5/19/2011 11:30 AM ET|
Should you keep your 'totaled' car?
Sometimes cars can be safely repaired, postponing the cost of buying a replacement. But before you go that route, there are some important questions to ask.
Crashed your car? Bummer. Even worse is getting a call from your auto insurance company saying it's a total loss and should go to the junkyard.
Your attachment to your vehicle may be sentimental. In some cases, your bond may be financial: You may not be able to replace the totaled car with the money your insurance company is willing to pay.
Typically, cars are totaled when damage exceeds 65% or 70% of the vehicle's market value. Rick Ward, the director of auto claims for MetLife Auto and Home, says the standard for deciding when a car is a total loss varies by company and may be set by state regulators. You can find out the threshold by contacting your insurance agent.
Working with your auto insurance company
Car insurance companies find that many older cars are simply not worth repairing.
"We determine the value of your car through market research," explains Ward. "There are three software providers that provide vehicle valuations, Blue Book averages and what cars are selling for in your area through dealer networks." But this software isn't available to consumers.
According to the Highway Loss Data Institute, the average cost for collision repair in 2009 was $4,245. If you think your totaled car is valuable enough to justify a repair, you can contest your insurance company's decision to declare it a total loss, but be prepared to provide evidence that the car is worth the effort.
If you can demonstrate good maintenance and mechanical improvements, you may be able to win your totaled car a reprieve. Its age and mileage will be key factors.
Keeping a vehicle your insurer has totaled
If you decide to accept the insurance company's decision to total your car but you still want to keep it, your insurer will pay you the cash value of the vehicle, minus any deductible that is due and the amount your car could have been sold for at a salvage yard. It then will be up to you to arrange to make repairs.
"They will cut you a check," says Ward, and then you're on your own.
Dan Young, senior vice president of insurance relations for the Carstar auto body repair group, says safety should be your primary concern when keeping a totaled car. "If there is a way for you to find someone to repair the car or make it safely drivable, that is great," he says.
If damage to the totaled vehicle is mostly cosmetic, you may be able to put it back into service for a modest cost. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go.
There is a good reason why car insurance companies are cautious about fixing badly damaged cars, says Ward. "Cars are complicated. All damages are not visible. Once you start dismantling, often you find additional damage."
Peter Moraga, spokesman for the Insurance Information Network of California, suggests that you think twice about repairing a car that has been seriously damaged. If the professionals who work for your automobile insurance company think the car is beyond repair for a reasonable cost, it probably is.
"A lot of damage goes unseen," he says. "There can be cracks in the frame or damage to airbags."
Finding coverage for a totaled vehicle
Ward says you may run into trouble when you seek auto insurance for a car that has been declared totaled. Your ability to buy collision and comprehensive coverage may be affected.
"That is really up to each individual company," he says. Before you decide to fix your car, check to see if that is an issue." Some insurers will not accept a car with "a branded title," he adds. "It basically puts a stamp on it that says it is a salvaged vehicle."
Ward notes that the federal government has established a database called the National Motor Vehicles Title Information System to provide information to car shoppers. "All total losses are recorded by the insurance companies. What this does is provide consumers with a database to see if a car has been previously salvaged." That means don't count on being able to unload your vehicle on a buyer.
Is repairing a totaled car worth the effort?
Only you can decide whether repairing your totaled car is worthwhile.
"The best thing is to be well informed," says Ward. "Talk to your mechanic. Do your research. Make sure you know what you are getting yourself into."
Young has seen more and more drivers deciding to repair and keep their "totaled" vehicles.
"People don't want to go down the road of having a $500-per-month car payment anymore" because of the tight economy, says Young. "Cosmetically, it may not look as good as it did before, but they are not going into debt for a new car purchase."
This article was reported by Emmet Pierce for Insure.com.
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this is why I love driving a clunker. I pay cash for it and run it into the ground over the years. Sure, I'll still do the regular maintenance, but everyone has to do that. If my paid-in-full car gets in an accident somehow, I just throw it in the gutter, and go buy another.
