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If You Dont Know You Cant Negotiate Effectively
When your vehicle is totaled in an accident, your insurance company pays you for the value of the totaled caror, more accurately, it pays you what it claims the value to be.
Nearly everyone who has been through this process can attest that the most frustrating part is accepting the auto insurance companys assessment of your cars value. Almost invariably, the estimate comes in lower than you anticipated, and the amount you receive is not enough to purchase an apples-to-apples replacement. Sometimes, it is not even enough to cover what they still owe on the car.
Confounding the issue is the fact that most customers are unfamiliar with the methodology used by insurance companies to value cars. The valuation methods of car insurers are esoteric, relying on abstract data, the specifics of which they are careful not to reveal. That makes it difficult for a consumer to challenge a low-ball offer from a car insurance company.
Knowing the basics of how insurance companies value cars and the terminology they use can bring you to a stronger position from which to negotiate.
Medical Payments Or Personal Injury Protection
Another coverage that may or may not be required is medical payments. This pays for the policyholders medical bills regardless of fault when the injury occurred in a covered auto accident.
Now that you know which options are commonly required, you can see that none of this protects the car that youre driving.
The only way to go about getting protection for your vehicle damages is to buy optional physical damage coverage through your auto carrier. Heres a breakdown of the types of physical damage coverage thats offered to policyholders:
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What Happens If Your Car Is Declared A Total Loss
- Remove your license plates and personal items
- Leave the key with the claims adjuster
- Send in any additional keys
- Fill out the associated paperwork
- Contact the leasing company if you lease your car
The quicker you do all of these things, the faster and smoother the process will be. After a total loss designation, the car is usually taken by your insurance company, which then notifies the DMV that the car has been totaled. Depending on the state, the car will be declared “salvage,” and any buyers who specialize in salvaging vehicles can purchase the car from the company.
If you want to keep the totaled car for example, to repair it or for sentimental reasons your company can allow it. If you go that route, you’ll get less cash. Your payment will be the ACV minus the value of the car as salvage. Though totaled, a salvage car will still have some value in its parts and potential to be restored. Geico tells customers to also be aware that some states prevent drivers from keeping total loss vehicles, while others will require you to obtain a certificate that states the car is salvage.
What Happens When Your Car Is Totaled And Its Not Your Fault
After you get the estimates and provide them to the insurance company, the insurance adjuster may make an offer. If you don’t agree with the offer and the adjuster has never seen the damaged vehicle, then you can require the adjuster or the insurance company’s appraiser to personally inspect your damaged vehicle.
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Let Your Attorney Negotiate With Insurance
Our attorneys at the Law Firm of Anidjar & Levine can negotiate with the insurance company to get you a fair payout for your totaled car. Many times, people are entitled to much more than what the insurance adjuster is offering. You should never accept the first offer.
It is best to reach out to a lawyer before speaking with an insurance company and then allow them to handle all communications regarding your totaled car. We are familiar with the tactics insurance companies employ to devalue claims, and we do not want to see you get shortchanged. We do not want you to leave money on the table. We will fight for what you deserve.
What Is Gap Insurance
Gap car insurance coverage can help with the scenario we just described above, where you still owe money on a car that’s been designated a “total loss” by the insurance company.
When you’re financing a vehicle, you don’t own it, the bank does. But thanks to car loan interest rates, the rapid depreciation we discussed above concerning brand new cars occurs faster than the pace of most repayment plans. This creates a “gap” between what you still owe on the vehicle and the vehicle’s actual cash value. That’s where gap insurance comes in, providing coverage that will pay off the difference between the remaining loan amount and the potential insurance settlement to cover vehicle damage.
Gap coverage may be required by the lender who is financing your vehicle purchase, and it’s usually available from most car insurance companies as an additional coverage option.
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What Does It Mean When Your Car Is Totaled For Insurance
Total loss refers to vehicles that are damaged beyond repair or it is “totaled”. Repairs would cost more than the actual cash value of the vehicle. If your insurance company deems the damages so substantial that they can’t be repaired safely, it will be a total loss, aside from cost considerations.
Insurers use factors such as repairs costs, salvage, safety and financial considerations for damage estimates and repair timelines.
