What to do if your car is totaled.

Auto accidents happen all the time, so if you are involved in a car accident will you know what to do, especially if your car is totaled? Car damages may look minimal but with the rising costs of car parts and labor, it means your car may be more apt to be a total loss. Knowing how to handle a total loss to your car may help reduce the stress of the situation, should it happen.

You have never been involved in a car accident until last month when you failed to see the car in front of you stopped and you forcefully plowed into the rear of it. The insurance adjuster just called to say that your car is a total loss determinable by the cost of car repairs exceeding the actual cash value (ACV) of your car.

What is Actual Cash Value?

ACV is the value of your car at the time of the accident less depreciation (usually 15-25% per year for the first five years). In determining that value, your insurance adjuster will visually inspect your car to assess it’s condition, age, damages, mileage and any other significant features. With this information, your car information will be input into an industry-leading database that gives a fairly accurate value of your particular car.

Furthermore, the adjuster may access dealerships in your particular area to determine the average selling price for cars similar to yours.


If your vehicle is declared a total loss, you will be hearing the word “salvage” from your insurance adjuster; therefore you need to know what this means and how it will impact your auto claim settlement. Salvage is referenced when an auto requires repairs with costs exceeding 50-75% of the current market value, and will be given a salvage title by the insurance company. This salvage value is factored in when assessing your vehicle.

For example, assume the established value of your car is $13,000 with initial repair costs of almost $10,000. The body shop indicates there is probable hidden damage that will most likely increase the repair bill so with this information, your adjuster declares your car to be a total loss. Simply put, if the vehicle’s cost to repair plus its salvage value exceeds the vehicle’s actual cash value (ACV), it is typically declared a total loss.

The Choice is Yours

It’s settlement time and you do have available choices.

  1. You can take the established ACV of your car (in this case, $13,000) less any applicable deductible with the check made payable to you and the lienholder, if there is a lien on the vehicle. Otherwise, the check is payable directly to you. The car would then be sold to the salvage dealer for the established salvage value.
  2. You can keep your car (salvage) at the established salvage price less any applicable deductible on your auto insurance policy. You would then receive the salvage title. Note that the vehicle’s VIN # will be sent to a federal database indicating substantial damage.

If you are involved in an auto accident, it is recommended that you immediately contact your local Alabama independent insurance agent to assist you with the next steps of the claim handling process as well as review your afforded coverage options on your Alabama auto insurance policy. Unfortunately accidents do happen so if you do find yourself involved in an auto accident and faced with a total loss, you will be better prepared to resolve and settle the claim in an informed and timely manner. Call us TODAY with any questions you may have at 256-704-7400.