Considerations

When a car is totaled, you will receive a check from the insurance company for the value of your car before the accident took place. This procedure will be more cost effective, for the insurance company, than having the vehicle repaired.

Effects

An insurance company will total a car out if it determines that it costs more to fix the car than the car is actually worth. If your car is valued at $4,500 but the repairs add up to $5,000, this would be considered a total loss.

Significance

After the insurance company totals your car, there is a chance that you could still owe money. When the value of your car is the same or less than what you owe, you could still have a balance to pay.

Expert Insight

Your insurance company may decide to total your car if the amount needed to repair it plus the salvage value is greater than the value of the car. The salvage value is what the insurance company could receive if it sells your car to a salvage dealer.

Features

Some insurance company will use a percentage method to determine if a car is a total loss. When repair expenses are in the area of 51 percent to 80 percent of the car's actual value, the car will be considered a total loss.

Warning

All costs involved are factored into the decision to total a car. Some of the expenses incurred are storage and the cost of a rental car while a car is being repaired.

Source:

Progressive.com: total loss

Insure.com: auto insurance forum

Carinsurance.com: How is my car determined to be a "total loss"?