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What Does It Mean When Your Vehicle Is Totaled?
Years ago, if you were involved in an auto accident, your vehicle may have been considered "totaled" if it sustained major damage. While that is still true today, a car can be totaled even if it looks only slightly damaged. The decision is based upon whether the cost to repair it exceeds its intrinsic value.
Cars were far less expensive to repair a generation ago than they are today. As a result, totaling a car back then usually meant destroying it. These days, repair costs have skyrocketed. Damage that affects an automobile's structural integrity may not be immediately visible on the exterior, but may be too expensive to fix.
This dynamic has had an impact on the automotive industry that most drivers may be unaware of (even though it affects them). Below, I'll explain the true cost of totaling a vehicle and describe what the auto industry is doing about it.
The Market Effect Of Totaling
To fully understand the cost of totaling an automobile, we must first put the auto insurance industry under the microscope. If you total your car, your insurance provider will send you a check so that you can purchase a replacement model. Consider the impact of sending that check to you: insurance rates increase for everyone.
At the same time insurance premiums are rising, the overall cost of vehicles is also rising. More advanced technologies are being employed to improve drivers' safety. Unfortunately, these technologies are more expensive to develop and therefore, push the prices of vehicles upward. Consumers become caught between rising insurance rates and rising automobile prices.
The Automotive Industry's Response
A few automakers have begun taking steps to curb the trend caused by totaling. Realizing that repairs are often cost-prohibitive and cause insurers to declare damaged vehicles as being totaled, these auto manufacturers are developing new structural designs. If damaged, a portion of the frame can be replaced rather than the entire frame. As a result, a car that was once considered totaled can be repaired. That keeps insurance rates from escalating needlessly.
Another advantage that has emerged from the automakers' efforts is that new structural designs have yielded additional repair options. In the past, if an automobile was damaged, there were few options available besides a complete frame rebuild. Today, auto technicians can resolve a structural issue by following a number of repair paths. This, too, will naturally lead to lower insurance rates; insurers are less likely to write vehicles off as losses.
Most people purchase cars, trucks, and SUVs without realizing the technology that goes into their construction. Nor do they realize the challenges that technology is attempting to overcome. Having said that, in the coming years, it may seldom be necessary to consider a car that has been in an accident as "totaled."
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