Heres an example of a total loss situation :
Lets say the market value is $10,000, and you still owe $12,000 on your loan. If your car is totaled, you will still owe your financing company $2,000. The $10,000 settlement cheque will be paid to the finance company. You are responsible for paying off the remaining balance on your loan.
Once your insurer writes off the automobile as a total loss, it is branded as salvage. The cash value is determined by the make, model, mileage and conditions. Next, it will be auctioned off for its salvage value.
Do I Have To Accept The Insurance Companys Offer On A Totaled Vehicle
Theres a good chance that the insurance companys offer of payment will look low to you. Whether they pay fair market value or replacement value, their estimate could be biased. Theres every chance that your car is worth more than they offer you.
Luckily, you can negotiate for a higher amount. While it wont be easy to convince the insurance company to pay more, its possible. You will need to show them evidence to prove that your car is worth more than they originally estimated. Any upgrades you made to your car could increase its value. Show the insurer photos or receipts of upgrades such as:
- Improved sound system
- New paint job
- New tires
The insurance company may not think all your upgrades and customization ultimately add value to the car, but that could vary by company. You should gather as much information as possible to prove that your car is worth what you think it is. Include current listings and recent sales of similar vehicles. We can present this information to the insurance company on your behalf and may be able to find more evidence to prove you deserve more money.
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Totaled Car Insurance Payout: How Much Should You Expect
Getting into an accident is scary, no matter how minor it is. If you walk away okay, youre thankful it was nothing serious and there are no medical bills to follow.
But what if your car wasnt so lucky and now its totaled? This is difficult enough, not to mention the thought of getting a new one.
If youre waiting on totaled car insurance payout, you have several questions related to the health of your car and what to expect next. Learn more about the process and prepare yourself for each step of the way.
Cheap Car Insurance Companies If Your Car Is Totaled And You’re At
Most insurers will increase your premium for 3 to 5 years if you are at fault in a crash. Your best bet is to find the cheapest insurance possible for that period.
Based on Insurance.com’s rate analysis, Geico is the cheapest car insurance company for drivers with a recent accident claim. Here is how car insurance companies rank on price for those with an accident on their record.
- At-fault bodily injury – $3,381
- At-fault property damage under $2,000 – $2,454
- At-fault property damage over $2,000 – $2,446
- Two at-fault property damage over $2,000 – $2,792
Victoria and Foremost specialize in insurance for high-risk drivers, so it’s not surprising that rates are among the highest for those companies after an accident claim. If you were to calculate average savings for standard car insurance companies in the chart above, the saving would be as follows:
- At-fault bodily injury – $1,268
- At-fault property damage under $2,000 — $1,108
- At-fault property damage over $2,000 — $1,053
- Two at-fault property damage over $2,000 — $1,861
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How Much Is A Totaled Car Worth
When your insurance company decides your vehicle is totaled, they’ll make an appraisal of its value before the accident. During this step, damage incurred from the collision isn’t part of the equation.
Your insurance company then brings in a third-party adjuster to make another appraisal for an additional perspective on the car’s value.
What both appraisers are seeking to pinpoint is the car’s actual cash value or ACV. Actual cash value refers to what the car would have sold for just before the collision.
Your insurance company will consider both adjusters’ reports and use factors like vehicle condition, mileage, options, and the value of similar vehicles in any given local market.
After the adjusters appraise your car and the insurance company takes those factors into account, there are a few things to remember.
First, you’ll owe your deductible before any payment is issued. So you’ll want to take a look at that amount before expecting a certain amount of money.
However, there are circumstances where you won’t receive money for a totaled vehicle.
If you owe money on an auto loan, your insurance company will pay that off first. If anything is remaining, you’ll receive the balance.
If you’re leasing your car, a similar policy applies.
What Happens When You Total A Car That Is Financed
So what happens if your car is totaled and you still owe money on it? Thereâs a chance you could wind up making car loan payments on a car that doesnât even exist anymore. Thatâs what gap insurance is for.
