You just got off from work and can’t wait to get home after a long day at the office. You desperately need to rest. And nothing will stop you. Not even the heavy snow and ice falling in Michigan.
Confident about your car’s ability to cope with the weather, you switch on the ignition and start cruising down the highway. Apart from the reduced visibility, everything else seems fine. You’re even enjoying the drive as you gradually wind down after a tiresome day.
There’s very limited traffic today, and the drive begins getting boring. The time is now seemingly moving slow. You start yawning, feeling woozy because of the immense amount of sleep creeping into your head.
Suddenly, you hear loud successive honks, and you bolt from sleep. You’re a bit surprised that you had dozed off behind the wheel.
But there’s no time to think about all that because a truck is quickly coming at you. You hadn’t even realized that you had drifted to the oncoming lane.
In panic, you try to turn the steering wheel to correct the situation. The oncoming truck, on the other hand, is visibly trying to apply brakes.
But the road is proving to be too slippery, and it starts veering across the highway. Your car is also letting you down because it’s doing very little to avoid impending danger.
You brace for impact, knowing too well that you might be taking your last breath. Then deafening noise before you black out.
You later gain consciousness just in time to pull yourself out of the wreckage. The seatbelt seemingly came in handy and saved your life. You’ve only suffered minor injuries.
Still shaken, you suddenly realize that you now have one huge problem. The car is totaled. Or so it seems.
As you stand back to analyze the damage, you notice a tree succumbing to the extreme weather and falling on another parked vehicle. Great. A second totaled vehicle.
It sure looks like a day for wreckages, thanks to the snowfall. Maybe another vehicle is probably losing control and hitting a wall in a different part of Michigan.
Whatever the cause, you are all facing a similar problem now. Your cars are totaled, and an insurance claim might be the only way to save yourself.
But, are they actually technically totaled? You’ve heard about other drivers successfully resuscitating their cars after major accidents.
So, is that possible in this case? Or will you be getting a new car? What are the requirements in the first place?
When Is A Car Considered Totaled?
“Totaled” simply means that the car is extensively damaged and largely irreparable. But even when it has been completely flatted by a building, you’re not the one who’ll make this conclusion.
Instead, your insurance company will decide whether your car is a total loss or not. This determines the subsequent type of claim.
A car only becomes totaled if:
● It’s impossible to repair it safely.
● Repair costs surpass the vehicle’s current value. In the insurance circles, a car’s price is assessed as the actual cash value (ACV).
The evaluation process takes into consideration several relevant factors. Two of the principal ones include overall depreciation and any improvements that may affect value.
But don’t get worked up about this right now, because we’ll be comprehensively reviewing it shortly.
Now, of course, it doesn’t make any economic sense doing repairs that exceed the vehicle value. Unless the car has an undeniable sentimental value. That’s why your insurance agent is not likely to contest total loss if the damages are actually extensive.
● The amount of damage exceeds limits stipulated by state laws.
Many states analyze this through a system known as Total Loss Formula or TLF. Essentially, the car’s scrap value plus repair costs need to be equal to or surpass the vehicle’s pre-accident value. This automatically qualifies it as a totaled car.
In Michigan, the allowable damage threshold percentage. Totaled vehicles are expected to equal or exceed this.
Source: Car Insurance
Steps To Take When Car Is Totaled
So far, 12 to 14 percent of all vehicles reviewed by insurance agents post-accident are ultimately declared totaled. This applies not only to Michigan but also the rest of the other American states.
Technically, this translates to a 1 out of 7 chance of total vehicle loss in case of a traffic accident. Additionally, the older a car is, the higher its chances of being declared irreparable. The trend is consistent up until vehicles aged 10 to 15 years old.
With odds that high, it’s critically important for auto insurance Michigan customers to understand the following post-accident procedure:
● Establish Insurance Providers That You Might Be Filing a Claim With
As a Michigan-based driver, you’re protected by auto insurance coverage from one of the many providers in the state. But this doesn’t necessarily make your company the primary compensator in case of an accident.
It all depends on the precise circumstances surrounding the accident.
If another driver is at fault, for instance, their insurance company is the one that should be covering consequent costs.
However, and rather unfortunately, a fifth of drivers in Michigan are uninsured. Of course, that’s illegal, but it doesn’t make them immune to accidents.
In case you’re unlucky enough to have your car totaled by one, you’ll have no choice but to turn to your provider. An underinsured/uninsured motorist coverage should sufficiently protect you here.
The collision coverage, on the other hand, is applicable when you are at fault. Your insurance company will be forced to extend compensation to affected third-parties
● Tow Vehicle To Relevant Auto Shop
Even when it’s visibly irreparable, you should tow the car to the auto body shop nominated by the insurance provider. If you’re lucky, you might deal with a flexible insurance agent who’s willing to accommodate your preferred shop.
This is where the bulk of assessments and damage appraisals will be conducted.
● Determine the ACV Attached To The Car
A comprehensive appraisal will outline all damages to the car. Insurance providers subsequently use this report to determine corresponding estimated repair costs.
