My Friend’s Car is Totaled But Still Drivable: What Does it Mean?

Firstly, let’s discuss what a totaled car is. A vehicle is considered totaled when the cost to repair it after an accident exceeds its actual cash value (ACV), or more than a set threshold percentage of its value.

This threshold percentage varies by state, typically ranging from 60% to 80%. For example, my friend’s car was worth $20,000 before the accident, and repairs are estimated at $18,500, and the state’s threshold is 75%.

In that case, his car would be considered totaled because $18,500 is more than 75% of $20,000, which is around $15,000.

Now, moving ahead, it is not necessary that a totaled car can be undrivable. A vehicle may remain drivable despite the incurred damage, including functional tyres, steering, and all other mechanisms involved in the operation.

Total Loss Threshold Percentage by State

What about States with no Threshold Percentage Set?

There are several states, such as California, Delaware, Georgia, Hawaii, Illinois, Massachusetts, New Jersey, Ohio, Pennsylvania, and Washington, that have set no total loss threshold percentage.

In that case, the insurance company uses a total loss formula. The formula is the car’s fair market value minus the car’s salvage value. Sometimes, the insurance company directly takes the totaled car to a salvage yard to see what it would pay for the wreckage.

Suppose my friend’s vehicle’s fair market value is $20,000, and the salvage value comes to $5,000. According to the total loss formula, we subtract $5,000 from $20,000, which leaves $15,000. Now, if the repair cost exceeds $15,000, the insurer would total the car.

Can My Friend Still Drive a Totaled Car?

Yes, he can still drive his totaled car. But before taking the vehicle back onto the road, he needs to take care of some important things mentioned below;

Safety Concerns

The first major thing that my friend needs to look for is hidden safety hazards still existing in a totaled car. It is essential to assess the extent of the damage by having it thoroughly inspected by a professional.

This inspection should encompass central components, like the engine, body frame, tyres, steering, and suspension, to ensure they meet safety standards.

If there is damage to these central components, it compromises the vehicle’s crash integrity and can be extremely costly to fix. It can put him and others at serious risk. That’s when insurers often treat a totaled car that is still drivable with caution.

Legality

Before driving a totaled car, my friend must also be aware of some legal implications. After a vehicle is deemed totaled, most insurance companies report the incident to the state and issue a salvage title for the car.

It means the car has been marked unroadworthy. It can’t be legally driven on public roads until it has been properly repaired and passes a state inspection.

How Much Can My Friend Expect From the Insurance Company?

Whenever a car meets with an accident, the insurance company visits to assess the damage. They will inspect the vehicle and review the repairs. The insurer will determine whether the repair cost exceeds the car’s actual cash value.

If yes, they will consider it a total loss. Then the insurer will only pay the car’s actual cash value minus the deductible or any other fees. The actual cash value (ACV) will be calculated using factors like mileage, condition, local market value, and optional equipment.

The insurance company will also determine which kind of insurance will cover the expenses, depending on the type of accident.

What Insurance Covers a Totaled Car?

• Comprehensive: This type of insurance covers damage expenses not caused by a crash, but caused by a natural disaster, such as flood, hurricane, and more.
• Collision: My friend’s car crashed into another vehicle that falls under collision insurance, covering damage caused by a crash with another car or immovable object, such as a fence or lamppost.
• Property damage liability: If you’re in an accident and there is fault of another driver, their property damage liability will cover the repair costs of your vehicle.

Remember that if you’ve a loan or lease on your vehicle, the lender will ask you to pick the collision or comprehensive insurance coverage.

Can My Friend Keep the Totaled Car?

As I’ve told you at the start of the article, the insurance company has considered my friend’s car totaled but still drivable. So, he decided to keep the vehicle.

But there is a process of keeping a totaled car. Once the insurance company considers a car totaled, you’ll receive paperwork outlining the claim, the value determination, and instructions on signing over your car title to the insurance company.

Sometimes, the insurer also offers the option to transfer the vehicle to a salvage yard directly. At this point, you will have two choices. One is that you can accept the amount the insurance company is paying and surrender the vehicle.

