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What happens if your car is totaled? - YouTube
Channel: Texas Department of Insurance (TDI)
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Hi everyone. I'm Ben Gonzalez and this is TDI.
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Today we're going to be talking about a situation that
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I guess you most likely don't want to
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find yourself in and that's when you're in an accident or
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some other reason that your car is determined
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to be totaled.
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We're going to talk about what that means and
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what your options are.
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And joining us today is John Mooney from
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our property and casualty area.
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John, I think we should start by defining what totaled
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means because I guess it's sort of shorthand, right?
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Yeah. First of all thanks for having me today
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and to talk about the topic of the total losses
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on your cars. And yeah it's, it's
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typically the definition of a totaled vehicle is when
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the cost to repair your vehicle
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is more than what the car is worth.
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So for easy math purposes, your car's worth $10,000,
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if the estimate comes back at
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$11,000 or $12,000 then clearly
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the insurance company is not going to pay more than
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what your car is worth.
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So at that point they'll determine your car is a total loss
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and start the process of
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handling your insurance payment that way.
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Now how do they determine
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that it is $12,000 or
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more than the value of your car?
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Do they have software or formulas they use?
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Yeah, they have a main software
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so there's estamatic software that
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the insurance companies use.
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It may be an estimator that's employed by
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the insurance company,
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but they also rely on the body shops as well
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to write an estimate.
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So they will take pictures of your car,
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talk about what parts need to be replaced or repaired,
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and they'll line item the estimate, and
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as a consumer you should ask for a copy
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of your estimate from the insurance company
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and then at that point they compare it to
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what the insurance company thinks the value of your
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vehicle is worth.
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And they use a couple different sources,
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different companies use different
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databases to determine what the value of the vehicle is.
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But for the repair costs, do they all use that same
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kind of estimator or is it
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varied from company to company?
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It varies from company to company.
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So they, they'll look at what the labor is in,
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in the market area, they'll look at the cost for the parts
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if they have to repair the part or replace the parts.
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So they use different types of software.
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Pretty much everything we do always says,
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it varies by the company.
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Correct. Yes.
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Well, we've had even folks
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here in the office have talked about how
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they'd had to argue about what the car is worth,
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versus what the insurance company says it is.
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They think it shouldn't be totaled,
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because it's a maybe a specific model or
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they've done something to the car that
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increases the value.
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Yeah. The first thing that you have to look at is
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is how is the claim being handled?
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If it's, because it's it works two different ways,
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whether it's a liability claim when you're not at fault,
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or if it's your own insurance company and
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you're handling it under comprehensive or collision.
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So, when it's when it's your own policy,
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you need to read your policy,
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they may have an appraisal clause
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in your policy where you can ask for
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or hire an appraiser to go out and
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determine the value of your vehicle is
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and the company will do the same thing.
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And if they can't agree,
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then you can, they'll bring in an umpire as a
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third appraiser to determine the value of the vehicle.
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You can also file a complaint
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with your insurance company as to speak to a
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supervisor, but more importantly,
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make sure you know what the model is of your vehicle.
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That XLR or XR all the different
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things can make a huge difference.
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You're sometimes talking thousands of dollars,
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so you need to make sure
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the insurance company has all that information.
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You can also go out and get what they call comps,
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or comparables, comps is short for the comparables,
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is go look and see what's out there in the market.
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Contact a dealership and say,
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"hey what do you think my vehicle is worth? or
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what are vehicles selling out in the marketplace for?"
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And you can give that a documentation
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to your insurance company.
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Alright.
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And you talked about hiring
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an appraiser that be on your dime.
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Correct. Yeah.
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So you can do some of that legwork yourself
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though by looking at the ads and car dealerships?
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Yeah there's various different
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agencies that are out there on the internet
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that'll provide
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a service for you where you can do that,
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you can also look to see what they're selling for
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and that kind of gives, what they're selling for,
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kind of gives you the market value
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of what your car is worth.
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So that's somebody that fighting to say,
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"My car shouldn't be totaled because it was worth
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more, and I think you should fix it and get it done."
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And then on the other hand, you have people that say,
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"Oh thank goodness it's totaled I don't have to drive
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this wreck. I want to start over."
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Are they going to pay you to replace the car
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if you have the right, depending on your insurance?
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Yeah. It depends on the insurance again goes back
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to the whether it's your insurance or the liability
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of the at fault driver. If it's your insurance,
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again, you have to go back and read your policy.
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Does your policy pay actual cash value
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or does your policy pay for a replacement vehicle?
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So you would have to look to see what,
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what your policy says.
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If it's a liability claim,
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then they're gonna be paying you, more than likely,
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they're gonna be paying you what your vehicle is worth,
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because that's what their,
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their policy holder is negligent for.
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And when you say,
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what your vehicle is worth,
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you're talking about actual cash value?
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Correct.
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Which is what the vehicle, is valued at today
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not to replace it with a like model, right?
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Yeah. So the it's gonna look at what your vehicle is worth.
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It's pretty much instantaneous like
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right before the accident happened,
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this is what your vehicle was worth.
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Wear and tear and age,
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Correct.
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and everything else.
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Yep.
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They'll factor all of that in there, is that
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the mileage on the vehicle;
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the year, make, and model of the vehicle;
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what kind of condition was it in;
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was it was it upkept is there tears in the seats.