They’ll also do a comprehensive assessment of your car’s actual cash value. The findings are then compared with the former to establish the actual state of damages.
Eventually, the vehicle will be considered totaled if the estimated repair costs are equal to or exceed 75% of the ACV.
● Decide Whether You Want To Repair or Replace The Car
Not all drivers are quick to replace their totaled cars. If it perhaps has sentimental value, you may choose to proceed with repairs as opposed to replacement.
But this may not necessarily go down well with the insurance company. That’s why it’s always advisable to provide additional records of past vehicle improvements.
This alone might increase the overall value, consequently persuading the insurance provider to opt for repairs over replacement.
● Receive Initial Offer From The Insurance Company
At this point, insurance agents will get in touch with you with a settlement offer to cover replacement or repair.
In most cases, initial offers are usually lower than the expected settlement. So, instead of rushing to accept, you should seek to further engagement.
● Negotiate The Settlement Offer Through An Independent Insurance Agency
Engaging the provider should give you the chance to negotiate the settlement offer.
Although understanding your rights might be helpful, you’ll be dealing with extensively experienced agents. So don’t expect them to simply agree to your counter offers.
They’ll attempt beating you at the negotiating table by capitalizing on any rights or clauses you may not be aware of.
Thankfully, there’s a way around this. Instead of getting too worked up trying to beat professionals at their own game, simply consult a reputable independent insurance agency. They should have the requisite knowledge and experience to conduct a more fruitful negotiation process.
In the end, the settlement is closed when you deposit the final insurance check. This takes away your legal right to seek additional compensation.
Calculating the Value of a Totaled Car
All things considered, the settlement should ideally match the actual pre-accident value of the car. Knowing how to calculate it, therefore, is fundamental to the whole claim process. Otherwise, you might end up with a settlement that is barely a fraction of the ACV.
The first step is establishing the precise conditions of the car before the accident. Insurance company adjusters often review elements like mileage, age, and previous damages.
Such findings are subsequently fed to third-party software for comprehensive market research. The system will crawl through numerous online databases to compare prices of similar vehicle models.
Finally, the insurance company might settle on the average price, then make a lower initial offer.
This should place you in a better position to negotiate a settlement with the company.
Possible Options After Car Is Totaled
We’ve largely focused on settlements since it’s the most preferred option. But handling totaled vehicles is not a one-way street. There are several choices for drivers based in Michigan:
● Take The Money: Drivers overwhelmingly love this option because of the money attached. The insurance company issues a check on the negotiated car value minus your deductible.
And the best thing about it you’ll be free to spend the funds as you please. You might as well supplement it and purchase a better vehicle.
● Keep The Car and Fix It: For several reasons, you might want to retain the car and use your own resources to repair. It may seem unwise at first, but it totally makes sense if the damage is largely cosmetic.
It’s also worth considering if the car has substantial sentimental value. Or in case the settlement amount is insufficient for a new vehicle.
The insurance company basically deducts the vehicle’s salvage value plus the deductible and hands you the rest of the cash.
● Keep The Car and Don’t Fix It: This is similar to the option above. But, instead of fixing the car, you leave it as it is. Possibly for sentimental reasons.
● Keep The Car and Sell It: Totaled cars have always been good sources for original car parts. The final proceeds, combined with the salvage payment by the insurance company might even surpass the would-be settlement.
● “Totaled” simply means that the car is extensively damaged and largely irreparable.
● A car only becomes totaled if: It’s impossible to repair it safely; repair costs surpass the vehicle’s current value; the amount of damage exceeds limits stipulated by state laws.
● So far, 12 to 14 percent of all vehicles reviewed by insurance agents post-accident are ultimately declared totaled.
● Establish insurance providers that you might be filing a claim with.
● Even when it’s visibly irreparable, you should tow the car to the auto body shop nominated by the insurance provider.
● A comprehensive appraisal will outline all damages to the car. Insurance providers subsequently use this report to determine corresponding estimated repair costs.
● Eventually, the vehicle will be considered totaled if the estimated repair costs are equal to or exceed 75% of the ACV.
● In most cases, initial offers are usually lower than the expected settlement. So, instead of rushing to accept, you should seek to further engagement.
● Instead of getting too worked up trying to beat professionals at their own game, simply consult a reputable independent insurance agency. They should have the requisite knowledge and experience to conduct a more fruitful negotiation process.
● All things considered, the settlement should ideally match the actual pre-accident value of the car.
What else do you consider important when handling totaled cars?
With all these elements to consider and evaluate, this procedure is evidently cumbersome and quite demanding. So feel free to contact us. We’ll not only do the heavy lifting for you, but also help secure a bigger settlement check.
Get insurance today!
At Signature Insurance we want to help you understand your insurance coverage options so you make the best decision.
Contact us at (586) 274-9600 and we’ll be happy to get quote for you from many of the top auto insurance companies or home insurance companies in Metro Detroit.