If you’ve ever been involved in a car accident or have known someone who has, you may have heard the term “totaled” being used. Typically, this term is associated with the aftermath of a severe car collision. But what does “totaled” mean to the car owner? In this blog, we’ll explain the concept of a totaled car, how insurance companies determine whether a car is “totaled,” and how this designation can have a significant impact on the owner of the totaled vehicle.

When Is A Vehicle Totaled

When a vehicle is deemed “totaled,” it essentially means that the cost of repairing the vehicle exceeds its actual cash value. In other words, the extent of the damage is so severe that it would be more expensive to fix the car than it would be worth after the repairs have been completed. This often happens in cases of extensive physical damage or when the vehicle’s structural integrity has been compromised.

Insurance Companies and the Total Loss Formula

Insurance companies use a specific formula to determine whether a car is totaled, and this is known as the Total Loss Formula. The Total Loss Formula typically takes into account the actual cash value of the car, which is determined by factors such as the car’s age, mileage, pre-accident condition, and market value for similar vehicles in the area. Once the actual cash value is established, the cost of repairs is then factored in. If the cost of repairs exceeds a certain percentage of the actual cash value, typically ranging from 75% to 100%, the insurance company will declare the car as “totaled.”

This decision is not always straightforward, as it involves a detailed assessment of the damage by a qualified adjuster. The adjuster will inspect the vehicle, assess the extent of the damage, and determine an estimate for the cost of repairs. Only after this evaluation can the insurance company decide whether the car meets the criteria to be labeled as “totaled.”

It’s also important to note that this formula can vary from state to state, depending on your state’s threshold for what is considered “totaled”. Learn more about your state’s total loss threshold here.

The Impact on Vehicle Owners

For car owners, the designation of a “totaled” vehicle can have significant repercussions. When a car is deemed totaled, the insurance company will generally offer a payout based on the actual cash value of the car at the time of the accident. This payout may not necessarily cover the remaining balance on any outstanding car loans, leaving the owner responsible for the difference.

Furthermore, for many car owners, their vehicle holds sentimental value, and parting ways with a car due to it being totaled can be emotionally distressing. Beyond the financial strain of having to find a replacement vehicle, there is also the inconvenience and disruption to daily routines that come with being without a vehicle.

In some cases, car owners may have the option to retain the “totaled” vehicle from the insurance company by accepting a reduced payout and choosing to repair the car themselves. However, it’s important to note that the car will receive a “salvage title,” which can significantly decrease its resale value and make it more challenging to obtain insurance in the future.

The term “totaled” holds substantial weight for car owners. It not only signifies the potentially irreparable damage to their vehicle but also spills over into the financial and emotional aspects of their lives. Understanding what this term entails and its implications is crucial for car owners navigating the aftermath of a car accident.

Here’s the last word from our own Ryan Clark:

In our home state of Nebraska, a vehicle is deemed a total loss when the repair cost exceeds 75% of the actual cash value of the vehicle.

Insurance companies do pay the actual cash value, based on their market research, plus sales tax. We encourage individuals to go to sites such as NADA to find the approximate market value, as well as look for their vehicle at dealerships to see what the car may be worth. It’s also important to remember that the condition of the vehicle plays a factor (condition of interior, seats, headliner, exterior, damage not related to the accident, tire tread depth, engine maintenance, etc).

Eustis Body Shop can help. We work with insurance companies to help get your car repaired and get your life back to normal. And if your car has been totaled, we can help you sort through your options going forward. If you have questions or need a quote, get in touch at any of our eight locations across Central and Eastern Nebraska.