What happens when a car is totaled?

If an insurance company decides that a vehicle was so severely damaged that the cost to repair is too high relative to its actual value, that vehicle is likely to be declared a total loss. However, just because a car is “totaled” does not mean that it will never be driven again.

Most totaled vehicles are stripped of their usable parts and the remainder sent to a car shredder. However, each state sets its own laws and regulations that cover totaled vehicles, so some are repaired or rebuilt, given new titles, and end up on the road again, and not always through legal channels.

State regulations vary

In some states, totaled vehicle titles label them as “salvage” or “flooded” vehicles, or as “junk,” meaning they are not suitable for public roads. Other states, however, do not provide such warnings , so unsuspecting buyers may not even know they are purchasing a wrecked vehicle. Also, because state laws differ widely, a vehicle that is totaled in one state may receive a clean title in another state that has more flexible regulations. This is known as “title laundering” and is frequently used by shady operators to sell flood-damaged cars.

Hurricanes, tornadoes, and other major storms damage tens of thousands of vehicles that are later totaled, but many are repaired and end up in other states with titles that don’t reveal previous damage and fresh paint that hides the evidence.

On the legitimate side, some totaled vehicles are sold with titles that identify them as “salvage” or “rebuilt” cars and are generally bargain priced compared to vehicles with unblemished records.

However, insurance companies may not cover these cars, or they will charge higher premiums because they don’t trust the cars to be safe and sound. Some lenders may also be unwilling to approve loans for them given their history.

How to detect a totalized vehicle

To protect used car buyers from being scammed, the National Insurance Crime Bureau offers a free service called VINCheck that checks a car’s vehicle identification number to see if an insurance company has reported it as a total loss or as theft. Most major insurance companies participate in this service, but it does not include all totaled vehicles.

Services such as Carfax and AutoCheck and the National Vehicle Title Information System also provide vehicle history reports (for a fee) that search insurance and public records for reports on whether a vehicle has been totaled or has suffered major damage.

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