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Whether due to a collision, natural disaster, or vandalism, a totalled car can cause plenty of stress. If you’re lucky enough to walk away from a car crash with your health intact, the next thing you’ll have to think about is how you’ll be covering the damage that’s been done to your vehicle. Dealing with a totalled car requires a set of steps that must be taken to ensure that you handle the situation effectively and minimize financial loss. 

Read on to find out the key steps you should take when your car is totalled.


Key Points

  • A totalled car is one that’s been deemed a total loss by an insurance provider because the cost to repair it is higher than its actual cash value.
  • If you’ve been involved in an accident or discovered your vehicle has been severely damaged, be sure to call the police, then contact your insurance provider right away to start the claim process.
  • If your car is totalled and you have appropriate insurance coverage, you may receive a payout up to your vehicle’s current cash value.

What Should You Do If Your Car Is Totalled?

If you’ve been involved in a car accident or your vehicle was damaged by the elements or by someone else, here’s what you should do immediately following the incident:

Step 1: Ensure Your Safety 

If the situation involves a collision, make sure you and any other occupants are safe and unhurt. Seek medical help if required right away. If possible, move to a safe location out of harm’s way.

Step 2: Report The Accident And Exchange Information With Others Involved

Call 911 and file a police report, which you can use when you file your insurance claim.

If there are any other drivers involved in the incident, exchange information, including the following:

  • Name and contact information
  • Insurance information
  • Vehicle information

Step 3: Call Your Insurance Company

Reach out to your insurance provider as soon as possible and start the claims process. You’ll need to provide the following information:

  • Details of the accident
  • Photos of the damage
  • Police report (if applicable)

Your insurer will assign a claims adjuster to your case who will assess the damage and determine if your vehicle is a total loss.

Step 4: Understand Your Insurance Coverage

Your specific insurance policy will determine the type of coverage you have. It’s helpful to understand your policy’s coverage, which will determine how much you receive for a totalled car. Coverage options include the following:

  • Collision Coverage: This component covers your vehicle if the accident was your fault.
  • Comprehensive Coverage: This component covers non-collision incidents, such as theft, vandalism, and natural disasters.
  • Gap Insurance: This type of insurance covers the difference between the remaining balance on your car loan and the insurance payout.

Learn more: Car Insurance


How Does An Insurer Decide If Your Car Is Totalled? 

Every car insurance provider has different policies. However, most insurers will consider your vehicle ‘totalled’ once it’s damaged beyond fixing or when any repairs would cost more than its actual cash value (ACV). So, if the repairs exceed 70% – 80% (varies by provider) of what your car was worth prior to the collision, your insurer may write it off as a total loss.

Ultimately, your insurance provider has the right to determine if your car will be repaired or if it’s considered a total loss. 

What Other Factors Do Insurers Use To Determine Coverage Eligibility?

Other factors that car insurers commonly use to determine your eligibility for coverage:

  • The age and condition of the vehicle (before and after the crash)
  • Safety issues the car presents and whether they’re repairable
  • The estimated cost and repair time of all damage
  • The costs of salvaging the vehicle

The evaluation of the potential car insurance claim (done by a claims adjuster) will also be based on a number of situational factors, like the location and circumstances of the collision. If your car meets at least one of these conditions, it will usually be considered totalled:

  • Its airbags have been deployed
  • Its structure is damaged beyond repair (reasonable safety)
  • Any repairs would cost more than its cash value

Essentially, if the insurer doesn’t think it’s worthwhile to cover the repairs, they’ll label your car as a total write-off.


What Types Of Payouts Can I Expect If My Car Is Deemed Totalled?

If your insurer determines that your car is a write-off, you may qualify for one of two payout types: 

Not At-Fault Accident And Totalled Loss Payout

If you’re not responsible for the crash, the insurer will provide direct compensation for property damage (DCPD), in the form of a settlement that’s equal to your vehicle’s current cash value.

At-Fault Accident And Totalled Loss Payout

If you’re at fault, the insurer will only pay the cost of replacement if your policy has comprehensive insurance. In this case, the payout varies according to the car’s cash value, minus your deductible. 

Learn more: What Is Accident Forgiveness Insurance?


How Is A Car’s Value Calculated?

Value estimates of vehicles can be conducted by a mechanic or qualified witness and may include factors, such as the following:

  • Make, model and year
  • Condition before and after the crash
  • Mileage
  • Interior or exterior upgrades/modifications

For example, if your car is over 10 years old and already has a lot of mileage and wear and tear, the repairs might cost way more than what it’s worth on the market. Even minor damage can lead to a total loss when it diminishes the vehicle’s safety or drivability.

Learn more: What Is My Car’s Value In Canada? 5 Ways To Find It


How To File A Claim With Your Insurance If You Totalled Your Car? 

