Auto Insurance Claims: rear end collision, Total Loss

Question
Just the other day while returning from school I was rear ended at an intersection. The light was green but due to traffic I could not cross until it was clear on the other side, so I waited at the light to cross. I was then rear ended at what seemed full speed. The rear of my car was crushed pretty good. The other driving admitted to being distracted by someone waiving a sign at the corner, and said it was most likely his fault. I didn't not have a police report filed,and tried to handle it on my own. The other driver did have insurance. He has now turned off his phone. My car is not worth much, but it is all I have. Will his insurance total my car and leave me trying to get another, or will they write a check for the damages? And will my rates go up at all? I was in no way at fault.

Answer
Hi Karissa,

When Is A Vehicle A Total Loss?

Financial Total Loss
Most insurance companies will declare a car, light truck, or SUV to be a total loss when the preliminary cost of repairs  reaches some pre-determined percentage of the vehicle's value. Generally, the percentage used is anywhere from 70% to 80%. A total loss is declared when it is determined that it is in the insurance company's best financial interest to declare the vehicle a total loss. This percentage is an insurance industry practice and in most cases is not related to a state law. There are only a few states that require a vehicle be declared a total loss when a certain threshold is met. Most states allow an insurer to repair a vehicle all the way up to 100% of the vehicles value.  Another way insurance companies calculate if a vehicle should be totaled is to determine what they could sell the salvage for and then subtract that figure from the value of the vehicle. If the cost to repair the vehicle exceeds that figure then the vehicle is a total loss.

The Total Loss Claim Process

Step 1: Determining the vehicle to be a Total Loss
When you are involved in a collision, you will report the claim to either to your own insurance company or the insurance company of another at-fault party.  The insurance company will assign a damage estimator to inspect the damage and write a repair estimate. Once the estimate is written, the repair cost will be compared to the value of the vehicle. Generally, insurance companies will declare a vehicle to be a total loss if the cost of repairs is more than 70% to 80% of the vehicle's value.   

Step 2: Doing Your Homework
If you have been informed that your vehicle is a total loss, the insurance company will then take usually a couple of days to determine the value they are going to offer you. During this time, you should do your own research to determine the fair market value of your vehicle. The easiest way to do this is by using the internet. You should check www.autotrader.com . There you can search for currently for sale vehicle like yours, in your area. You should try to locate 5 to 10 vehicles of the same year, make & model, with similar options and mileage.  Print out the listings you find and average the values. This will give you a good average value to use as a baseline. However, you must understand that the prices you find are asking prices and virtually all of those prices will be negotiated downward to some degree.  Now when the insurance company makes you an offer you will know if it is within a reasonable range or not.   

Step 3: Negotiating and Settling Your Claim
Now that you know what your vehicle is worth and what the insurance company is offering you, it is up to you to negotiate if the offer is not reasonable. You can start by sending the documentation you collected in step 2 above and making a demand of what you are seeking to settle the claim. If the insurance company does not properly negotiate with you then you may have to hire a professional vehicle appraiser to properly establish the value of your vehicle.  If you are dealing with your own insurance company you can invoke the appraisal clause of your policy. This is a part of your policy that is there to help settle disputes in value between you and your insurance company.

Since you were not at fault, this incident will have no affect on your premiums.

I hope this helps
Richard Hixenbaugh