When you are in a car accident, your vehicle can suffer many types of damage. The damage may be small, serious, or very severe. Collision insurance helps pay for repairs to your car after a crash.
Sometimes the damage is so serious that fixing the car would cost more than the car is worth. When this happens, the insurance company may declare the car a total loss. This means the cost of repairs is higher than the car’s current market value, which is often called the total loss threshold.
After you file your insurance claim, the insurance company looks at what your car was worth right before the crash. This amount is called the actual cash value. They also review an estimate of how much it will cost to repair the damage.
If the repair costs are less than what the car is worth, the insurance company will pay to fix the car. You will still have to pay your deductible.
If the repairs would cost more than the car’s value, the insurance company may declare the car a total loss. In that situation, they will usually pay you the car’s actual cash value minus your deductible instead of paying for the repairs.
If you were hurt in a crash and are dealing with insurance questions about a totaled vehicle, it may help to speak with a Virginia Beach car accident lawyer from Shapiro, Washburn & Sharp. An attorney can explain your rights, deal with the insurance company, and help you pursue compensation for your injuries and other losses.
How Virginia Decides When a Car Is Considered a Total Loss
In Virginia, insurance companies often consider vehicles to be total losses when the repair costs equal roughly 75 percent of the car’s actual value, although insurers may use their own evaluation methods when determining whether a vehicle should be declared a total loss. If it would cost the insurance company about three-quarters of what the car was worth before the crash to fix it, they may decide that the car is totaled. This calculation only looks at the cost of repairs compared to the car's value; it doesn't include the car's salvage value.
Some other states use a different method called the total loss formula, which takes into account the car's salvage value. Virginia does not usually use that formula when deciding whether a vehicle should be declared a total loss.
What if My Car Is Totaled and I Don’t Have Insurance?
If you do not have collision insurance and you caused the accident, you may not receive payment from your insurance company for your car. In that situation, one option is to salvage the vehicle. This means selling the damaged car as it is. The money you receive can help you put something toward buying another vehicle.
What Happens if I Have Gap Insurance?
Gap insurance is different from regular car insurance. It can help if your car is totaled, and you still owe money on a loan or lease. Cars lose value over time. This is called depreciation. Because of this, your car may be worth less than the amount you still owe on it.
If you are in a serious crash and the car is totaled, your collision insurance usually pays only the current value of the car, not the amount you still owe on the loan or lease. This can leave a gap between what the insurance company pays and what you still owe. Without gap insurance, you may have to pay that remaining balance out of your own pocket.
You can usually add gap coverage to your current car insurance policy for a small extra cost. In many cases, it costs about $15 to $40 per year. Buying gap insurance through your regular insurance company is often the least expensive option.
What Happens if I Still Owe on My Car When It’s Totaled?
If you do not have gap insurance and your car is totaled while you still owe money on the loan, the insurance company will usually pay the lender the current value of the car.
If that amount is less than what you still owe on the loan, you will be responsible for paying the remaining balance. You should continue making your loan payments so you can finish paying off the loan and avoid damage to your credit.
What if My Car is Totaled But Still Drivable?
If your car is declared a total loss and the insurance company pays you the car’s actual cash value, the vehicle is usually treated as a salvage vehicle. If a vehicle is declared a total loss, the insurance company usually applies for a salvage certificate with the Virginia DMV. If you keep the vehicle after settlement, you may need to apply for the salvage certificate yourself.
A car with an operational salvage certificate can’t be registered or driven on public roads in Virginia until it is properly repaired and approved.
If your car can still be driven, you may be able to ask the insurance company for a smaller payment and keep the car instead of having it declared a total loss. You could then choose to repair the car yourself. However, your current insurance company may decide not to insure the car after that. If that happens, you may need to look for liability insurance from another company.
What if Someone Else Was Driving My Car When It Was Totaled?
In Virginia, auto insurance policies usually cover people who have permission to drive the car. But the policy and the circumstances of the crash will determine what is covered. This means your insurance may apply even if someone else was driving your vehicle. If a crash happens and your car is totaled, your collision insurance may pay for the damage. However, this generally only applies if the person driving your car had your express permission to use it under Virginia law § 38.2-2204.
If you clearly gave someone permission to use your car, then you gave them express permission. Sometimes, the situation itself may also suggest that permission has been given. For this reason, you should be careful about who you let drive your car, especially if they aren't on your insurance policy. When you let someone else use your car, it's best to give them clear and limited permission.
If your friend borrows your car with your permission and is in a crash that was not their fault, the at-fault driver’s insurance is responsible for paying for the damage.
What if Someone Else Totals My Car?
If the other driver caused the crash, their property damage liability insurance should pay for the value of your car, even if you don't have collision insurance.
But insurance policies only cover certain things. If your car is worth more than the other driver's policy limit, their insurance might not cover the whole amount. If you have uninsured or underinsured motorist coverage, you might need to file a claim in that case. If you don't have that coverage, you might have to sue the other driver or pay the rest of the bill yourself.
What if My Car is Totaled by an Animal or the Weather?
Even if another driver isn't involved, a car can still be totaled. A crash with an animal or damage from bad weather, like hail or flooding, can do a lot of damage to a car. Drivers usually can't control these kinds of events, and they are often hard to see coming or stop. In these cases, comprehensive insurance usually covers things. This is different from collision or liability insurance.
Virginia law does not require comprehensive insurance, but it can give you extra protection. If you still owe money on the car, a lender or leasing company may require it in some cases. If your car is totaled in one of these events, comprehensive coverage will usually pay you the car's actual cash value minus your deductible.
When you have both liability and collision coverage, as well as comprehensive insurance, your car insurance is often called "full coverage."
Even if the damage is bad enough to total the car, comprehensive car insurance usually doesn't cover these kinds of damage:
- Normal wear and tear: Damage that happens over time from using the car regularly is not covered.
- Hitting something that isn't moving: Collision insurance usually covers hitting things like a house, fence, guardrail, or telephone pole, but not comprehensive coverage.
- Damage from bad roads: Collision coverage usually covers damage caused by potholes or rough road surfaces, not comprehensive insurance.
- Damage to the car caused by animals: Depending on the terms of the policy, comprehensive insurance may cover damage caused by animals, such as chewed wires.
If your car is totaled in an accident or damaged in some other way, it's important to know what your options are. You might want to call your insurance company to find out what kinds of coverage are best for you and your situation.
Talk to a Virginia Beach Car Accident Lawyer
If you have questions about insurance after a crash or a car that was totaled, it might be a good idea to talk to a Virginia Beach car accident lawyer before you agree to a settlement. A lawyer can look over the offer and help you figure out if it fairly covers your losses.
The lawyers at Shapiro, Washburn & Sharp have helped numerous accident victims stand up to insurance companies. In one case, our firm secured a jury verdict of $150,000 for a client after the insurance company refused to offer a fair settlement that addressed the worsening of a pre-existing medical condition.
To schedule a free consultation, call (833) 997-1774 or fill out the contact form on our website. Shapiro, Washburn & Sharp has offices in Virginia Beach, Norfolk, Hampton, and Portsmouth.
