Totaled car

What “totaled” means

TDI says that if the cost to repair your car is close to its current value, the company might decide to total it, meaning it will pay you to replace your car rather than fix it. The decision depends on repair cost compared with value. A car with modest visible damage can still be a total loss if it is older or if hidden damage is expensive to repair.

How the payment is figured

According to TDI, if the company totals your car it will pay the car’s value minus depreciation, which TDI describes as a decrease in value because of wear and tear or age. TDI gives an example: if your car is 10 years old, the company pays the value of a 10-year-old used car, not the cost of a new car of the same make and model. Elsewhere in the same guide, TDI describes this as actual cash value, the cost to replace your car minus depreciation.

Ask the adjuster for the valuation report, including the comparable vehicles used, their mileage and options, and any adjustments for condition. Check that the trim level, options, and mileage listed for your car are right. Recent maintenance records and receipts for significant equipment can support a higher condition rating.

Negotiating the offer

TDI tells drivers to be prepared to negotiate to get what they think is a fair deal. It says a company might raise its offer if you can show that your car would sell for a higher price, and suggests getting written price quotes for a similar car from used car dealers and looking at local used car listings. Keep your evidence specific: same year, model, trim, and similar mileage, in the Houston market.

If the claim is on your own policy and you still disagree about the amount, TDI describes appraisal as an option for disputes about the amount of a claim with your own company. It is not available against another driver’s company. The claim disagreements page explains how TDI describes appraisal, complaints, and court.

If you still owe money on the car

TDI warns that if you still owe money on your car, the amount the company pays for a total loss might not be enough to pay off your loan. That happens when the market value of the car is less than what you owe. TDI notes that auto dealers and lenders usually offer guaranteed auto protection, called gap insurance, for this. If you bought gap coverage, find the contract and contact the gap provider early; it will usually need the settlement paperwork from the auto insurer.

TDI also notes that a lender will require collision and comprehensive coverage while you owe money, and that if those coverages lapse the lender may buy expensive single-interest coverage that protects only the lender.

Keeping the car

TDI says that if you want to keep the car, the insurance company will subtract its salvage value from the settlement amount. TDI adds that if the car is issued a nonrepairable title, it cannot be retitled or registered. Before you choose to keep a totaled car, ask the company what title the car will receive and what the salvage deduction will be.

The rental clock

On rental cars, TDI says that if the company totals your car, it might stop paying for the rental a few days after telling you. Start shopping for a replacement as soon as a total loss is likely. The rental car page has more.

Before you sign

• Check the valuation report for errors in trim, options, and mileage.
• Gather written quotes or listings for comparable cars.
• Confirm the loan payoff amount and whether gap coverage applies.
• Remove personal items and any toll tag from the car.
• Ask whether the settlement covers any rental or towing and storage charges.
• Read what you are signing; a property damage settlement and an injury release are different documents.

Injury claims are handled separately. TDI cautions that before signing a release in an injury claim you should talk to your doctor about future treatment; see injury claims and releases. TDI’s Consumer Help Line is 800-252-3439. This page is not legal advice.