• Review your auto policy with your agent now, before an accident
  • Research what rights your state provides victims of a total loss
  • You may be able to retain a totaled car, but that's usually a bad idea

You survived the accident, but how do you cope with a totaled car?

Once you've been involved in an accident, much of your fate - as it applies to your wrecked car - is in the hands of others. There is some opportunity for your input, as well as procedures for you to challenge decisions made on your behalf; generally, once your car is towed away, the insurance companies take over.

Knowing what comes next can certainly minimize some of the stress accompanying more serious accidents, as well as providing a game plan for dealing with the insurance companies and getting on with your life.

Here's what you should know:

You can't unring the bell.

It's always smart to hope for the best and prepare for the worst.

According to CCC Information Services that tracks auto insurance claims, 12 to 14 percent of all post-accident insurance appraisals result in a total loss. This percentage has been tracking relentlessly upward since 2002.

That means if you are in an accident, there is a one in seven chance that your car will be a total loss.

Do you know how your insurance company determines if a car is a total loss or what formula it uses to calculate the check it will cut once it declares a car totaled? Do you know if your policy covers a rental car? If so, for how much and how long? Do you know the procedure and your rights for challenging the settlement amount?

No? Now, not after you've been in a wreck, is the time to have your insurance agent sit down and explain your auto policy's mouse print. Not only do you want the opportunity to make needed changes, but most agents will be more helpful and forthcoming before a claim is filed.

Each insurance company has its own methodology for deciding if a car is totaled and establishing its value. Many states also get into the act, further sharpening the total-loss definition.

Before an accident is also the time to determine if you should have gap insurance to cover the difference between what your car is worth and the balance you owe the finance company, this is called Gap Insurance. Remember to include your insurance deductible in the math. You don't want to be left holding the bag for hundreds or thousands of dollars if the settlement check from the insurance company doesn't cover the payoff amount of the loan you are still responsible for.

A good rule of thumb: If you are less than halfway through the term of your auto loan - two years on, say, a five-year loan - you probably need gap insurance. Check with your agent, most companies will let you add gap insurance at any time.

How does an insurance company define total loss?

One constant among all insurance companies is that total loss is a function of how much it will cost to repair a car versus what an insurance company will have to pay out in a total-loss claim.

If it costs more to fix the damage minus your deductible than the market value of the car and what the insurance company thinks it can get selling the wreck at the salvage yard, the insurance company will declare it a total loss.

The amount of damage is a factor only as it relates to the car's value. That is, an insurance company will probably choose to repair $3,000 damage to a one-year-old Mercedes-Benz, but consider a ten-year-old Ford Mustang with same amount of damage is a total loss.

Know your rights.

Every state regulates the auto insurance companies doing business within its borders - some states more than others.

After an accident, go online and research your state's department of insurance. It should provide all the information you need on insurance claims, as well as a list of your rights and the insurance company's responsibilities.

Familiarize yourself with the site because it will be the first place you go if you don't feel the insurance company is treating you fairly.

What should the check include?

When an insurance company declares a car a total loss or write off, the settlement it pays should be based on the market value of the car before the accident.

Insurance-company adjustors have their own resources for establishing a market value for your car, but they probably include online pricing sites and actual records of recent transactions.

From that market value they will subtract your deductible and any costs related to disposing of the wreck. To the settlement total they may add the estimated sales tax, as well as the registration and title costs of a replacement car.

Defend your rights.

After an accident, become proactive.

During the next few weeks, you are going to have to make several decisions; it makes sense to begin preparing yourself as soon as possible.

Any number of Web sites can help you determine your car's value. Kelly Blue Book (KBB.com), for example, has a "Car Values" calculator where you enter you car's information and it will provide an estimated market value.

If you don't have an idea what your car is worth, the insurance company can tell you anything and you'll have no basis for agreeing or disagreeing with their number.

The amount of the settlement they offer should have some relation to the estimated value you researched after subtracting the amount of your deductible and their expenses for disposing of the wreck.

If you have reason to question the proposed settlement, your policy may include the right to hire your own appraiser and get a second opinion. Most states have a procedure for settling the dispute if there is a difference between the appraisals.

Understand, though, that no matter the outcome of an arbitrated settlement, you will still have to pay your appraiser, as well as probably pick up some of the arbitration costs.

Decide if you want the car back.

For any number of reasons, you might decide you want to keep the car and repair it yourself. You may have the right to do this - particularly if you own it outright - but it may not be a smart course of action.

If you are considering keeping the car, let the insurance company know immediately.

You also will need to do the research because some states won't permit an owner to retain a car declared a total loss, and some insurance companies won't insure a car it or another insurance company has declared a total loss.

Furthermore, the settlement amount will probably be less if you keep it because the insurance company may deduct the car's salvage value.

How long until you see a check?

There is no set time line from the date of the date of the claim until it's paid. The more involved the accident, the longer it may take to sort things out. It could take three or four weeks, or as long as 60 days, if there are no challenges.

What does it mean to you? A totaled car is never a plus to your bottom line, but the negative impact can be minimized by knowing your rights and doing your homework.

author photo

Russ Heaps began covering the automotive industry in 1986, first overseeing the automotive pages of the Boca Raton News and then the Palm Beach Post in Florida. In 2001 he became managing editor of AMI Auto Week and NOPI Street Performance Compact magazines. Since leaving AMI he has freelanced his auto reviews and industry analysis to the Washington Times, Hispanic magazine, Journal-Register Newspapers, Bankrate.com, MyCarData.com, Interest.com, and others. He resides in Greenville, SC.

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