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What is the car total loss process? Once you are in an accident, the insurance company must inspect the vehicle and determine whether the damage was substantial enough to declare a complete loss.
Most insurance companies will want to inspect the vehicles themselves. In most accidents, insurance companies have approved body shops write estimates and they eventually issue payment based on that estimate. However, when there is a potential for a car total loss, most insurance companies want their insurance adjuster to inspect the vehicle.
The reason for this is the conflict of interest that arises from the arrangement between the insurance company and the body shop. Body shops are in the business of fixing cars. They have a vested interest in quoting the repairs so the car can be fixed and not declare it a car total loss.
For all practical purposes this means that you will be waiting longer. Usually it takes two to three business days for the body shop to issue a repair estimate. If the claim adjuster or the field representative has to inspect and write their own estimate, then you will be waiting three to five more days to get to the location of your car.
Before the adjuster comes out, she/he will submit all pertinent information about your car (year, make, model, and mileage) to a third party company. This company usually is CCC Information Services Group, Inc. CCC will do a preliminary report to determine what the value of your car is so the adjuster knows what the insurance company would be looking to if there is a total loss.
Depending on your state law and the specific insurance company, there will be a car total loss when the insurance company believes that the cost to fix the car reaches 70%, 80%, or even 90% of its total value. It is always a good idea to ask the adjuster what is the threshold they use to determine a total loss.
When the vehicle is being estimated by the car total loss adjuster, this individual will be looking at the condition of the vehicle. They will note how “clean” the vehicle is, what is the exact mileage, and what equipment and options the car has. All of this information will be reflected in the final evaluation of the vehicle.
Next, the adjuster must determine who the lien holder of the vehicle is. If you have a car loan, the insurance adjuster must get that information so they can contact the bank to determine how much is owed. There are different requirements insurance companies must follow. If the insurance company you are dealing with is your own (you are claiming the car total loss against your own insurance company) then they will be bound by the terms of the policy, which 99% of the time requires them to pay the bank first. If you are making a total loss against someone else’s insurance company (the person that hit you), then this requirement does not exist (there is no actual policy to be bound by).
If you have a loan, then the insurance adjuster will request from the bank a Letter of Guarantee. This letter is an agreement between the bank and the insurance company that for the payment of x amount, the bank will release the title of the car to the insurance company directly. This process usually takes four to five days.
If the amount you owe for the car is less than what the insurance company will pay for the car total loss, then the insurance company will pay the loan amount and then issue you a second check directly. If the loan amount is higher than what the car total loss offer, then you will be upside down your loan. You will be required to continue making payments even though the car title will be transferred to the insurance company.