Talking to Insurance about a Totaled Car


With over 2.4 million registered cars in the state of Arizona and an average of well over 120,000 accidents occurring each year, it is important to be prepared for an accident and to have good insurance. Being prepared and insured will greatly reduce stress and allow for a quick return to life before the car accident.

Each accident is different and damage ranges from a minor fender-bender to totaled cars and injuries sustained by drivers or passengers. When a serious accident occurs, the insurance company will then use repair costs and car valuations to determine if they are willing to fix the car or if it will be a total loss (totaled).

When is a Vehicle Considered Totaled?

A vehicle is “totaled” when the cost to repair the vehicle is more than the “actual cash value” of the vehicle. This means that if a car that with an actual cash value of $5,000 is in an accident and the cost to fix it is more than $5,000 then the insurance company will consider the vehicle totaled.

The total cost of repairs being greater than the actual cash value of the car is not the only justification for an insurance company to consider a car totaled. This means that an insurance company may instead look at how the repairs compare to the actual value and if there is a high enough percent, then an insurance company may deem the car a total loss.

In addition to having the cost to fix your car be more than the car’s value, if the cost of repairing your vehicle exceeds a certain percentage of your car’s value before the accident the insurance companies will declare it a total loss. The percentage is dependent on your insurance company as well as which state you are in.

Some states set what’s called a “total-loss threshold”, meaning a set number at which the car must be declared a total loss. For example, Nevada has a total-loss threshold of 65%, meaning if repairing a damaged vehicle would cost more than 65% of the car’s value, it’s a total loss.

Arizona is a “Total Loss Formula” state, and percentages are not applied when determining if a car is a total loss. Instead, the formula used is:
Cost of Repair + Salvage Value > Actual Cash Value

Fighting a Total Loss Claim

Following an accident, it is up to your insurance company as well as your insurance policy to decide the fate of your car. Once the insurance company labels a car as totaled or a total loss, they will take ownership of the car.  Then they will pay you the car’s actual cash value, minus your deductible. Finally, they will send your car to a salvage yard to be auctioned off to the highest bidder and the insurance company will keep the money it makes from selling the car.

Since the insurance company is a business that solely survives off of profits, the valuation you receive from them will not be extremely favorable for you. This does not mean that your insurance company is trying to con you, rather their valuations tend to be more generalized to fit the masses instead of being specific to you and your car.

If the valuation you receive from your insurance company seems neither fair nor correct, you do not have to settle with their offer. This is especially true when you are still making payments on your car and the insurance company’s cash offer is less than the amount that you owe as you still need to pay off your remaining debt.
If you wish to dispute your car insurance company’s valuation of your car after an accident, you will need a good amount of evidence proving your car is worth more than what your insurance agent determined. This will involve hiring your own appraiser, negotiating with the insurer, or having an experienced lawyer handle the process for you.

Do I Still Have to Make Payments on a Totaled Car?

As most of us have learned the hard way, cars depreciate in value as soon as they drive off the dealer’s lot. That being said, when a car has been financed the money owed is based off of the original value and will only decrease as you make payments.

Many drivers wrongly assume that their car’s appraised value will match the amount they currently owe on their loan, and sometimes this may be the case but it is only by coincidence and not due to any rules or regulations. This means that if you have been in an accident and your vehicle has been written off/ totaled by your insurance company, you are not off the hook for the money you still owe on the vehicle.

If the amount of money you receive from your insurance company is less than the amount you still owe for the car, you are not off the hook for the remaining difference. Instead, even though you no longer have the car you will have to pay off the remaining balance of the loan.

Insurance agencies will try to settle claims for as little as they can to earn a profit. Having an experienced attorney by your side will ensure that you receive all that you deserve.

Consulting an attorney is even more important if you or a loved one were injured in the accident.  They will help you recover the necessary compensation to ease the burden of the related expenses.

Frequently Asked Questions

Q: What happens if you total a financed car?
If your car is financed and has been totaled/written off by your insurance company you are still required to pay off the remaining financed amount, even if your insurance pay out does not cover the full amount owed.

Q: Can you fight a total loss value?
Yes. You can negotiate with your insurance company by providing independent valuations as well as provide proof of after-market upgrades made to your vehicle which may increase its overall value.

Q: Can I negotiate a total loss value?                                                                                                                                                                                                                                          You can negotiate a total loss value but you will have to pay out of pocket for things such as appraisals and expert testimonies.

Call our Personal Injury team at (480) 467-4392 to discuss your case today.

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