In Arizona, if an automobile is declared totaled, this affects your payout, the status of the title, the types of insurance you can obtain or maintain, and whether the automobile can be legally driven back on the road. Before making decisions about accepting a settlement, make sure you weigh the cost of repairs versus the salvage value of the vehicle, any necessary paperwork to obtain a new title in the event of a total loss, and any resale value that may exist related to the vehicle.
In Arizona, if a vehicle is damaged to the extent that it is no longer practical to repair, it may be considered a total loss vehicle. According to Arizona statutes, a salvage vehicle is any vehicle listed as stolen, a total loss due to an accident, flood damaged, or damaged to such an extent that the owner, lender, leasing company, or insurance company does not repair it.
Keeping a severely damaged vehicle can lead to complications with the vehicle title, inspections, resale, or insurance. In Arizona, any conditional salvage titled vehicle that is sold must include a written disclosure.
A restored salvage titled vehicle must be repaired, inspected by an authorized entity, and issued a proper title before it can return to public roads.
What Counts as a Totaled Car After an Arizona Collision?
The main question is whether the vehicle can be economically repaired, taking into account its precrash condition, repair cost estimate, damage type, and remaining salvage value according to Arizona law (A.R.S. § 28-2091), which defines a salvage vehicle as one that the owner, lessor, lender, or insurer determines is economically unfeasible to repair because of the severity of the cost to repair versus the probable resale value postrepair.
According to A.A.C. R20-6-801, insurance payments for total losses are calculated at either the value of like vehicles or actual cash value, giving consideration to taxes, licensing fees, and transfer of ownership. The fixed-percentage method does not apply in Arizona.
Choosing Between Repair and a Total Loss Settlement
Whether it is beneficial to repair your vehicle or classify it as a total loss depends on factors such as safety, the vehicle’s value, the quality of repairs, and how much money you owe after the insurance claim closes. If damage to your vehicle is limited (i.e., minimal physical damage), replacement parts are readily available for the vehicle, and you can restore the vehicle without hidden structural damage or airbag problems, repairing it is likely the more sensible course of action.
Classifying your vehicle as a total loss is likely cleaner and less complicated if your estimated repair costs are very close to what your vehicle’s actual cash value is or if your vehicle has a bad history after being repaired by the insurance company.
Arizona’s laws require that insurance companies use an actual cash value or comparable vehicle replacement value method to determine a vehicle’s total loss value. As a result, insurers are required to provide proof of the supporting documentation for this determination to the insured to maintain a complete factual record. This paper trail provides the injured party with records if they choose to prove their loss value.
How Arizona Insurers Usually Resolve a Totaled Vehicle Claim
Once an insurer in Arizona determines that a car or other vehicle qualifies as a total loss, the insurer then calculates the fair market or pre-loss value, deducts any applicable deductible from the pre-loss value, pays any liens on the vehicle, and then handles the transfer of title or applies for salvage documentation. The intent of these statutes and rules is to preserve the title history of the damaged vehicle and its history as an asset.
If the insurer acquires the vehicle via settlement, Arizona statutes require that the insurer, or an authorized person acting on behalf of the insurer, applies to the Arizona Department of Transportation Motor Vehicle Division for the appropriate salvage title certificate, stolen vehicle title certificate, or nonrepairable title certificate within 30 days after the title is properly assigned and all liens are released.
If the vehicle owner accepts the total loss settlement but there is still missing documentation or information, the insurance company may have an additional 30 days to complete the application process required to establish title history for the affected motor vehicle.
Can You Ask the Insurer to Leave the Totaled Car With You in Arizona?
Keeping the vehicle is possible, but it is not simply a matter of taking your full settlement and the damaged vehicle and leaving with both. Under Arizona law, if you keep possession of a salvage vehicle or a vehicle that cannot be repaired, you must comply with the state’s title requirements before you receive your total loss payment or dispose of the vehicle. In effect, your insurer may reduce your payment by the salvage value, and your title likely must be branded if the vehicle is repaired, transferred, or resold in the future.
When Keeping a Total Loss Car Makes Financial Sense
The only time it makes sense to keep a total loss vehicle is if you have a definite purpose for doing so, such as salvaging parts, rebuilding to an acceptable standard, or selling to someone who knows the vehicle’s history. The Arizona MVD’s rules regarding restored salvage vehicles require that the vehicle is repaired, inspected, and has a restored salvage title in order to be driven on the highway. The seller must also tell the buyer about the vehicle’s salvage history before completing the sale.
These requirements reduce your options for reselling the vehicle and add steps to the transaction process. Additionally, if the vehicle is damaged to the point that it needs extensive structural or electrical repairs, sustains water damage, or has an airbag deployed, it may be easier to accept the clean insurance payout or sell the damaged car directly to a private party.
Insurance Payments After Your Car Is Declared Totaled
Generally, when vehicle ownership changes or the damaged vehicle is no longer being driven, you do not continue to maintain an active policy for the vehicle under the previous titleholder or owner. However, how long you keep an active policy and when you can cancel your policy may vary.
You may wish to keep your policy in force until all questions regarding the claim process, title, lender payment, and possession are resolved to avoid a coverage lapse. If you still own the vehicle and intend to repair or re-register it, Arizona restored salvage laws and the potential availability of continued insurance coverage may affect you. Your insurance company can help you determine the exact cancellation date and what type of coverage may be available, such as storage, liability, or rebuilt vehicle coverage.
Reviewing the Initial Total Loss Amount Before You Agree
The initial adjustment should not be considered the final adjustment just because it is the first value given. In Arizona, the total loss value is based on comparables to similar vehicles, local market conditions, required dealer quotes, and satisfactory documentation that includes a full explanation of any potential deductions from your total loss value, such as salvage value.
Many other factors also apply when determining total loss value, for example, mileage, trim level, options for a given make and model, condition adjustments, local taxes or fees, deductibles, and lien payoffs. If you want an easy alternative to negotiating with the insurance company or retaining salvage so you keep the vehicle, use Sell Us Your Car as a cash for cars option. We buy your car for cash and provide a quick, guaranteed purchase value with clear, hassle free paperwork.
