Who Decides if Car is Totaled?
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When a claim for damages to a car is made, the insurance adjuster often uses the term "totaled." That term means, in the opinion of the insurance adjuster, it would cost more to fix the car than the car was worth immediately before the wreck.
Who decides whether a car is totaled in a collision and what is the significance of that determination?
Insurance companies like to declare that a car is "totaled." When doing so, they seek to obtain the title to the car and pay the owner for the value of the car before the wreck. Insurance companies then move the wrecked car to a salvage yard where car dealers buy the wrecked cars at auctions. You would be surprised at how much these wrecked cars bring at auctions. Uninformed car owners assume that they salvage value of a "totaled" car is only a couple hundred dollars. Usually, these cars bring much more, usually at least several thousand dollars. In buying the wrecked cars from the owner, the insurance company avoids a dispute about the salvage of the car and they profit from the high dollars that these salvage vehicles bring at auctions.
You are not required to sell your wrecked car to the insurance company.
You do not have to accept the adjuster's opinion that a car is "totaled."
The amount a court will award for damages to a car is the difference between the fair market value of the car immediately prior to the collision and its value immediately after the collision. The cost of repairs is some evidence of the difference in the value but it does not determine the amount you can recover.
If, for example, an older car was worth $1,500.00 before the collision and it would cost $5,000.00 to repair, it would not make economic sense to repair the car and the court would not set the damages at the $5,000.00 cost of repair. The recovery could never be more than $1,500.00 (the car's pre-accident worth).
There are many cases, however, in which the car owner would be better off to keep the title to the car and either have the car repaired or sell the car to a salvage yard. If this were not a smart move, the insurance companies would not be so eager to obtain title to the car.
There may be other reasons why an owner would want to keep title to a salvage car. It could be that it would make more sense to have a car repaired if even the cost to repair the car exceeds the fair market value than to deal with buying and financing a car to replace the wrecked car.
If a car has sentimental value to the owner, or if the owner feels the car may one day be a collectors item, it may be better to have the car repaired even if the costs of repair exceeds the before-accident value.
The point is, only the owner of a car has the right to decide what is to be done with the car. It is the owner's decision...not that of the insurance company.
For more information on this subject matter, please refer to the section on Car and Motorcycle Accidents.