Can I Keep a Car Deemed a Total Loss?
If you have recently been in a car accident and your insurance provider has determined that your vehicle is a total loss, you still may be able to bring your car home before it hits the salvage yard. The big question to ask yourself, however, is whether you really want to keep it.
What Is a Total Loss?
Insurance providers label cars as total losses if the cost of repairs is more than the value of the vehicle at the time of the accident. Specific definitions can vary from state to state and from insurer to insurer. Additionally, if your insurer decides that the damage to your car is so substantial that it cannot be repaired safely, it will be deemed a total loss, cost considerations aside. If there is a question of whether the vehicle can be restored to a safe driving condition, you should definitely cut your losses and gratefully cash the check your insurance company sends you.
In most jurisdictions, once your insurer decides to write off your vehicle as a total loss, its title is branded as a salvage. Your carrier will determine the actual cash value of your car—taking into account its make and model, mileage, condition, and options—and cut you a check. The insurer then will auction off the vehicle for its salvage value.
Considerations Before Keeping a Totaled Vehicle
The two main reasons to keep a totaled vehicle are to salvage it yourself for the spare parts or because you believe it can be repaired and made safe and driveable again. You might be right, but consider a few factors before making your decision.
This is the big one. If the insurance company doesn't think repairs are worth it, you have to be sure that you can get actual value out of the vehicle. If you are not an expert mechanic, be sure to get the opinion of one. However, one of the few ways such a vehicle can be worth keeping is if you are a mechanic and can do the repairs yourself for significantly less than it would cost to pay another mechanic.
A totaled vehicle is a danger to you and other drivers if not properly repaired.
You may face difficulty getting your state's department of motor vehicles to approve the repairs and re-brand the title as a “rebuilt." You will have to get your repaired vehicle inspected, and if the state won't sign off, you will not be able to drive your car on publicly owned roads.
You may have trouble finding a carrier willing to insure your repaired vehicle—and you definitely will find it impossible to locate an insurer willing to insure your vehicle before repairs have been made. Insurance companies are reluctant to write a policy on a car once it has been branded a salvage vehicle. You may only be able to get liability coverage and nothing more.
Don't get too excited about bringing your baby back home if you don't actually own it. Remember, if the vehicle is financed and you haven't paid it off, it may not be yours to keep. The financial institution that holds the loan will have the final say.
If you are concerned that you may owe more than your vehicle is worth if it becomes totaled, you should look into gap insurance, which will cover the difference for you.
A salvage title reduces the resale value of your vehicle by 20% to 40% or even more. If you decide you don't want to keep the car later, you probably won't find as willing a buyer as your insurance company would have been.
Depending on where you live, your state laws may not even allow you to keep a totaled vehicle. Your agent will know the rules in your area as to whether keeping the vehicle is even an option for you.
If You Still Want to Keep Your Car
If you still can’t bear to part with it, and your state doesn’t prevent it, you should be able to come to an arrangement with your insurer to keep your beautiful wreck. Your carrier will determine payment on your accident claim the same way it would if you were not keeping your car, except that the settlement amount will be decreased by the vehicle’s salvage price.