Cars are considered totaled when the price of repairs is so high that insurance companies deem the car not worth repairing; this number varies, but insurance providers generally consider vehicles totaled when their repair cost is approximately 70 to 75 percent of their current value, say authors at CarsDirect. Generally, older cars are more likely to be declared totaled, as they have lower resale values at the time of their accident than newer vehicles. Insurance companies assign adjusters to each case, who then inspect damage to cars to determine whether to declare them totaled.
Before declaring cars totaled, insurance agents take several factors into consideration. They consider the type and age of the car, along with any responsibility of the driver for the accident and the condition of the car at the time of the accident. The car's type is a crucial factor in determining whether to declare a total loss, say authors at CarsDirect, as luxury cars have a much greater value than older, average cars. When evaluating condition, adjusters compare the car's condition compared to functioning vehicles of the same make, model and year, which helps establish a value. Any responsibility of the driver for the accident also lowers the car's value.
After declaring a vehicle totaled, insurance companies compensate drivers. Many drivers take the check to use for purchasing a new car. Sometimes, however, people keep their totaled vehicles. To do so, they usually go through a legal process involving licensing and registration.