Secondly, if you want to keep the car, just like my friend, retain ownership through a buyback option. Yes, you can buy your vehicle back from the insurance company for a small amount, typically deducted from the total payout.

For example, a car is valued at $8,000, but it’s worth $1,000 in salvage. In that case, the insurer will offer you $7,000 to keep the vehicle. Once you’ve reclaimed the car, it will be reclassified as a salvage title by the State’s DMV (Department of Motor Vehicles).

Now, you’ll be responsible for any repairs and safety inspections to drive the car legally.

What Happens If My Friend Still Owe a Loan Amount on His Totaled Car?

If my friend still owes some loan amount on his totaled car, keeping it will become the most complicated job for him. Most lenders won’t allow to keep a totaled car under an active loan. He may be obligated to pay off the loan regardless of whether he decides to keep the car or not.

That’s where gap insurance comes into play. It will help him cover the difference between the car’s actual cash value and the loan amount he still owes. However, most of the policies even cover the collision or comprehensive deductible.

Challenges My Friend May Face to Keep a Totaled But Still Drivable Car

One of the biggest challenges my friend may face in keeping a totaled vehicle is securing insurance coverage. Most of the insurance companies are hesitant to provide full coverage for a car with a salvage title due to the increased risk of lower resale value.

In that case, the best thing he can do is secure liability-only insurance, in which he’ll be completely covered if he causes damage to others. Still, his vehicle won’t be protected in the event of an accident.

Even if he finds an insurance company that is ready to insure his salvaged title vehicle, the premiums might be higher, and the payout in future claims will likely be much lower.

If he tries to sell his totaled car, even if it runs fine and looks great, he will face a lot of difficulties in trading it in at dealerships. Most of the dealers won’t accept the salvaged-title vehicles.

However, private buyers may be ready to take the risk, but only after thorough documentation of repairs and inspections.

What Should You Do If Your Car is Considered Totaled But Still Drivable?

There are a few important steps you need to take if your vehicle is considered totaled but still drivable.

• Document the Damage: The first major step you should take is to document the damage thoroughly. Make sure to click pictures of the entire vehicle inside and out, including taking close-ups of the damaged areas.
• File a Claim: Now, contact your insurer to file a claim. They’ll guide you regarding the insurance options, and even tell you whether you’re at fault or are partially at fault.
• Keep Records: Make sure to keep the records of your interaction with the insurance provider and the adjuster. You can save your email correspondence and make notations of dates and times of phone calls.
• Access the Damage: The insurance company will send an adjuster to assess your damaged vehicle. It will conduct an inspection to estimate the cost of repairs, gathering necessary evidence, such as photos and videos of the damage from the cars. It will also help the adjuster to decide whether you’re at fault or not.
• Know your car’s actual cash value: The insurance company will determine the actual cash value of your vehicle before the accident.
• Contact your lender: If you still owe some loan amount on your totaled car, you must inform the financing company about the damage and continue paying. If you stop paying, it will negatively affect your credit.
• Negotiation: If the insurance company decides the actual cash value for your vehicle which is too low, you have the right to negotiate it. You have to prove why your car is worth more than what the insurer is offering.
• Buyback procedure: Want to keep the totaled car as it is still drivable? You should follow a buyback procedure. You can buy the vehicle back from the insurance company for a small amount, typically deducted from the total payout.

Wrapping Up

It is possible that a vehicle, after being declared totaled, can be drivable. But the possibility also came with a dangerous misconception. If you decide to keep the totaled car, you should consider whether it’s safe, economically repairable, and roadworthy long term.

Safety should be your top priority. If some core components of your car get damaged in the accident, it will seriously jeopardize your safety in another crash. Therefore, before driving a totaled car, make sure to have it inspected by a professional.

With safety risks, there are several legal risks also associated with keeping a totaled car, as I’ve discussed in the article above. Lastly, if your vehicle has been considered totaled but is still drivable, before taking any action, take some time to understand the full picture.

Consider the safety and legal risks before taking the car onto the road.

Safe Driving!

Sources: Kelley Blue Book, The Barnes Firm