Assuming you’ve already exchanged information with other drivers, taken photos of the damage to your vehicle, and called the police to file a report, here are the general steps to claim a car crash on your insurance:

Step 1: Contact Your Insurance Provider

Call your insurance company to file a claim. Provide them with your policy number, accident details, and supporting documents.

Step 2: Schedule A Vehicle Inspection

An insurance adjuster will be assigned to your case and will assess the damage to your car to determine if it’s a total loss. Photos of the vehicle may be enough, but if not, you may be required to take your car to an approved repair shop.

Step 3: Review The Settlement Offer

If the adjuster determines that your car is totalled, you’ll receive an offer based on the vehicle’s actual cash value. 

Step 4: Decide Whether To Accept The Insurance Payout Or Keep Your Car

You have the option to either accept the payout amount and surrender your vehicle, or keep the car and take a reduced settlement.

Step 5: Take Care Of Your Car Loan Or Lease Obligations

If you still have an outstanding balance on a loan, your lender will be paid out first from the proceeds of the insurance payout. If the payout is not enough to cover the remaining loan balance, you’re responsible for making up the difference, unless you have gap insurance.


How To Negotiate A Car’s Value With Your Insurer

If you think your insurance provider’s first settlement offer is too low, there may be a few things you can do to negotiate a larger payout after your car is totalled, including the following:

  • Research – Don’t accept an offer until you get the car’s true value. Go online, see a reliable mechanic and collect any documents to support your claim. The more evidence you show the adjuster, the more negotiating power you’ll have.
  • Get A Lawyer – If you need help or think your insurer’s offer is unfair, hiring an attorney may save you stress and may help earn you a larger payout. However, it can be pricey, especially if you go to court. With that in mind, getting a lawyer should perhaps be your last resort if you don’t want to spend extra money.
  • Ask For A Written Settlement – Once you negotiate a fair settlement, remember to get all its conditions in writing. This will hold your insurer to their agreed payout amount and protect both parties if the terms of the settlement are ever violated.

How Much Will You Get If Your Car Is Totalled? 

If your car is totalled and your insurer says you’re eligible for coverage, the amount of your settlement payout could vary according to a number of factors:

  • Your Policy – If you have a comprehensive car insurance policy, you may be able to add “new car replacement” to your plan. Doing so covers the purchase price of a car of equal value. While this can raise your premium, it provides wider coverage than regular collision insurance; which doesn’t offer any payout.
  • Actual Cash Value (ACV) Coverage – This less expensive add-on compensates you for the ‘current’ value of your car (pre-collision). The value is determined by subtracting the car’s depreciation amount from its former purchase price. A car’s ACV is assessed using factors like mileage, age and pre-existing damage.
  • Appraiser’s Assessment – Insurers also adjust your payout according to their appraiser’s evaluation of the damage, combined with their own research into comparable vehicles and the investigation of your claim. If you can reach a fair settlement, the insurer will normally issue you a check, minus your deductible.
  • Financing – As mentioned, if you owe money on your car from a loan or lease, the insurer pays your lender first. Any positive balances will then be sent to you by cheque (if the car is worth more than you owe). Unfortunately, if you don’t have gap insurance, you have to pay any negative balances which means you will owe more than the car’s value.

How Long Will It Take To Be Paid Out?

If your car is deemed a total loss by your insurer, it could take up to two weeks to receive your payment. Ultimately, the amount of time you wait depends on how long it takes for your claim to be processed. Your claims advisor will communicate with you and keep you informed throughout the stages of your claim.


Final Thoughts

If your car is totalled, speak to your insurer right away and get expert advice. Totalling a car is a scary and dangerous event, which might leave you with a large bill afterwards. For this reason, it’s highly recommended to have a comprehensive insurance policy in place to ensure coverage in unfortunate cases where your car is totalled.


FAQs On Totalled Cars

How fast will I get my payout?

After you’ve arranged a settlement amount for your totalled car, most insurers will send you a cheque for the car’s write-off value, minus any applicable deductibles. It may take a couple of weeks to receive your payout, but the process varies from provider to provider.

Will my insurance increase after a total loss?

It depends on the circumstances of your car crash. If you’re at-fault for the collision, your insurance rates will increase. If you were not at fault, the insurance rate may not increase.

Can I keep my car if it’s been totalled?

Yes, you might be able to negotiate with your insurer and hold onto your car as part of the settlement, including its actual cash value. However, its salvage value and your deductible are not included. Keep in mind that you may have to cover any repair costs from that point on.

What if I’m not happy with my totalled car’s appraised value?

If you don’t agree with your insurer’s total-loss assessment or settlement offer, there are several routes you can take, such as negotiating further or hiring a lawyer. As a Canadian, you also have the right to file an ‘appraisal appeal’ under the country’s Insurance Act.

What happens to my car if it’s totalled?

If you have the right coverage and your insurer considers your vehicle a total loss, they should pay you its cash value, minus your deductible. Afterward, cars will typically be scrapped with the parts sold and salvaged for extra money.

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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