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Ryan M Rosenthal's Legal Blog


Ryan's Legal Blog

Is My Car Totaled? And What Does That Mean?

Facts about what it means when your car is declared a total loss

Often times when people are involved in a bad car accident, it is possible that your car could be a total loss. What exactly does that mean? Well, it means that the cost to fix your car exceeds the current book value of your car. When this is the case, the insurance company for the at fault party will tell you that they are going to total out your car. When this happens, you will be asked to sign over the title of your car to the insurance company, they will then take possession of your car and give you a check for the book value of your vehicle. To determine the book value of your car, there are websites such as Kelly Blue Book, that will have you input the information about your vehicle into their website and it will tell you the approximate value of your car. 


The most common problem that arises when cars are deemed to be total losses is when the book value of your car is less than the amount of money that you owe on your car. The term used for this situation is that you are upside down. So if for example your car is worth $10,000.00 and you still owe $12,000.00, you would be upside down by $2,000.00, meaning that after the insurance company takes your car and gives you a check for $10,000.00, you will still owe the remaining $2,000.00 on your car. The only way to rectify this problem without having to come out of pocket for the additional $2,000.00 is if you had purchased GAP insurance when you bought or leased your car. This insurance policy is designed to cover that $2,000.00 differences in situations like these. Many cars come with GAP insurance and some you need to purchase additionally.


Another problem that arises in total loss situations is when you are driving an old car that has a very low book value, thus, minor damage can often put your vehicle in the total loss category. If your car’s book value is only $500.00, and that is all the insurance company is willing to give you for your car, chances are that you won’t be able to replace your car for that same $500.00. In reality, that $500.00 car that you were driving had much more value to you as the owner in that it was able to get you from A to B. Unfortunately, in this situation, you are just out of luck and will have to dig into your wallet to get yourself another mode of transportation.
In some instances, the book value of your car might be very close to the cost of repairing it. Here, if an insurance company wants to total out your car, you can have the option of keeping your vehicle after the insurance company deducts a nominal amount (usually $500.00) for salvage value. This is something that you may want to consider if you don’t want to have to go purchase another vehicle or if you have a friend who might be able to fix your car for less money. Many people in this situation do not want to repair the car and would rather let the insurance company total out and take the car due to the fear of having to deal with problems in the future arising from damage caused from an accident.


Hopefully these facts have been helpful to explain what is means when your car is declared a total loss and have given some suggestions as to how you should handle this situation if and when it arises.
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Law Office of Ryan M. Rosenthal
The Law Offices of Richard S. Sennett.
Practicing Law For Over 60 Years

Ryan M. Rosenthal - Partner
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Telephone: 847.412.0333
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