Being a clunker, it's also not a thief magnet, so I usually leave my keys in the ashtray. I know where they are and I don't worry about it.
I take care of my car and do my best to make sure it lasts a long time. Yes, I get sentimentally attached to them, but I'm also not afraid to drive around with a dented fender or mismatched paint colored hood. It's MY car until it dies. Then I get another car to be MY car,
My 1993 Silverado pickup truck has been totaled twice in its lifetime. Both times I took what the insurance company was willing to pay and repaired it myself at a local body shop. The net combined repair costs out of my pocket came to just under $10,000.00. Several people called me 'foolish' but my reply to them was and continues to be this.
$10,000.00 is a lot less than $18,000.00 to almost $30,000.00 for an equivalent new truck. Secondly it remains paid for so I am not paying interest on a huge loan, Thirdly the licensing, insurance, and routine maintenance remains a lot less than for a new vehicle. And finally I still have a nice looking functional truck that is perfectly safe, economical to drive, and runs like a Swiss watch.
We have become a 'disposable nation' where everything we own has a certain amount of planned obsolescence built into it. Home appliances used to routinely last at least 20 years. Now you are lucky if they make it to the end of their warranty period. However American made automobiles have suffered such a beating by foreign auto makers that their quality and durability has quietly improved dramatically. If you are conscientious about maintenance and upkeep most cars will serve you well for a very long time and this includes American products.
Now if you just want a change of scenery and are tired of your old vehicle then be my guest and hit the showrooms. However be prepared to pay a very large price for a metal box that serves no other purpose than to carry you and yours from point A to point B comfortably and safely. My old car and truck do just that and I see no reason to incur a huge debt just to 'look cool' or out do my neighbors. LOL
There are a few things this article failed to mention:
1. You can challenge your Ins. Co., over the amount (usually 70%), your Co. is willing to pay when they total your vehicle, and I believe you can get an arbitrator involved.
2. There is optional insurance you can buy, to cover the gap between what your Ins. Co. pays, and what it would cost to replace your vehicle with a "used like" vehicle.
3. Never just accept what your Ins. Co. offers, hold out for more! If they won't budge, TAKE THEM TO COURT! They charged you plenty for the Ins. Premiums didn't they??!
Cannot anyone see the Vehicle Insurance People's GAME?? They promise you better rates if your a good driver,....no accidents, no tickets, etc., etc.. So,.... you are inclined to become this great driver, and have no accidents, but you keep paying the Ins. Co. the premiums which they Keep FOREVER, if you have no accidents! You NEVER get your money BACK, when the day comes that you quit driving, and have had NO ACCIDENTS, now do you??! Some of these younger folks out there are paying $2000+ a year for auto insurance, well if they decide to keep their vehicle for 10 years or so, they've pretty much paid for another vehicle wouldn't you say??, but that money's gone if they've had no claims! I just don't think it is right, the way it is done these days! There should be some kind of reward at the end of the tunnel if you are a "good driver"!! BUT, all I can see is the GOOD DRIVER PAYING FOR THE BAD DRIVERS OUT THERE!
My 2001 Ford Focus was totaled in 2009 and being on Disability made a new car purchase "null and void". I am so glad I got my car repaired. Haven't had any problems w/it since. The insurance company gave me a $2500 chk, the repairs w/labor cost $1500, and I pocketed the rest. I have liability insurance. Long story short: repairing was the best and only option for me.
Twice we've had older cars that were worth less than $2k hit by other people and the insurance companies wanted to total the vehicles because the cost of the repairs exceeded the cost of the repairs. Both times the damage was cosmetic. We were able to have the insurance company just write us a check for the value of the car less what they would have received from a junkyard and put that money aside for the next car and just continue to drive the car with big dent in it. It wasn't pretty, but the cars didn't look that great before the accident either. They didn't change the title to salvage or anything. I have a little dent in the 2007 car I have now. Stupid little bumping into something in the driveway thing. They wanted $800 to fix it. No way am I paying $800 to fix a little dent smaller than the palm of my hand. I'll just live with it for the next 10 years.
