Auto insurance

Understanding total loss claims

March 18, 2019 by PEMCO Insurance

​When most people hear a car is a "total loss," they envision a demolished mess. But when an insurance company uses the term, it can mean different things. For example, if a car is stolen and not recovered, it is a "total loss," or if a car's estimated cost to repair  the damage plus its salvage value is likely to exceed its fair market value, it is a "total loss." Older cars, in particular, can be totals with purely cosmetic damage.

"Your car is a total." This can be hard news to receive. You know your car's maintenance history and use, and it may have been "in the family" for years. A total means it's likely you'll be starting over with another car (although there is a process for keeping a total—we can walk you through that option if it's right for you).

PEMCO is committed to freeing our communities to worry less and live more. A big way we do that is partnering with you to help you understand next steps and choices as you get your life back to normal after an accident.

Here are answers to some common questions about total losses.

What should I expect after I hear my car has been "totaled?"

Know that PEMCO's in your corner. Once we receive your claim, a total loss specialist will promptly reach out to work with you to settle your claim quickly and fairly. The process usually unfolds in four steps:

1) Accurate valuation. Your specialist will work with you to determine your car's fair market value (or "actual cash value") immediately prior to the loss. (See more below.) We'll add applicable taxes and government fees to this value, less your deductible if applicable, to reach the full settlement amount.

2) Paperwork exchange. Once we've agreed on a settlement amount, we'll exchange paperwork as required by the state. (See more below.)

3) Payment. Depending on whether you own your car outright or are making payments to a lender or a leasing company, we'll send checks to the appropriate parties.

4) Salvage. The car will be sent to a salvage yard to be sold for parts or repair. If you are keeping the totaled vehicle, we'll work with you on a process called "retained salvage." (See more below.)

How does PEMCO establish a fair market value for totaled vehicles?

PEMCO uses an independent company to research the fair market value of your vehicle as of the moment immediately prior to the loss, based on its year, make, model, mileage, condition and options. We'll also consider additional relevant information you give us, such as evidence of recent work done on the car or other research you have on the value of the car.

Then we'll add applicable taxes and government fees to the fair market value amount, and subtract your deductible if it applies, to reach an overall settlement offer. You'll have an opportunity to address any incomplete or incorrect information we have on the car, and to discuss value further. You can also request a copy of the valuation report from us if we haven't already sent it to you.  

The full process can take several business days to complete, or longer if your car is unique or rare. Keep in mind, if you have a loan on the car, we'll need to pay the lender first and the remainder to you. Sometimes the value of the car is less than what you still owe on your loan. If you don't have an auto loan endorsement on your policy (which makes up the difference), PEMCO will pay your lender and you'll be responsible for the remaining balance of your loan. If you have loan gap insurance elsewhere (like through your lender), just let us know, and we'll provide the needed valuation information.

How will I get around without my car?

We may be able to help!

If you're a PEMCO customer and you purchased rental reimbursement coverage on your policy, we can pay the cost you incur for a rental car up to the "per day" and "per occurrence" limits, while your car isn't drivable or is being repaired. After we've declared the car a total loss and made an offer to settle the claim, we'll pay the cost of an additional five days of rental car use.

If you don't have rental reimbursement coverage, other coverages may still help you with a rental car, depending on the facts of the loss. Was your car stolen, damaged by an uninsured motorist, or damaged by a driver carrying liability insurance? All these scenarios might result in some coverage for the cost of a rental car while you're without yours.

What will happen to my wrecked car, and what​ about my personal belongings that were inside?

If you don't want to keep the damaged car, we'll ask your permission to move it to a secure salvage yard, where it will be stored until it's sold at a salvage auction. (We'll pay for towing and storage if you give us permission to move the car.) That's when you'll want to collect any personal belongings still in your car and turn over your keys, along with any spares you have.

If you want to keep the damaged car, we'll walk you through that process as well. (See more below.) .

What paperwork is involved?

When we settle your total loss claim, we essentially buy your vehicle from you. As with the sale or transfer of any vehicle, the title must be exchanged and recorded with the state. The title sign-off process and paperwork varies depending on your situation. We'll guide you through the steps and help you get the forms you need. If you can’t find your title, we’ll help you with that paperwork as well.

What if I want to keep my damaged car?

You can do that! If your car is still roadworthy (for example, an older car that received only cosmetic damage), you could choose to keep it and make repairs on your own. In that case, we'll pay you the settlement amount for the car minus what we would have gotten from the salvage yard had we taken possession and sold it at a salvage auction. If the car isn't drivable at that point, we'll pay to tow it to your home or to a nearby repair shop of your choice.

The process is called "retained salvage," and we're required by law to report to the state that the car was damaged badly enough to be considered a total loss. The title will then be branded so that any future buyer will be aware the car was once declared a total.

We urge you to carefully consider the pros and cons of keeping a salvage vehicle. Like many insurance companies, PEMCO does not accept vehicles with branded titles. Besides having more severe losses compared with other cars, they have safety and mechanical concerns that can impact the well-being of everyone on the road. Branded titles identify vehicles as "totaled" in addition to other notations including "salvage," "junk," "dismantled," "flood," "fire" and "hail."

For vehicles with a "Rebuilt" or "Reconstructed" title, we can't offer physical damage coverage (collision, comprehensive, towing and rental reimbursement). 

Remember, you're not in this alone! If you have questions or concerns, call our Claims Department at 1-800-841-6031. Or, call 1-800-GO-PEMCO and tell them you have a total loss question.

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