What is the car total loss process? Once you are in an
accident, the insurance company must inspect the vehicle and determine whether
the damage was substantial enough to declare a complete loss.
Most insurance companies will want to inspect the vehicles
themselves. In most accidents, insurance companies have approved body shops
write estimates and they eventually issue payment based on that estimate.
However, when there is a potential for a car total loss, most insurance
companies want their insurance adjuster to inspect the vehicle.
The reason for this is the conflict of interest that arises
from the arrangement between the insurance company and the body shop. Body shops
are in the business of fixing cars. They have a vested interest in quoting the
repairs so the car can be fixed and not declare it a car total loss.
For all practical purposes this means that you will be
waiting longer. Usually it takes two to three business days for the body shop to
issue a repair estimate. If the claim adjuster or the field representative has
to inspect and write their own estimate, then you will be waiting three to five
more days to get to the location of your car.
Before the adjuster comes out, she/he will submit all
pertinent information about your car (year, make, model, and mileage) to a third
party company. This company usually is CCC
Information Services Group, Inc. CCC will do a preliminary report to
determine what the value of your car is so the adjuster knows what the insurance
company would be looking to if there is a total loss.
Depending on your state law and the specific insurance
company, there will be a car total loss when the insurance company believes that
the cost to fix the car reaches 70%, 80%, or even 90% of its total value. It is
always a good idea to ask the adjuster what is the threshold they use to
determine a total loss.
When the vehicle is being estimated by the car total loss
adjuster, this individual will be looking at the condition of the vehicle. They
will note how “clean” the vehicle is, what is the exact mileage, and what
equipment and options the car has. All of this information will be reflected in
the final evaluation of the vehicle.
The adjuster will then submit the inspection report again
to CCC. CCC will send a final report showing comparative prices for the vehicles
in your local market. They will establish what the fair market value of the car
is and what a fair offer of settlement would be. For more information on how to
dispute this report visit:
Next, the adjuster must determine who the lien holder of
the vehicle is. If you have a car loan, the insurance adjuster must get that
information so they can contact the bank to determine how much is owed. There
are different requirements insurance companies must follow. If the insurance
company you are dealing with is your own (you are claiming the car total loss
against your own insurance company) then they will be bound by the terms of the
policy, which 99% of the time requires them to pay the bank first. If you are
making a total loss against someone else’s insurance company (the person that
hit you), then this requirement does not exist (there is no actual policy to be
If you have a loan, then the insurance adjuster will
request from the bank a Letter of Guarantee. This letter is an agreement between
the bank and the insurance company that for the payment of x amount, the bank
will release the title of the car to the insurance company directly. This
process usually takes four to five days.
If the amount you owe for the car is less than what the
insurance company will pay for the car total loss, then the insurance company
will pay the loan amount and then issue you a second check directly. If the loan
amount is higher than what the car total loss offer, then you will be upside
down your loan. You will be required to continue making payments even though the
car title will be transferred to the insurance company.
Once you receive payment for your loss, you will be able to
go out and get another car. For more information the total loss process and how
to protect your interest, visit: