TL;DR:

  • A car is totaled when repair costs exceed its actual cash value (ACV).
  • Insurance payout is usually the car’s ACV minus any deductible or salvage value if you keep the car.
  • Collision and comprehensive coverage typically cover totaled cars; gap insurance covers the difference if you owe more than the car’s value.
  • State laws vary on total loss thresholds and what happens if you keep a totaled vehicle.
  • If another driver is at fault, their insurance company usually pays; if you’re at fault, your coverage applies.
  • Continuing loan payments after a total loss is important to avoid credit damage.
  • Legal advice can help if you face disputes with insurers or need compensation for injuries.

Experiencing an auto collision is never an exciting endeavor. Even in a best-case scenario where no injuries are suffered, you could end up fighting with insurers over repair costs. This is particularly problematic if your vehicle is a total loss. In these situations, a totaled car means the cost to repair the car exceeds its value, leading to implications for ownership, insurance claims, and what happens to the vehicle next. You may find it difficult to get fair compensation in such instances. That’s why it’s important to consult with a car accident attorney in Denver if your car is totaled in an accident in Colorado.

Understanding the Concept of Total Loss

When your car is declared a total loss after an accident, it means the insurance company has determined that the cost to repair your vehicle is greater than its actual cash value (ACV) at the time of the incident. The ACV represents the fair market value of your car, factoring in its make, model, year, mileage, and overall condition just before the accident occurred. In other words, it’s the amount your vehicle would have sold for on the current market, not what you originally paid for it.

Insurance companies rely on a repair estimate to compare the cost of bringing your car back to its pre-accident state with its ACV. If the repairs cost more than the vehicle’s ACV—or, in some states, if they exceed a certain percentage of the car’s value—the insurer declares the car a total loss. For example, if your car’s ACV is $10,000 but the repair estimate comes in at $12,000, your insurer will likely consider the vehicle totaled and pay you the ACV rather than covering the repairs.

The type of insurance coverage you have plays a major role in how a total loss is handled. Collision coverage and comprehensive coverage are the most common policies that pay out in total loss situations, whether your car is damaged in a crash, by severe weather, or through other covered events. If you have financed your vehicle and still owe money on your car loan, gap insurance can be a financial lifesaver. Gap insurance covers the difference between your car’s ACV and the remaining balance on your loan, so you’re not left paying out of pocket if your loan exceeds the insurance payout. Understanding how much car insurance you need in Colorado can help you make informed decisions about coverage levels before an accident occurs.

It’s important to remember that state laws and individual insurance company policies can affect how total loss is determined. Some states set a specific threshold for when a car is considered totaled, while others leave it up to the insurer’s discretion. Additionally, if you want to keep your totaled vehicle, the insurance company will deduct the salvage value from your settlement, allowing you to retain ownership but with a branded car title.

Understanding the concept of total loss, including how actual cash value, repair costs, and insurance coverage interact, empowers you to make informed decisions after a car accident. By knowing what your car is worth and what your insurance policy covers, you can better advocate for fair compensation and avoid unexpected financial setbacks if your vehicle is ever declared a total loss.

Is My Car Considered a Total Loss in Colorado?

Before trying to get your vehicle replaced after a collision, it’s important to recognize whether the damages are truly a total loss. The answer to this question can vary by location, as other states may have different rules and thresholds. For instance, a car accident in Denver may have a very different outcome than one in Atlanta. This is all thanks to state laws dictating what counts as a total loss.

In Colorado, these calculations are made using a total loss threshold of 100%, as set by state law. This means that a vehicle is considered totaled if its salvage value plus necessary repair costs would exceed 100% of an auto’s current market value. For instance, combining a salvage value of $5,000 and repair costs of $15,000 (i.e., $20,000) would make a car whose current market value is only $19,000 a totaled car.

Steps To Take if Your Car Is Totaled

If you’re still reading, you’re likely wondering about your options when your car is totaled in an accident. In many cases — particularly in non-injury collisions — the answer is as simple as filing an insurance claim. You will need to file a claim with your car insurance company or, if another party is responsible, you may need to file a third party claim with the other driver’s insurance company. A negligent or at fault driver who caused your accident will be responsible for damages, and this means their driver’s insurer or driver’s insurance company pays for the loss, subject to the terms of their car insurance policy.

The situation becomes more complicated if you’re dealing with certain scenarios. For example, if you’re hit by an uninsured driver, you may need to rely on your own uninsured motorist coverage. Similarly, if you’re hit by a drunk driver, there may be additional legal considerations beyond the typical insurance claim process.

If you were at fault in an accident, your vehicle is only covered if you have adequate insurance to cover the damages. However, it’s important to remember that there are often caps on property damage coverage regardless of who’s at fault. In Colorado, only $15,000 worth of this insurance is required to drive. Since the average used vehicle in our state costs nearly $35,000, a discrepancy may exist. If you have financing on your vehicle, your lender or lenders may require you to maintain certain types of coverage, such as collision or comprehensive, to protect their interests in case of a total loss. Failing to make loan payments after a total loss can negatively impact your credit, so it’s important to understand how a totaled car affects your financial obligations.

When dealing with insurance companies after a total loss, it’s crucial to understand key insurance company facts that can strengthen your claim. Additionally, making sure you’ve properly documented the accident by filing a police report can be essential for your claim’s success.

Put simply, a settlement with a negligent driver’s insurance company may not be enough to cover your losses after the deductible and payment process. This could make the right course of action to contact a legal professional — even if you didn’t suffer significant injuries — especially if you need help navigating the claims process, understanding who pays, or replacing your vehicle with a new car.

What if You Suffered Injuries in Your Auto Accident?

If you suffered injuries due to someone’s negligence, knowing what to do after your car is totaled in an accident may be the least of your worries. Sure, getting your vehicle repaired is important — but you may also end up facing pain and suffering, medical expenses, and lost wages on top of property damage. In these situations, a visit to a local law firm may be in your best interest.

Even if you think you weren’t hurt, it’s important to understand that you should seek medical attention after an accident even if you think you’re not injured. Many people experience delayed shock symptoms after an accident that may not be immediately apparent.

That’s because your economic and non-economic losses will exceed any amount you may be able to recover for a totaled vehicle. Understanding the types of damages that may be recovered after a motor vehicle accident can help you understand the full scope of potential compensation. With experienced legal representation, you can learn what to do when your vehicle is totaled and how to move forward when seeking additional compensation.

It’s also important to be aware of Colorado’s statute of limitations for car accident cases to ensure you don’t miss important legal deadlines. If you’re considering legal action, understanding how to file a personal injury lawsuit and what a personal injury lawyer does can help you make informed decisions about your case.

Our law firm may be able to help. Contact us today to learn more.