Gap insurance is a type of coverage add to your policy that will cover the difference between what your insurer will pay out on a total loss and what you still owe, so you arenât left underwater on your car loan. Your lienholder may require you to add gap insurance to your coverage, but even if they donât, it can be a smart buy if youâre still paying off a car.
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Research Your Cars Value
Not only should you understand your cars current value in the marketplace, but you should also research how much any accessories and after-market items are worth.
These are extra features add value to the vehicle and increase your final settlement amount, says Espenschied, who cites the case of a moonroof, audio and video equipment, and an upgraded trim package that an adjuster did not take into account when evaluating a car totaled because of hail damage.
The more knowledgeable you are on this subject, the better you are able to negotiate with the insurance carrier for your payout.
Consumers dont realize they can negotiate for a higher settlement amount based on the current market availability of the same vehicle, Espenschied adds.
Consumers should insist that they get all the costs of replacing the totaled car, Heller says. This includes the taxes and fees associated with buying a replacement car, as well as the refund of the license or registration fee from the totaled vehicle based on the remaining term of that registration. For example, if you paid $120 for the annual registration of your vehicle one month before your accident, you should get $110 added on to your claim settlement to cover the unused portion of the old cars fee.
Of course the insurance carrier may not see the value in your car the way you do, and the payout may not equal what it costs to purchase a new car.
How Much Does Insurance Pay For A Totaled Car
After reading this far, youre likely to ask, If my car gets totaled, how much will insurance pay?
This is a valid question. After an accident has occurred, youre left to battle with the claims adjuster from your insurance company about how much your totaled car is worth.How much your insurance will cover for your totaled car is included in their policys fine print.
However, for you to get the maximum payout for your totaled car, you need to know how your insurance company will calculate the amount and the options that are open to you.
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Can You Negotiate The Total Loss Value
If you disagree with the insurance companys estimation of your cars fair market value or replacement cost after a total loss, you can dispute it and try to negotiate a higher payout. However, it is difficult to negotiate with the insurance company, as without substantial evidence, it is unlikely to budge.
Know Your Car’s Value
There are several guides to determine the current value of your car for insurance purposesfor example, Kelley Blue Book, and theNational Association of Automobile Dealers’ NADA Guides.
Note that most standard auto policies will not pay to repair a vehicle if it is “totaled”that is, if the repairs cost more than the cash value assigned to the car. It is up to your insurer to decide whether to pay for repairing your car or to declare it a total loss and pay you its book value.
However, you may be able to make a case that the pieces of the car were worth more than the book value and so increase your settlement. To do that, you’ll have to submit evidence such as mileage records, service history and affidavits from mechanics to show that your car was worth more than a typical car of its make and model.
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I Use My Vehicle For My Primary Or Second Job Will My Claim Be Paid If I Am In An Accident
Personal cars used for business, like for delivering pizza and ride sharing arent covered under a personal auto policy. You should always tell your agent or insurance company about your plans to start driving for a ride share company as you will likely need excess coverage for when your vehicle is being used for business purposes.
When Does An Insurance Company Total A Car
An insurance company will total a car when the cost to repair it is more than what the car was worth immediately before the damage occurred. An insurer might also declare a car to be a total loss if it cannot be repaired safely or repaired at all.
Sometimes, state law dictates the amount of damage necessary to total a car, and this threshold can be as low as 50% of its value.
Learn more about when an insurance company totals a car.
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Can My Insurance Company Deny A Claim For Damages To My Vehicle If The Principle Place Of Garaging Listed On My Application Is False
Yes. They can deny a claim if any of the information on your application is false. The single most important thing you can do to protect yourself from a claim denial is to make sure that all of the information you give to your insurance company is complete and accurate.
If you or someone on your behalf gives false, deceptive, misleading or incomplete information on any application and if that information increases the insurance company’s risk of loss, your company may refuse to pay claims under any or all of the Optional Insurance coverages of the policy. You must state where your car is garaged most of the time, regardless of your listed address. You must also list all the licensed drivers who are likely to drive your vehicle. This includes people who live with you who do not have their own auto insurance, and also people who use your car on any kind of regular basis.
If you move after you fill out your initial application, you must tell your insurance company and the Registry of Motor Vehicles of your new address promptly.