Accidents happen. Sometimes, the damage to your car is so bad that the insurance company declares it “totaled.” But what does that really mean? And if you’re in Arizona, who gets to keep the car afterward? Let’s break it down in simple terms.
What Does “Totaled” Mean?
First things first. When a car is called “totaled,” it means the cost to fix it is more than the car’s value. In Arizona, insurance companies usually total a car if repairs would cost 70% or more of what the car is worth. For example, if your car is worth $10,000 and repairs are estimated at $7,000 or higher, the car is considered totaled.
It’s not just about dents and scratches. Totaling a car can happen even if the damage looks small. Sometimes, structural issues or hidden damage make repairs way too expensive.
Who Decides if the Car is Totaled?
The insurance adjuster decides. After the accident, the insurance company sends someone to inspect the car. They check the damage and estimate repair costs. Based on this, they make the call.
Once the car is totaled, the insurance company offers to pay you the actual cash value (ACV) of the car. This is the car’s market value right before the accident, not what you paid for it originally.
So, Who Keeps the Car?
Here’s where things can get interesting. In Arizona, the answer depends on what you want. You actually have a choice.
Option 1: Let the Insurance Company Take It
Most people choose this route. When you accept the insurance payout, the insurance company takes the car. They usually sell it to a salvage yard or auction it off. This is the simplest option. You get paid and don’t have to deal with a wrecked car.
Option 2: Keep the Car
If you love your car or think you can fix it, you can keep it. The insurance company still pays you the ACV, but they subtract the car’s salvage value. This is the amount the car would have sold for at a salvage auction.
For example, if your car’s ACV is $10,000 and the salvage value is $2,000, you’ll get $8,000 and keep the car.
What Happens If I Keep It?
There are a few extra steps if you decide to keep the car. Arizona law requires that the title be marked as “salvage” or “restored salvage.” This lets everyone know the car was previously totaled.
If you fix the car and want to drive it again, you have to pass a state inspection. This ensures the car is safe to be back on the road. After that, the car can get a “restored salvage” title.
Why Would Anyone Keep a Totaled Car?
Sometimes, the damage is mostly cosmetic. If the engine and major parts are fine, fixing the car might not be too expensive. Some people also keep totaled cars for sentimental reasons. Maybe it was their first car, or it has special memories.
Others might part it out. Selling individual parts can sometimes bring in more money than the whole car.
Are There Downsides to Keeping a Totaled Car?
Yes. A salvage or restored title lowers the car’s resale value. Even if you fix it perfectly, people may be hesitant to buy it.
Insurance can also be tricky. Some companies won’t fully cover a restored salvage car. You might only get liability insurance, not full coverage.
What If I Don’t Agree with the Total Loss Decision?
You can challenge it. If you believe the car isn’t totaled or the payout is too low, you have options. Get an independent appraisal. Compare the payout offer to online listings for similar cars.
If you still disagree, you can negotiate with the insurance company. Sometimes they’ll adjust the offer if you show proof the car is worth more.
What About Loans and Leases?
If you still owe money on the car, things work a little differently. The insurance payout goes to the lender first. If the payout is less than what you owe, you have to cover the rest.
This is where gap insurance helps. Gap insurance covers the difference between what you owe and the payout. If you lease the car, the leasing company handles everything. They get the payout and decide if you get any money back.
Final Thoughts
In Arizona, if your car is totaled, you get to decide what happens to it. You can let the insurance company take it or keep it yourself. Each option has pros and cons, so think carefully.
Keeping a totaled car isn’t for everyone. But if you believe the car is worth saving, it could work in your favor. Just make sure you understand the process and the costs involved.
The most important thing is to stay informed. Knowing your rights and options helps you make the best decision for you and your car. Drive safe and stay prepared!