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There's various things that the insurance company's
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going to look for to factoring on the value
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So depending on the age of the car and how
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it was before the accident,
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the payment that you get for your insurance claim
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may not be enough to put you back on the road.
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Yeah, the first thing you're gonna look at is,
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do you have a loan?
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You'll hear the term lien holder,
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so does your, is your vehicle paid off?
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So if there's not, easy math purposes,
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if you have a $5,000 pending on your loan,
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your car's worth $10,000,
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they'll pay the lien holder that $5,000 first
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and then cut, cut you a check for $5,000.
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But if your vehicle doesn't have a loan,
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then obviously you would get the full $10,000.
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And if you have an older car, there's
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even components within that car like
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airbags and seatbelts that may
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push you quickly over that edge of what the cars worth.
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Yeah. It, on an older car, it depends on the
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value some cars might only be worth
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$4,000 or $5,000 when the estimate comes in.
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It might be what you call minor damage,
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and your car can still run,
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but by definition, it is a total loss.
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And you know $4,000 is a lot of money to
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get you back on the road, but
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if you want to keep that damaged car, and try to fix it,
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even though it costs more than the value,
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the car means something to you or
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you just want to try to fix it,
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how do you get,
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I know you the, the insurance company takes
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possession of the car when they
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total it out is that correct?
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Yeah, so you do have an option of what you call,
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owner retain it. So, most,
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most of the time in a claim, the insurance company
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will take possession of the car
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and cut you a check for the full amount of the vehicle
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for the value of the vehicle. You can owner retain it,
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and tell your insurance company,
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"Hey I want to keep this vehicle."
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At that point,
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"This is my baby, I need to keep it."
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Yes and that happens quite a bit
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and it could be what they're gonna do is
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they're gonna deduct salvage value.
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So going back to the $10,000 example,
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if the insurance company thinks they can get $3,000 at
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an auction for that vehicle,
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they're gonna deduct that $3,000 from the offer
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and cut you a check for $7,000,
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assuming you don't have a lien.
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That's the money that they could have gotten for the
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parts and the metal and everything.
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Yeah, because if you don't owner retain it,
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then the insurance company takes possession of it
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and then more than likely they will sell it at
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the auction or a salvage yard.
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And, therefore that's money they would,
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would have recouped in that instance
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for the example would have been the $3,000.
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So then they're gonna, if you owner retain it,
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they're going to deduct that $3,000,
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but you also then at that point
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need to contact the DMV
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and you can check their
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information on their website or contact them,
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because the DMV has titling
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requirements after a vehicle has been totaled.
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If you want to drive that vehicle back, back on the road.
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So it'd be good to do some research before
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you make that decision, what it would take
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to get the vehicle back out of the road.
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It's not it's not so much that I'd fix it myself,
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it's also that you'd have to get it re inspected.
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Correct
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Retitled
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Yeah the DMV has requirements to get a,
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to get it titled and properly be back out on the road.
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Ok. I think that's most of the stuff
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we've covered about being totaled.
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You mentioned title is there anything
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else we should know about..
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Yeah, just one thing to remember is,
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is to keep your title if your vehicle is paid off.
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I would keep that title in a safe spot.
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I know a lot of folks have a,
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a lock box that's fireproof in their home that they keep
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valuable possessions, whether it's
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passports, birth certificates, marriage licenses,
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things along those lines,
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because you don't want to keep it in your glove box,
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because if your vehicle is stolen
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insurance companies will settle your claim
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without the vehicle being recovered.
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It's called a stolen and unrecovered theft.
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And if you don't have a copy of your title,
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It could be more difficult?
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Yeah, it might take a little longer to get your claim settled.
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So it's good to keep your title in a safe place.
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I know some people keep them at the bank,
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but there have been stories where the bank is destroyed
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and banks flood
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big floods and tornadoes and things like that, so
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if you keep it in your home,
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it might be in a safe spot. That might be the best place.
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I guess fire is also a concern as well,
correct?
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Because of the if the cars burned the title's inside.
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Correct. Yeah, you don't want to keep it in your,
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inside your car for that reason.
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Because if your car burns then the title would be, so
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it's best to keep it in a safe place.
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And if the, you can also get into a situation,
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or even mention the lien holder
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if your car is worth less than
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what you owe and the loan right, that,
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that require gap insurance?
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Yeah, so the term you hear on that is upside down.
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So if you're upside down on your loan,
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so if your car's worth $10,000, but you owe $15,000
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left on the loan, then the insurance company will only
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pay the value of the vehicle.
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So you would be responsible for
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that additional $5,000 back to the
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to the loan company. You'd still be responsible for that.
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We'll have to talk about gap insurance next time.
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Gap insurance is a whole nother discussion that we could have.
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Okay.
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All right, well hopefully you don't need these tips about
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your car being totaled because that means that you're
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either lost your vehicle or you're in an accident,
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but if you do,
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you can always call our helpline,
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1-800-252-3439
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and ask questions about your options.
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We also have a lot of this information online, on the website
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TDI.Texas.gov
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Just put in totaled car into the search engine on the
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top and you'll find some information.
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Well, I'm Ben Gonzalez, this is John Mooney, and this is TDI.
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