How does the insurance company decide if a car is totaled?

Learn more about what happens to your vehicle if you get into an accident. Find out how an insurance company determines if your car is a total loss.

It happens all the time in Texas after a seemingly minor accident that an insurance company declares one of the involved vehicles is a total loss. This leaves many scratching their heads and wondering how such minor damage could result in this. The answer lies in how an insurance company figures vehicle value and what constitutes too much damage to repair.

The basic steps

While insurance companies may have different processes for figuring the damage on a vehicle after an accident, there are still some general steps that all companies follow. Geico explains that after a person reports an accident, the insurance company sends someone to inspect the vehicle. The inspector looks at the damage and the overall condition of the vehicle and creates a valuation.

According to Erie Insurance, to calculate the valuation of a vehicle, the insurance company researches how much the vehicle would have been worth before the accident using various databases within the auto industry. To find the value, the company uses information such as the vehicle's make, model, age and general condition.

After finding the actual cash value, the company figures the cost of repairing the damage. If the amount to repair the vehicle is more than the actual cash value, the insurance company declares it as a total loss.

Additional considerations

An insurance company also considers the salvage value of the vehicle in some cases. The salvage value is how much money would come from selling the vehicle for parts. This may also figure into the equation. Some companies may total the repair costs and salvage value, and if the actual cash value is less, the vehicle is a total loss.

What happens after a total loss

Once an insurance company declares a vehicle a total loss, the insured person may have the option to keep the car or take a settlement payment. Some companies may provide a partial settlement payment minus the actual cash value of the vehicle.

If a person wants to keep a vehicle that is totaled, he or she has to get a salvage title, according to the Texas Department of Insurance. This title lets others know the vehicle was declared a total loss by an insurance company due to an accident.

If the owner does not agree with the assessment of value, he or she can get a private assessment done. The person can give the insurance company with quotes from used car dealers in the area, online sales prices for the same vehicle and any proof of customization to the vehicle.

If you have been in an accident and need to deal with insurance companies, it may help to seek legal counsel. Seek out an experienced accident attorney, such as Lorenz & Lorenz, L.L.P.