What happens when insurance totals your car?

When your car is badly damaged in an accident, insurance companies must decide whether to repair it or declare it a total loss. Understanding this process helps you navigate insurance claims and get fair compensation. This guide explains everything you need to know about totaled vehicles and your rights.

What Does “Totaled” Actually Mean?

A car is considered totaled when the cost to repair it plus its salvage value equals or exceeds the actual cash value of the vehicle before the accident. Insurance companies use this calculation, often called the Total Loss Formula, to determine if fixing your car makes financial sense.

Many states set specific thresholds, typically between 70% and 80% of the vehicle’s value. This means if repair costs reach that percentage of your car’s pre-accident value, the insurance company must declare it a total loss.

Your insurance company will inspect your damaged vehicle after an accident. They look at the extent of damage, cost of parts, labor hours needed, and your car’s pre-accident market value. This inspection typically happens within a week after you file your claim.

The Total Loss Claim Process

When your insurance company totals your car, several steps follow:

• Your vehicle undergoes inspection by an insurance adjuster
• The insurance company determines your car’s actual cash value
• You receive a settlement offer based on that value
• You decide whether to accept the offer or dispute it
• You handle title transfer and DMV requirements
• You figure out your transportation needs

Most total loss claims take between two and four weeks to complete, though complicated cases may take longer. Your insurance company should keep you informed throughout this process.

How Insurance Companies Calculate Your Car’s Value

Insurance companies determine your car’s actual cash value using several factors:

Your car’s year, make, model, and trim level all affect its base value. Insurance adjusters also consider mileage, overall condition, and options or features your vehicle has. They look at comparable vehicles for sale in your area to establish market value.

Recent repairs or upgrades may increase your car’s value, but normal wear and tear will decrease it. Insurance companies often use third-party valuation tools like Kelley Blue Book or NADA Guides as starting points.

The settlement amount typically includes your car’s actual cash value plus applicable sales tax and title transfer fees. This represents what the insurance company believes your car was worth immediately before the accident. If an insurance company isn’t providing a fair value for your total loss claim, contact our experienced Las Vegas car accident attorneys at (702) 867-8900 to see if they can help.

Your Rights When Dealing With A Total Loss

You have several important rights when your car is declared a total loss:

You can review the valuation report from your insurance company. This report explains how they determined your car’s value. If you disagree with their assessment, you can dispute it by providing evidence of your car’s higher value.

Such evidence might include receipts for recent repairs or upgrades, listings of similar vehicles selling for more, or an independent appraisal. Many insurers have formal appeals processes for disputed valuations.

You can also choose to keep your totaled vehicle in most states. If you decide to keep it, the insurance company will deduct its salvage value from your settlement. You will need to get a salvage title through your state’s DMV.

What To Do If You Still Owe Money On Your Car

If your car is totaled but you still have an outstanding loan or lease, complications can arise:

When you owe more than your car is worth, you face a gap between your insurance settlement and your loan balance. This negative equity must still be paid off, even though you no longer have the vehicle.

Gap insurance covers this difference between what you owe and what your car is worth. If you have gap coverage, it will pay off the remaining loan balance after your comprehensive or collision insurance pays the actual cash value.

Without gap insurance, you remain responsible for paying off your entire loan. The insurance settlement goes to your lender first, and you must pay any remaining balance out of pocket.

Transportation Options After Your Car Is Totaled

After your car is declared a total loss, you need to consider your transportation options:

Your insurance policy may include rental car coverage. This typically covers a rental for a limited time while your claim is processed. After your claim is settled, this coverage usually ends.

Some insurance companies offer temporary transportation assistance beyond basic rental coverage. Ask your claims adjuster about all available options.

Your settlement money can help you purchase a replacement vehicle. Understanding market conditions and having your settlement in hand allows you to make informed decisions about your next vehicle purchase.

Steps To Take If You Disagree With The Insurance Valuation

If you believe the insurance company has undervalued your vehicle, you can take several steps:

Request a detailed breakdown of how they determined your car’s value. Review this information carefully for any errors or omissions. Gather evidence supporting a higher valuation, such as maintenance records, recent upgrades, or comparable vehicle listings.

