Insurance companies will declare as total losses damaged cars that would in all probability be more costly to repair than what they are actually worth. If you have an older car that was damaged in an accident, for example, your insurer may want to declare it totaled and give you the money, in exchange for the vehicle even if it’s still drivable. They then usually list these vehicles for sale at auction.
Alternatively, you might want to keep your damaged car and repair it. A car damaged in an accident that has been written off by your insurance company (this is what does totaled mean) does not necessarily mean that it will have to be sent to the scrap heap. You actually have several options.
#1. Take the Money
After an accident, either your insurer or the insurer of the driver who is at fault will determine the cash value of the vehicle, and then decide whether the car should be totaled or repaired. When the car isn’t worth fixing, the insurance company will issue you a check for the value of the car, minus any deductible that you’re carrying on your insurance policy.
#2. Keep the Car and Fix It
If the car can still be driven safely, or at least towed to a place where it can be repaired, you might choose not to file a claim.
Of course, you won’t want to do this if the damage is severe, but if it’s just cosmetic or easily repaired, you might want to think about keeping the vehicle and having it repaired. This is a good option if the amount you’re likely to get from your insurance claim is going to be lower than what you’ll need to replace the vehicle. You might want to just have the repairs done.
If you decide to file a claim, the insurance company may deduct the salvage value of the vehicle (which is usually only a few hundred dollars) plus your deductible if you’re at fault in the accident. Then you’ll get a check for what remains, along with a salvage title.
Then you may rebuild the car, get a rebuilt title, and prove that the vehicle is roadworthy. In many states, you can even get a clean title after all the repairs have been done and the inspections have been passed. If you can rebuild the car cheaply enough, this can make a lot of sense. “Totaled” does not necessarily mean “unfixable.”
#3. Keep It But Don’t Fix It
Sometimes, this simply depends on what’s important to you. A scratch on a car might not cost much to repair, but it could require a huge paint job if it extends over a long area of the vehicle. If you’re handy, you might actually be able to do the repair and touch-up yourself, in which case you might want to take the money that the insurance company would pay a body shop for the repair, and handle it on your own.
On the other hand, if you’re not planning on keeping your vehicle for long and you can live with a bit of unsightliness, you might want to just take the money, forget about the repair, and use the settlement to help you buy another vehicle.
Keep in mind that some kinds of damage (from hail, for instance), can damage a car to the point where an insurance company will consider it totaled, but it’s still perfectly drivable. If the car runs fine, and you don’t care what it looks like, you might consider just taking the settlement money and doing nothing.
#4. Keep the Car, and Sell It
Another course of action would be to keep the car and try to sell it yourself, part it out, or even use the parts for another car that you’re trying to restore.
#5. Donate it and Take a Tax Deduction
There are donation services that will tow your car at no cost to you, sell it for parts, and give you a receipt for a tax deduction on the depreciated value.
The Final Word
When a car is totaled, most people simply let the insurance company write it off, and take the check. But there are other options available, and what you do may depend on how much you like the car, how handy you are, and whether you think you can do better on your own than if you take what the insurance company offers. The decision is yours.