My car was totalled by a drunk, who fell asleep, and hit it while it was parked. He admitted to it being his fault...although, the cops took so long to get there...he was sober...not anexageration!
Anyway, the car wa 11 years old, and they settled with me for an amount I wasn't satisfied with...I threatened to get an atty, and they bumped it up 3000.
The fact also, was they wouldn't let me keep the car..I could have had it repaired for far less than what they paid me...the system is broken, and needs to be fixed....Maybe we can total it and make a profit?
I have nothing against an independent doing body work, but i know for fact in the community i live in going to a Dealership is no more expensive than the individual. I had someone hit me, insurance wanted 3 quotes, both independent shops asked to see the dealership "bid" and pretty much just went off that. The Dealership Manager that did the quote went over the car twice to be sure nothing was missed. I was told by the dealership they would fix a small dent in my car as well, (which i paid a little extra for) and did, all paint matched. Once they started on my car there was damage that was hid when the quote was given. They dealt with the Insurance Company and made sure it was taken care of, I had to do nothing. Insurance Companies sometimes try to tell you where you have to take your car, but you can call BS because it is YOUR car and YOU pay the premium. It is Your choice where you have repairs done! I know people that have bought back their car after it was called totaled, and did fix it for the money paid by insurance. Going to a dealership to me is the best option, because the one i go to has cars they loan, no insurance to hassle with over that. I guess bottom line is "trust". Take it to someone you trust!
Play hardball with the insurance company. One of the best keep secrets is that you, the consumer, have the right to make the insurance company replace the car. They will kick and scream and try every way to not have to do that, including telling you that you don't know what your talking about. Push it up the chain, cause odds are the insurance adjuster your talking too is unaware, on purpose or not, that you have this right.
Stick to your guns, get your state's insurance commissioner involved, and/or get an attorney. It's about money, your's or the insurance company's. Your time is worth something more than a check for your totaled car. If they think it is so easy to just go out and buy a car, then by all means, point out that its just as easy for them too.
This can be done, but you have to stand up and tell them what it will take to make you whole again.
Older car, low ball check, just say 'replace the car.'
Other financial issues aside, it comes down to how many extra years of good performance and reliability you can reasonably expect to get out of the repaired car and how much you're spending per year to get those extra years. For example, if I spend $3000 to get 3 more years, that's $1000/year. If I bought even a low-priced replacement, like the Hyundai Elantra, made in Alabama, It would cost me around $18,500 up front (taxes, shipping, etc above $17125 MSRP) and be drive-train guaranteed for 10 years. That's nearly $1850/yr. If I keep it 15 years that's still above $1000/yr, though I would save $500/yr or more on gasoline at $4 or more/gallon.
So in my case: I'll repair my car if I think, after advise from mechanic friends, I can get one additional year of good, reliable running for every $1000 I put into it. Otherwise, it's time for a new car.
Then there are those "other financial considerations." For example, delaying a new car may allow someone to delay beginning his/her Social Security or Pension a couple years, making them worth a few thousand per year more. In such cases, the band-aid approach becomes more valuable.
Forgot to mention that since the dealership where my repairs were completed was an approved State Farm dealer, I didn't have any problem continuing my coverage with State Farm and without any increase in my rates (even though I was at-fault on the accident).
A lot of this could be applied to working with the medical profession and all there "test". There should also be a place there of if the "body work" is needed. Oh yes could a lot of it be also based on the insurance returns over the need? Small world. Don't pick on the hard working auto repair folks.
Good people wonder why premiums continue to escalate the way they do, EAP's comments about feigning an injury, constituting fraud is a primary reason why. The amount of money that is spent investigating this and the myriad of other fraudulent claims as well as employing the resources to pursue these bogus claims is astronomical.
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