So, your insurer just totaled your car — here’s what to do next
How do insurers determine whether to total a vehicle?
If your car is totaled: Should you accept your insurance company’s settlement?
- You can salvage the vehicle or sell it as-is
- You can donate the vehicle to charity and write it off on your taxes
If your car is totaled: Should you salvage your vehicle?
To out more about the process for salvaging a vehicle, we talked to a public claims adjuster, someone not tied to one of the major insurance companies.
Elvis Dafrawi, who is based in Atlanta, says insurance customers often lose money for one simple reason. “Most people don’t have a general understanding of how insurance works, so they agree with the insurance company. You should never agree with the insurance company. They are a financial organization. They look out for their own interests.”
Dafrawi says that if your car is totaled, it’s in your best interest to work out a settlement with your insurer that would keep the most money in your pocket.
“You can agree to the damages,” he says. “It works like this: Let’s say you have an accident and the car is worth $5,000, but to fix it costs $6,000. The insurance company is going to total it for financial gain.”
That means they’re only willing to pay $5,000. “So what you can do is talk to the insurer and tell them I want to accept your offer,” Dafrawi says. From there, you can shop around to get the vehicle fixed, oftentimes for much less than what the insurer has calculated.
The issue with this is that either the insurer or owner will likely have to declare the vehicle a salvage car. That means it must be issued a salvage title. If you fix it and decide to sell it down the line, a prospective owner will be able to see that this was a salvage car.
Dafrawi said that depending on how the car is declared — what the insurance company writes down — will determine the process. The thing is, the DMV makes it easy to re-register a salvage title.
3 questions to ask when deciding whether to salvage your vehicle
- Is it in your budget? Most importantly, you need to determine if you can foot the repair bill with the partial settlement from the insurance company. If you don’t have the financial means to pay for the fixes, having a salvage car will be of little benefit.
- Does your low-value car need major repairs? If your car is relatively low value, it may be best to consider a newer vehicle rather than spending a lot of money to get it fixed, especially if you were taking it to the mechanic frequently before your accident.
- Is the engine damaged? Find out exactly what needs to be replaced or repaired. If your vehicle needs extensive engine work, it likely won’t be worth it. But if the damage is mostly cosmetic, although costly, it may make sense to save a car that still runs great and is intact.