Can I Buy My Totaled Car Back From the Insurance Company?
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If your car has been in an accident or has sustained damages by other means, and your insurance provider determines the costs to repair are too high, they may just consider it a total loss. Rather than providing payments for repairs, your insurance provider will instead just send you a cash payment for the value of the damaged car.
But, what if you want to buy your totaled car instead? Although insurance providers are pretty trustworthy when it comes to determining when a car is totaled and beyond repair, only the owner knows its true value. For whatever emotional, financial, or other reason, the option to buy your totaled car is available. Here’s what you need to know.
When Is a Car Considered Totaled?
There is a bit of confusion as to how insurers determine that a vehicle is a total loss. Some people think that airbags deploying, the axle breaking, or the frame bending automatically make the vehicle totaled. While these can all be characteristics of a totaled car, they do not necessarily automatically make the car a total loss.
Most insurance providers will classify a car as totaled when damages are greater than 60% to 70% of a car’s market value. This is the market value of the car when the accident occurred, not how much you paid for the car originally. Cars are one of those tricky assets that depreciate rapidly over time. Few cars retain their value.
In some cases, insurance providers will classify a car as totaled if the damage is not greater than 60% or 70% but if the vehicle cannot be repaired safely. This can mean severe damage to the engine, airbag system, or steering, for instance. And, some states have certain limits as well that dictate an insurance provider’s evaluation.
So, if your car was purchased for $30,000 7 years ago, it may only be worth $12,000 when it was hit. That valuation considers age, condition, mileage, and other factors. So, if the cost to repair the vehicle is near or greater than $8,400 ($12,000 * 70%) your provider will likely consider it totaled. The exact figures used by providers vary and are available upon request.
Essentially, the costs to repair the vehicle are so great that it would be more valuable to look for a new ride. So the insurance company will hand you a check to do just that instead of paying for repairs.
For you as the driver, it is important to consider whether you truly want to drive a car with a repaired engine, brakes, suspension, or steering. The problem might only get worse after repairs.
How Can I Buy My Totaled Car Instead?
If you decide that you want to keep your totaled car instead, you can request to buy it from your insurance provider. The specifics of this process will vary between providers. In most cases though, there will be some similarities.
You won’t necessarily “buy” your vehicle from the insurance company, the insurance company instead will determine the value of your totaled and deduct that from the check they would’ve normally given you.
To get started, you will need to determine the valuation of your totaled vehicle. You can do some research yourself and request additional appraisals to ensure you are not getting cheated on the valuation. The market value of a car is largely determined by its interior and exterior condition, age, mileage, and accident or repair history.
After you and the insurance company have settled on a fair price, there will be some deductions. Your insurance provider will deduct your insurance deductible as well as the estimated salvage value. The salvage value is the amount of money the provider could have received from a salvage auction.
So, to keep with the example above, let’s say your car was valued at $12,000. If your deductible was $500 and the salvage value of the vehicle was determined to be $2,500, then a total of $3,000 ($500 + $2,500) will be deducted from your appraised value. This would leave you with a totaled vehicle and a check for $9,000 ($12,000 – $3,000).
What Can You Do With a Totaled Vehicle?
Once you decide to buy back your totaled vehicle, you are probably going to wonder what you can do with it. Here is what you need to know:
- You cannot drive it: In most cases, you cannot drive your vehicle if it has been classified as totaled. Cars with a salvage title are illegal to drive and need to be kept in storage. This includes totaled cars with primarily cosmetic damages. Before you can drive the vehicle again, it needs to be fully inspected and certified. Plus, you’ll need to check with your insurance to see what coverage is available to you moving forward and if you need to purchase additional options.
- Repair it: You can take that $9,000 check and put it towards repairs to your vehicle. Remember that the damage done to the vehicle is likely to be greater than $9,000. You should get estimates before jumping into any repairs and having to pay hundreds or thousands of dollars out of pocket.
- Salvage it: If you decide after a while that it would have been wiser to just salvage the vehicle from the beginning, you can still do so. Check with local salvage yards to see what they would offer. There are also online salvage options available. Or, you might be able to find a buyer on social media or Craigslist.
- Purchase a new vehicle: If you decide to salvage the vehicle and save the check, you can put all that money towards another car. It can make a great down payment on a new vehicle or can help purchase a used one.
Final Word on Buying Back Your Totaled Vehicle
If your car has been classified as totaled, it was likely done so with good reasoning. There are certainly major problems that need attention before hitting the road again.
Take time to consider all your options before just agreeing with your insurance provider’s decision. Make sure to get your own valuations and estimates. Also, consider your own financial situation. Purchasing a totaled car back can be valuable if there are primarily cosmetic issues or if you know that you can salvage it for more money. But, remember that all this takes additional time and energy.