Let's talk about car values. There are a few items of information we need to know first, such as: Has your car been "totaled" by the insurance company claims adjuster? Is it now being towed to a salvage yard because it has been rendered unusable in an accident?
The laws of states vary somewhat, but typically there are state laws involved with "totaled" vehicles in order to keep unsafe "junk" from being driven on public highways. Part of each insurance companies' procedures must follow the state statutes in order to comply in the claims process.
Generally, the definition of "totaled" means the cost of repairing the vehicle will exceed its "blue book" trade-in value, or a value which is the lowest possible price that a similar car can be purchased by a car dealer.
So, if your car is worth $4,695 trade in value, but the body shop will require $7,000 from the insurance company to repair it, then the claims adjuster will have no other choice by state law, and the insurance companies' own guidelines, than to total the vehicle.
Assuming the collision coverage in your auto insurance policy has a $500 deductible, you would receive from them a check for $4,195, which would be the Actual Cash Value (ACV) of the vehicle, $4,695, minus the $500 deductible. Of course this is a hypothetical example and may be overly simplified.
For more information on how the worth of your vehicle is determined it is usually done by comparing your vehicle's model condition to similar vehicles in your area. This may include input from local auto dealers, private parties or recent sales which the adjusters use in their valuation. Condition, equipment and mileage differences are all taken into consideration.
In addition, your insurance company may use a computerized evaluation process to assist them in determining the value of your vehicle. Insurance companies purchase third party computer systems that help them estimate costs in automotive claims and collision repairs. Third party software supplies insurers with software and a database that helps determine the value of a vehicle based upon automating the claims process. These systems have databases and systems that contain benchmarking tools to find the true value of a vehicle from repair shops and dealers.
Once an the ACV amount of your vehicle is determined and accepted by you, if you want to negotiate on the amount you will need to prove to the insurer that your car is worth more than their offer usually this is done by proving from local dealers estimates that your car was worth more, than the vehicle would become the property of the insurer so that you could receive your settlement payment.
So the insurance company would, by state law have you sign over the title of the vehicle to them and take legal possession of your vehicle. They then normally sell the vehicle to a salvage yard and have them pick up the car. If the car is not junked then it is required to have a special state issued (branded) title, which is called a "salvage title" in most states.
In many states a salvage titled vehicle legally indicates the status of the car is one that means it is not drivable on the roadway. Now, usable parts will be taken off the car, and eventually the shell and frame will be sent to the auto crusher and sold so the steel can be melted down and reused in a future manufacturing process. If the car can be repaired than it may be taken to an auction and resold to someone who would fix it and get the car inspected to so it was roadworthy. The title may remain as salvage but in many states it would get changed to "rebuilt" or "previously salvaged" so that anyone that buys the car in the future is aware that it was in an accident and totaled out but repaired to be made roadworthy.
There have been numerous instances when someone was in a vehicle accident, which totaled their favorite car and they wanted to buy the vehicle from the insurance company, and have it repaired at the extra cost. This is allowable in some states but not others. In some states it depends upon the age of the car if you can repair the car and keep it. For example in Illinois you can only keep (buy back) the vehicle if it is 9 years or older or only sustained hail damage that did not affect the operational safety of the vehicle.
Because laws are involved even if you keep the car it is required by most all states Department of Motor Vehicles that they brand the vehicle and you have to trade in the clean title for a salvage title on the car. Again as we mentioned if you have the car fixed your state may have a rebuilt branded title that you can trade the salvage in for.
My second car a few years ago was a sleek, teal colored T-Bird, which was a very pleasant little car to drive. It had brand new tires, the transmission and engine were kept in "like new" condition, and it was a real pain to lose it.
Unfortunately one pleasant Sunday afternoon I was driving down one of our little country two lane roads here in Florida when a person pulled out in front of me while I was doing 50 miles per hour. I skidded almost to a stop before I hit him in the driver's side door. Gladly, no one was hurt, except the T-Bird and the other fellow's car.
It was enough damage to the front end of the car that the cost of repair easily exceeded the total value of the car. Even though the car was repairable, I had to give it up since it did not make sense to keep it. My insurance company paid me for the car, about $2,000, but I would have had to pay them roughly $1,800 to purchase the vehicle back. Then I would be out the $3,000 it would have taken to repair the vehicle properly, and to have it certified drivable so a proper title (rebuilt) could be issued. So you see it is not a win-win situation when this sort of thing happens to you.
The laws vary from state to state, so if you do desire to re-purchase (buy back) and repair the car, you may need the assistance of an attorney. Usually it is fairly "cut and dry" by law, so if you have a cooperative claims person at the insurance company you may be able to work out something on your own. Normally if you want to buy back the vehicle and you do not have a line holder than the salvage value of the vehicle would be taken out of your settlement amount and then you could keep the car and get repairs made. So if we go back to the numbers from earlier and your settlement check is for $4,195 and the salvage value of the car is $1000 than you would get back $3,195 from the insurance company and get to keep the car. You would have to trade in your clean title for a salvaged title with your DMV and now pay for repairs.
If the repairs are minor and you really want to keep the car because you know it is reliable and you could not replace it for the cost of the repairs you may want this option or you may just want to move on, take your insurance claim money and go shopping for another new or used vehicle. It is wise to find out the cost of repairs before asking to buy back your car. Since you already know from the car being totaled out that the cost of repairs are more than the value of the car you have to decide what the best choice for your situation is.
Whatever the case, always keep your car protected by maintaining your insurance policy coverage. If you do end up signing over the title to the insurance company and letting them take it away as salvage make sure that you follow your state's laws for turning in the license plates and then taking insurance off of it so that you are not hit with penalties for a lapse of insurance on a non-operational vehicle.