One of the most important possessions that we have are our cars. We rely on them for safe transport from our homes to work or play. While they are built to last, we may find ourselves in accidents. This is why we invest in auto insurance. This covers the financial loss in case of an accident. Car insurance companies can cover your expenses in case of a variety of minor to moderate accidents. The cost of body-work repair, engine overhaul and new wheels is covered by your auto insurer. However, if your car is totaled, that is a whole different story. Read on to learn what happens when you get in an accident and your car insurer determines that your car is a total loss.

What is a total loss and when is this decided?

A total loss is a car that is so damaged that its cost of repair exceeds its current market value. This term is used to describe such a car by car insurance companies. A car is determined to be a total loss according to a number of factors.

Factors that contribute to deciding that a car is a total loss

The foremost factor is the auto insurance company itself. Despite being obligated to follow specific laws according to their administrative location, insurance companies can set standards to value totaled cars. The second factor is adjusters. These are special insurance agents who determine the car's worth after accidents. Their opinion on the value of your damaged car counts quite a lot in determining if it is a total loss. The state laws also come into play. According to these laws, your car must have suffered a particular percentage of damage before it can be regarded as a total loss. Your insurance agent can guide you through these factors.

What happens after a total loss?

After our car is deemed to be a total loss, the first thing that you do is file a total loss claim with your car insurance company. The procedure for filing for a total loss varies according to the insurance company that you work with. However, there are a number of details and documents that they normally ask for. These include:

• The title of your vehicle

• Its license plate

• The keys to your vehicle

• The contact information of your lienholder

After filing this claim, the decision to reimburse you or not falls upon the purview of the claims adjuster.

When your car is regarded as a total loss, it is towed to a safe place by your car insurer. While there, it is inspected by the claims adjuster. If your car is found to be worth compensation, you can get enough money to fix it up from your insurance company. This amount is the fair market value of your car. Also know as the Actual Cash Value (ACV), it is the current value of your vehicle after depreciation has been considered. If you accept this amount, your auto insurance company can award you a full or partial settlement. During this period, you will need some other form of transport. If you do not have another car, rental car insurance coverage comes in very handy. It gives you access to a rental car that you can use while your car is being assessed.