When we are in an accident that renders the car completely unsalvageable, we say that the auto has been "totaled." But what exactly does that mean? It sounds informal, like slang, but it is in reference to a specific auto insurance term.
Total Loss
The technical term for "totaled" is total loss. This is what your car insurance company is going to write on the paperwork should your car be destroyed in an accident.
Total loss means that the cost of repairing the vehicle would be more than the cost of replacing it. This can be down to the dollar. A $20,000 Toyota that would cost $20,001 to repair, for instance, has been "totaled." Any time it makes more sense to buy a new car than to repair the old one, the car has been totaled.
This means that the term does not strictly apply to collisions. The regular wear and tear a car is subjected to can leave it totaled when it finally gives out. Of course, if a car is totaled not because of an accident, but instead because of driver neglect, insurance is unlikely to cover it.
Note that "total loss" isn't always easy to calculate. That $20,000 Toyota might require $8,000 in parts and $12,001 in labor to repair. In this case, it may be possible to shop around for a better estimate on repairs. You could even conduct the repairs on your own if you are handy with a wrench set. However, the back-and-forth negotiations with the insurer may be more trouble than they're worth, and it may be wiser to simply accept the replacement vehicle offered by your insurer.
A few more points worth bearing in mind:
- Totaled cars less than nine years old are required to be turned over to your insurer in many states.
- Older cars may be kept as salvage vehicles for parts, but they cannot legally be driven.
- A car with superficial damages in excess of replacement cost may technically be totaled, but it can still be legally drivable.
If you have any questions on this process, talk to an Automatic Insurance agent.
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