What Is A "Totaled" Vehicle, And How Is It Determined After Flooding?

A "totaled" vehicle, also known as a "total loss," is a term used in the insurance industry to describe a vehicle that has sustained damage or incurred repair costs so significant that it is considered economically impractical to repair. In other words, the cost of repairing the vehicle exceeds its actual cash value (ACV), which is the fair market value of the car before the damage occurs. When a vehicle is deemed totaled, the insurance company will typically choose to settle the claim by paying the policyholder the ACV of the vehicle instead of covering repair costs. Here's how a vehicle is determined to be "totaled" after flooding:

Initial Assessment: After a car has been involved in a flood, the insurance company initiates an assessment of the damage. This assessment is typically conducted by a claims adjuster, who examines the vehicle to evaluate the degree of the damage and estimate the cost of repairs.

Comparison to Actual Cash Value (ACV): The adjuster compares the estimated repair costs to the vehicle's ACV, which is determined based on factors like the car's age, make, model, mileage, and condition before the flood. If the estimated repair costs exceed a certain percentage (often around 75-80%) of the ACV, the vehicle is likely to be declared totaled.

State Regulations: Some states have specific regulations and thresholds for determining when a vehicle is considered totaled. These regulations may dictate the percentage of ACV at which a vehicle must be declared a total loss.

Salvage Value: The adjuster also considers the salvage value of the vehicle. Salvage value is the estimated amount that the damaged vehicle could be sold for as scrap or to a salvage yard. If the salvage value is relatively high compared to the repair costs, it can make financial sense for the insurance company to declare the vehicle totaled.

Safety and Mechanical Issues: In the case of flood-damaged vehicles, there are often safety and mechanical concerns that go beyond the visible damage. Floodwater can cause damage to critical systems like the engine, transmission, and electrical components. Even if the visible damage seems repairable, these underlying issues can make it unsafe or impractical to restore the vehicle to a roadworthy condition.

State Requirements for Totaled Vehicles: Some states have specific requirements for vehicles that have been declared totaled due to flood damage. For example, they may require a "salvage title" to be issued for the vehicle, indicating that it has been significantly damaged. These titles can affect the vehicle's resale value and require additional steps before it can be legally driven again.

Settlement: When a vehicle is declared totaled, the insurance company will usually offer a settlement to the policyholder. This settlement is based on the ACV of the vehicle, minus any deductibles and, in some cases, minus the salvage value if the policyholder chooses to keep the vehicle. The policyholder can accept the settlement or negotiate with the insurance company if they believe the ACV assessment is inaccurate.

In summary, a "totaled" vehicle is one that has sustained damage so severe that the cost of repairs exceeds its actual cash value (ACV) before the damage occurred. In the case of flood-damaged vehicles, factors like safety concerns, mechanical issues, and state regulations play a role in determining whether a car is declared totaled. If your vehicle is declared totaled after flooding, your insurance provider will offer a settlement based on the ACV, and you can decide whether to accept it or pursue other options, such as retaining the salvage.