When Is Your Vehicle Deemed To Be A Total Loss?

As we all know, having car insurance is necessary if you want to protect your vehicle from any potential damage. However, there are some accidents in which your vehicle could be declared as a total loss. Right now, you might be wondering, what does that mean? And is my insurance enough to cover this type of situation? If this is happening to you, don’t panic. Here, we will explain everything you need to know.

The first thing you need to understand is when your car will be declared a total loss vehicle. Keep in mind the conditions can change depending on the city you are living in. But, overall, an insurance company will tell you that it is a total loss when the costs of the repairs exceed the value of the car. 

There are some instances in which the car will be a total loss vehicle if the repairs are greater than 75 percent of the vehicle value. However, this will depend on the type of insurance provider you have and the laws of the province you are living in. 

This may sound like a nightmare situation, but there is no need to worry if you have proper coverage from an insurance company. Before we explain how you can file this type of claim, let’s take a look at how a vehicle is evaluated before deciding it is a total loss. 

When is a vehicle considered a total loss?

Let’s say you have just been in an accident and your vehicle has been seriously damaged. When this happens, there are a couple of steps you need to take to get proper coverage. 

1. Call an insurance agent

One of the first things you need to do after you have been in an accident is to call your insurance agent. It is important to tell the insurance company everything that happened. This way, they can get started on your claim. Remember, you won’t receive any money right away. First, the insurance company needs to evaluate the damage, and then they will let you know if the car is considered a total loss. 

2. Insurance company evaluation

Once the insurance company has access to your vehicle, they will determine the total cost of the repairs. Some people believe that this only includes the value of the parts that need to be replaced. But, in reality, there is more to it. For instance, the insurance company also needs to calculate the labor fees. In the end, they will sum up all of these costs and calculate if this is more than the actual value of the vehicle.

3. Issue the payment

If the insurance claim goes through, your insurance provider will give you the actual cash value of the car. Keep in mind that from this amount they will take the deductible of your insurance coverage. 

What type of insurance should I have for a total loss car?

If you want to be covered in case your insurance company declares your car a total loss vehicle, you’ll need to have comprehensive and collision coverage in your policy. Usually, this will already be included in the insurance you purchase, even if your car is under a lease. However, in case your vehicle is already paid off, this will be optional. That’s why it is important to talk to your insurance agent about this. 

We know that there are several insurance policies available in the market right now. But, our favorite without a doubt is Surex. We advise you to check it out before making your final decision. In case you decide to check out other providers, make sure you understand the limits of their coverage and how to file the claims.

How is the value of your car calculated?

When you start looking for different insurance quotes, it is crucial to understand how this provider will determine the value of your car in case it is declared a total loss. This is vital if you don’t want to be disappointed when the insurance company issues the payment for your vehicle. Here are some key elements most companies look at to calculate the cost of your car.

1. Type of car

The first thing the insurance company will look at is what type of vehicle you have. For instance, if you have a luxury or classic vehicle, they will be treated differently. This happens because these cars depreciate differently compared to other vehicles.  

2. Age

Another factor that helps them determine the value of a car is age. Once insurance companies know what type of model you have and its age, it will be easy to calculate the cost. 

3. Car Condition

Even though there are some situations we can’t plan for, such as accidents, it is crucial to do regular maintenance on your car and keep it in a good condition. If you don’t do this, the insurance company might tell you that your car was in below-average condition, which will reduce the total amount.

4. Negligence

This has nothing to do with the value of your vehicle. It will determine how much money you receive. If the insurance company decides that the incident was even partially your fault, they will reduce the total amount you receive. 

Further, the insurance company will also consider if you have made any improvements to the vehicle. That’s why it is vital to report this to your insurance company while filing the claim. At the end of the process, they will give you an estimate and then issue the payment.

When will I receive the money if the car is at a total loss?

After the insurance company finishes the process for the claim, as we explained above, they will give you the value of your car. Typically, owners receive this payment in a couple of days. However, you need to understand that this cheque will be issued to different institutions depending on your situation. For instance, if your vehicle is under a lease, it will go to the leasing company. Otherwise, the money will be divided between the bank and yourself. But, this amount will be calculated according to how much you owe.