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how insurers determine a car is totaled

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How insurers determine a car is totaled

No one ever wants to go through the process of being in an accident and filing a claim. What’s worse is when you receive news from your insurance company that your car is totaled. Now, what do you do? Who makes such a big decision? We’re going to tell you how insurers determine a car is totaled.

There are some factors taken into account that explains how insurers determine a car is totaled. Below, we break these down so you can understand how the decision is made.

Actual Cash Value

The truth of the matter is that it doesn’t depend on if your car still runs. What actually determines if your car is totaled is the actual cash value (ACV) of the car at the time of the loss. The actual cash value is what your car is worth after factoring in depreciation costs. According to Erie Insurance Company, vehicles have an average depreciation rate of between 15 to 20 percent each year after the first five years of purchasing it brand new.

A lot of your car’s characteristics are taken into account when determining the actual cash value. Erie uses the example of how a pick-up truck will strike a higher cash value in rural areas as opposed to urban areas. This aspect in determining the value is associated with the demand of your vehicle in those markets.

What is Salvage Value

 Salvage value is another way the value of your car is calculated. It is the resale value of the parts and metal. Since the accidents can cause potentially unseen damages, your car will have been assessed from front to back. If the cost of repairing the car plus the salvage value is greater than then the actual cash value, the vehicle will be considered totaled.

According to Mattiesen, Wickert & Lehrer, S.C. Attorneys at Law, here in West Virginia, if the costs to repair your vehicle is greater than 75% of market value determined by a nationally accepted used car value guide, it’s deemed a total loss.

What’s Next?

Outlined by Erie, you have two options if your car is considered a total loss. These are:

  1. Take the cash settlement for the actual cash value of your vehicle


  1. In West Virginia, you can complete a salvage certificate application and submit it to your local DMV office. If you wish you repair your car yourself, you can obtain a reconstruction packet from the West Virginia DMV. If you choose this route to take, your car’s title is always branded “reconstructed” or “salvaged.”

Nevertheless, receiving the word that your car is totaled can be a tough pill to swallow. Give us a call at 304-263-3361 if you need to re-evaluate or auto insurance policy or learn more about how insurers determine a car is totaled. You can also visit our website to get a Quick Quote today.

Photo credit: Orangesky3. Licensed under CC BY 2.0.

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