehicle, and your options.

What Does Totaled Mean?

In the insurance world, the term totaled is the shortened form of total loss. When the cost of repairs exceeds the value the vehicle, it makes little financial sense to spend the money to fix the vehicle. Once a vehicle has been declared a total loss they will issue the owner a check for the value of the car.

Cars that are totaled are generally older models. Older cars tend to have very low resale values. When damage is done to an older model, the cost of parts and labor can easily exceed the value of the car.

How Do Insurance Companies Arrive at This Decision?

The cost of damages is not the sole factor in determining whether or not a vehicle is a total loss. There are other factors taken into consideration. The number one consideration is the safety of the driver, the passengers in the car, and the safety of all other drivers on the road. Insurance companies assess damage costs, the safety of the vehicle, and other possible damages that are not easily recognizable upon first glance.

When a car comes into Koester, it is our responsibility to prepare an estimate for the entire damage of the vehicle. We then report to the insurance company how much it will cost to restore the car both inside and out. The insurance company then assesses the car’s value and makes a final decision.

Appraising Your Vehicle

Most assume that an insurance company just simply writes a check for the value of the vehicle after the accident, it’s actually quite the opposite. Before a check is cut, the appraiser assesses the value of the car before the accident. This is known as the actual cash value or ACV. The final amount issue to you is determined after any deductions are taken out. Deductions can include car rental, towing, storage, and any salvage yard fees.

Comprehensive coverage and collision coverage help pay to replace a totaled vehicle. You are required to obtain BOTH of the coverages if you’re leasing or financing your vehicle. If your car is paid off, they’re optional. However, if your vehicle is totaled and you don’t have comprehensive or collision coverage, you will have to pay out of pocket for a new vehicle.

Keeping a Totaled Vehicle

If you ultimately decide to keep your vehicle after the insurance company declares it totaled, your insurer will pay you the cash value of the vehicle. However, prior to issuing you a payment they will take out your deductible and the amount your car could’ve been sold for at a salvage yard. It then will be up to you to make and oversee your own arrangements for repairs.

Repairing a Totaled Vehicle

Safety should be your first concern when deciding to keep a totaled vehicle. You should think twice about repairing a car that has been severely damaged. If your insurance company believes the car is beyond repair for a reasonable cost, then it probably is. Damage, such as cracks in the frames or to airbags, often can’t be seen by just looking at a vehicle.

There is a good reason why car insurance companies are cautious about fixing seriously damaged vehicles. Cars are complicated. All damages are not visible to the naked eye. There is often additional damage found after a complete tear-down is performed.

If your totaled vehicle has mostly cosmetic damage, you may be able to put it back into service for a modest cost. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go.

We Work with Insurance Companies

Our goal at Koester Automotive and Collision Center is to restore your vehicle to its original showroom glory as quickly as possible. To expedite the collision repair process, we work directly with the insurance companies for you. We understand that car accidents are stressful and our staff is dedicated to making this time as painless as possible. Remember, in the unfortunate event of an accident, Koester has you covered!

Learn more about Understanding Your Insurance Policy HERE…

Koester Automotive and Collision Center is a full-service auto repair shop providing expert automobile services for foreign & domestic cars
Proudly Serving Sherman Oaks, Encino, Studio City, Tarzana, Woodland Hills, Valley Village, Sun Valley, the San Fernando Valley and surrounding areas!
15315 Dickens St. Sherman Oaks, CA 91403- (818) 986-7376 –