Consider hiring an independent appraiser to provide a professional opinion of your car’s value. While this costs money upfront, it may result in a significantly higher settlement.

If negotiations stall, you can file a complaint with your state’s insurance department or consider mediation services. As a last resort, you might consult with an attorney who specializes in insurance claims.

Special Considerations For Leased or Financed Cars

In Nevada, leased and financed vehicles present unique challenges when totaled:

With leased vehicles, the leasing company owns the car and receives the insurance settlement. You may owe fees for early termination of the lease. The settlement goes directly to the leasing company, and you must settle any remaining obligations.

For financed cars, your lender has a legal interest in the vehicle until the loan is paid off. The insurance settlement check may be made out to both you and the lender. You must coordinate with your lender to ensure the loan is properly settled.

Gap insurance is particularly important for leased and financed vehicles. Without it, you could face significant financial obligations even after losing your car.

DMV Requirements After Your Car Is Totaled

Each state has specific requirements for handling totaled vehicle paperwork:

You must surrender your vehicle title to either the insurance company or your state DMV. The exact process varies by state, but insurance companies generally help guide you through these requirements.

If you choose to keep your totaled car, you must obtain a salvage title. This identifies the vehicle as damaged and rebuilt. Salvage titles affect a vehicle’s value and may impact your ability to register or insure it in the future.

Some states require safety inspections before a rebuilt salvage vehicle can return to the road. Check your state’s specific requirements before deciding to keep and repair a totaled vehicle.

Common Mistakes To Avoid With Total Loss Claims

Several pitfalls can reduce your settlement or complicate your claim:

Accepting the first offer without review often leads to lower settlements. Take time to understand how the insurance company valued your car.

Failing to document your car’s condition and features can make it harder to dispute valuations. Keep maintenance records and photos of your vehicle.

Forgetting to remove personal items from your car before it goes to salvage can result in permanent loss of those items. Clean out your vehicle thoroughly once you have permission from the insurance company.

Misunderstanding your policy coverage may lead to unrealistic expectations. Review your policy terms to understand what you are entitled to receive.

Understanding your rights under Nevada law

Nevada law puts significant power in your hands during the total loss claims process, though many drivers don’t realize the full extent of their rights. You’re not required to accept the insurance company’s preferred repair shop or their initial valuation.

Instead, you can choose your own repair facility, hire an independent appraiser, and challenge any settlement offer you believe undervalues your vehicle. However, exercising these rights effectively requires knowledge of the claims process and insurance regulations. Our car accident lawyers understand how to leverage Nevada’s consumer protection laws to prevent insurance companies from pressuring you into a rushed or unfair settlement.

DMV and salvage title requirements

The Nevada DMV has specific requirements for total loss vehicles. Once your vehicle is declared a total loss, keeping it requires converting your regular title to a salvage title. While the DMV offers this service at their offices in Las Vegas, Henderson, North Las Vegas, Reno, and Carson City, the requirements can be stringent and the paperwork overwhelming.

Final Thoughts

When insurance totals your car, knowing the process and your rights helps you secure fair compensation. Review your insurance company’s valuation carefully, understand your options for keeping or releasing your vehicle, and ensure all paperwork is handled properly with your lender and DMV.

Being prepared for these situations before they happen by understanding your insurance coverage and considering options like gap insurance can save you significant stress and financial hardship. With the right knowledge, you can navigate this challenging situation effectively and get back on the road quickly.

Frequently asked questions for Nevada drivers about your insurance company totaling your car

How does Nevada determine if a car is totaled?

Nevada uses a Total Loss Formula where repair costs plus salvage value must equal or exceed the vehicle’s actual cash value. This formula often results in more vehicles being declared total losses compared to fixed-percentage states.

How long do total loss claims take in Nevada?

By Nevada law, insurance companies must complete their evaluation within 7 working days. The entire process typically takes 14-30 days from accident to payment, though Las Vegas and Reno metropolitan areas often see faster processing times.

Can I keep my totaled car in Nevada?

Yes, Nevada allows you to keep a totaled vehicle, but you must obtain a salvage title through the Nevada DMV. The settlement will be reduced by the vehicle’s salvage value, typically 20-40% of its pre-accident value.