Here’s the latest reader question, along with my reply!
Mike asks: I got into an accident this month (Aug. 2020) and took the truck to Toyota Collision Center and was informed two days later that the truck is going to be totaled, due to repair cost being more than the value of truck. It was front end damage at first inspection, then when lifted, collision center said it had frame damage and stopped the work, and told me to look into the value of the truck because I would be paid out by the insurance company. My question to you, is it worth buying back truck and repairing the truck? If not how do I know the value of the truck through the insurance point of view, will I get a MSRP value of the truck?
My reply: As a general rule, when the projected repair cost exceeds 50 percent of the retail value of a vehicle, the insurance adjuster will recommend that it be “totaled.”
Whether it is worth fixing to you is another matter.
Variables include the nature of the damage – e.g., is it functional or cosmetic – and whether the payout you get from the insurance company will get you an equivalent replacement. The problem there, of course, is there is no such thing as an equivalent replacement – because every used vehicle is unique. You know your vehicle; its overall condition – how it’s been treated – and can form a more accurate idea as to the prospect of it giving you trouble down the road. With a “new” used vehicle, it’s much more of a gamble.
I’d consider getting estimates regarding the cost of fixing the physical/structural damage to the frame and so on. If the truck can be made safe to drive again at a cost that is reasonable, I’d certainly consider fixing it – using the money you get from the insurance company, which will be calculated on the basis of their assertion of its value – what they’d pay you for a “total” – vs. what you’d have to pay them to buy the vehicle back, unfixed.
The insurance company uses their own formula to determine “fair market value” – which is usually lowball vs. the values listed in NADA and other used car guides. Probably you will have to haggle over this. Your vehicle may be worth more – or less – than the “book” based on its overall condition before the accident, the mileage, any upgrades/mods you may have done – and so on.
I hope it turns out well!
. . .
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Here is a question for you Eric. If a vehicle is totaled out by the insurance company, why isn’t the buy back price the scrap value? Isn’t that it’s “true” value?
In theory you should be able to buy back any totaled vehicle for under 400 bucks or so. Because that is all you would get for a junk vehicle that you yourself brought to a junkyard.
Or is this just another way insurance companies are ripping us off? Keeping vehicles off the market that could be repaired economically if you can get them cheap enough.
DISCLAIMER: Not Eric. 😀
Rich, it’s because after they total a car, they sell it at a salvage auction, where it is bought by someone for parts, rebuild or export. Anything fairly new will bring thousands at the salvage auction [It’s insane actually- I once saw a trainwrecked Town Car that was litterally crushed, go for $23K at suich an auction? Didn’t look like there was one good part on it- only thing I can figure is they wanted the VIN number to switch with a stolen one that would be exported; Or, an older, not low-mileage Cadillac that had been in a bad flood -it smelled like an aquarium- and the water was definitely above the engine and electronics- went for either $7K or $9K- I forget which.
It’s gotten to the point where they’ll take even an old car to the salvage auction- they get totalled out easily- and may bring more at the auction than what the ins. co. paid out on ’em.
I’d say if the frame is damaged, forget it. These modern vehicles are VERY expensive to repair properly– even if one does it themself. Body parts, plastic parts, front-end parts, air-bags and setbelt pretensioners, any mechanical parts or electronic parts that got damaged (Which may not be readily apparent, immediately); painting is absurdly expensive…. and then add to that the frame damage, and trying to get all of the front-end geometry back into correct alignment (Which can be hard even without frame damage)- it’s not worth it.
Not to mention, that in most states, once the insurance company totals it, it has to be inspected by the state to get titled again- and it has nothing to do with “saaaafety” or the quality of the repair- but rather checking receipts for all parts; making sure the airbags are installed, and that they are not used ones, etc. etc. Depending on where ya live, it might be a long way to a facility that does the inspecting (It’s done directly by the state).
If ity were just simple body damage, like to the rear or side, that didn’t involve the front-end or the frame, it might be worth it…
My neighbor hit a tree with his truck; didn’t have comp and collision, so he fixed it. Only the very end of the frame where the bumper brackets mount, had damage (In addition to the sheet metal of course)- He fixed it- but the truck has never been the same. Can’t keep a transmission or transfer case in it now- apparently something in the driveline got tweaked in the accident. Absolutely no indication of that until he was driving it again. He spent about $5K fixing a truck he had paid $8K for (Did all the work himself), but will likely end up selling it now.