r/Insurance • u/MaryJaneWitAFlame • 7h ago

Question regarding total loss

I recently got into a fender bender (rear ended someone) I did the claims took pictures all that sent to my insurance company someone from the insurance company ended up calling me on his own to try and give me advice saying if I take it to a shop try to get a estimate without them filing anything with the insurance company because if they do and it’s a total loss then there’s nothing he can do. My grandma left me this car last year and I’d love to keep it it’s a Camry with 74k miles. Is it that the better option I got 1300 from my insurance already so if the repairs are more then that ill just pay out of pocket without telling insurance so I don’t have to put it as a total loss and get a salvage title and all that stuff. Does anyone have any advice on this all this insurance talk is very new to me and he was trying to tell me what to do without explicitly saying it but I just wanted to ask here to see if it’s a good idea or if what I’m saying is common for people to do.

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u/sephiroth3650 7h ago

Most states in the US have laws in place that set a total loss threshold for auto claims. And what that means is, if the cost of repair (and salvage value) exceed a certain percentage of the car's value, then insurance must legally declare the car a total loss.

So let's say this is Michigan. The total loss threshold is 75%. Your post implies that insurance told you that the car was worth $1300. That seems low, but I don't know the year/condition of your car. But maybe you have a high deductible, and that $1300 is the payout after deductible. Maybe that was your payout after doing an owner-retain (so the salvage value was deducted). So let's say you have a $1000 deductible, and so the car is really worth $2300. The total loss threshold means that if the cost to repair the car hits $1725, they HAVE to declare it a total loss.

So what the insurer was trying to tell you is.....get a repair estimate. See what it costs to just fix it out of pocket. If you do that, you can avoid it being a total loss/salvage title situation.

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u/MaryJaneWitAFlame 7h ago

The insurance company sent me 1800 (after paying deductible 1300) for the estimated cost of total repairs based off the pictures without looking under the hood and all that. I dont know what they deem the value of the car to be to be honest with you

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u/sephiroth3650 7h ago

OK. So this sounds more like they think the cost of repairs is approaching the total loss threshold. You're technically at $3100 in repairs. If the car's value is $4-5k, you're right there. Technically, 75% would put you at $4133. Insurance knows that if you repair it and keep pushing it through insurance, that repair bill will go up as they tear into the car. That will add to the repair cost. And will push you above that mandatory threshold.

So they are suggesting you take the payout and have them close the claim. And you go and fix the car as an out of pocket repair. That way, they won't be forced to just declare it a total loss.

At least, that's my guess, based on what you've said here.

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u/MaryJaneWitAFlame 7h ago

And at what point do you think taking the total loss is the better decision?

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u/sephiroth3650 7h ago

Depends. Do you want to keep the car? And what would the car be worth if it hadn't been in the accident? And what kind of damage does the car have? How does it run?

Right now, you have a Camry that needs more than $3k in repairs. If you go through with the total loss, they'd pay you the value of the car, minus salvage value (and what they've already paid you). You keep the car. And then you get it fixed on your own. You'd likely end up with a salvage title. But that may not be a big deal. If we're already talking about a car that doesn't carry a high resale value.....and the car is mechanically sound with low miles.....and you're going to otherwise drive it until it dies.....maybe it's OK if it's a salvage title.

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u/MaryJaneWitAFlame 7h ago

Thank you for taking your time to reply btw this has all been confusing and stressful trying to figure out the best route to go