Can An Insurance Company Force You to Total Your Car?

Matthew Lloyd
August 31, 2021
Matthew Lloyd

Can An Insurance Company Force You to Total Your Car?

2020 changed the way Americans do just about everything - including driving.

Although we drove fewer miles, traffic death increased an alarming 24%, the highest increase in recorded history.

Even though traffic levels are returning to normal, authorities say risky behavior on the road is still a huge problem. If you are involved in a car accident, the insurance company may decide your car is a total loss.

We often get asked, "Can insurance company force you to total your car?" This is an important question for many Americans who can't afford to buy a new car.

Keep reading while we dive deeper into what constitutes a total loss and whether you have any recourse if you find yourself in this situation. 

What Does Totaling a Car Mean Exactly?

Having your car declared a total loss is something most drivers try to avoid. A car is considered totaled when the cost of making repairs will be more than the value of the car.

So, if your car is worth $5,000 and the cost of repairs is $6,000, your car would be considered a total loss. However, it's not always so simple.

Each state has its own laws regarding totaled vehicles. In some states, if the cost of repairs to your vehicle is a certain percentage of the actual cash value, the car can be declared a total loss. 

How Does Reimbursement Work for a Total Loss?

Insurance companies are required to make you whole for your loss.

Car insurance policies usually offer reimbursement for what is called the actual cash value (ACV) of your vehicle rather than the replacement cost. By giving you the value of your vehicle, in theory, you should be able to replace it. Unfortunately, cars depreciate in value very quickly.

If your car is kept in good condition and has low mileage but is older, you might not be able to find another vehicle in the same condition for your car's current value. This is why drivers try to avoid a total loss situation.

Who Determines Whether a Your Car is Totaled and How is a Settlement Calculated?

Your car insurance company decides whether your car is a total loss.

Your claim will be assigned to an adjuster who specializes in motor vehicle claims. They will determine whether your car is a total loss by taking into account a number of different factors. If they declare your vehicle a total loss, you will be offered a settlement based on your coverage plan.

Most drivers have an actual cash value policy. The adjuster will also determine the value of your vehicle in order to determine your settlement amount. This involves determining what your car was worth before the accident.

They will also determine the market value of your vehicle, as the market is constantly changing and where you live can determine how much your car is worth. The adjuster will first use the make, model, and mileage on your vehicle to determine its value. They will then evaluate the demand for a comparable vehicle in your area using a database that logs car sales in your area. 

Can Insurance Company Force You to Total Your Car?

When you purchased your policy, you likely signed a clause that states your auto insurance company won't pay you more than the actual value of your car. Unfortunately, this limits your options when the insurance company says your car is a total loss.

There are some things you can do is make sure you are getting a fair settlement. The easiest thing to do is to research the value of your car online. Consult Kelley Blue Book and NADA to find the value of your vehicle.

You can also hire an independent appraiser. They will inspect your car and create a report of their findings, including an evaluation of the amount of damage and cost of repairs.

Sometimes you can find a repair shop that will offer cheaper rates than the amount quoted to your insurance company.

If these methods don't work, you might consult your state's insurance regulation department. If all else fails, you could hire a lawyer. 

Other Options to Consider

If your car is deemed a total loss, you may have several different options.

In the most simple scenario, the insurance company pays you the actual cash value of your vehicle less your deductible. This is usually the case as long as you have collision or comprehensive coverage, depending on the facts of the loss.

However, if you still owe money on the vehicle, you could be in trouble. The insurance company won't pay the difference between the actual cash value of the car and the amount of your loan unless you purchased gap insurance.

If you have replacement cost coverage, the insurance company will pay you the cost to replace your vehicle. If you have the means, you may be able to keep your car and make the repairs yourself. Finally, if your car is brand new, depending on your coverage, you may qualify for a new car. 

Finding the Best Car Insurance

Whether you've been in an accident and your car is a total loss or you are just thinking ahead, you might be wondering, "Can insurance company force you to total your car?"

We hope this article provided some valuable insight into that question. Car insurance can be complicated but finding cheap car insurance doesn't have to be. The number one thing you can do to make sure you have the best policy is to compare car insurance quotes from multiple insurance companies side by side.

Click here to get your free quotes today.