Find Out Why Your Total Loss Payout May Be Less Than Your Loan
The Balance / Michela Buttignol
If your car receives heavy damage in an accident or other covered event, your insurance company may . When that happens, you might receive a total-loss payoff settlement from your insurerassuming you have comprehensive or collision coverage.
Unfortunately, this payment isnt always enough to cover the amount of money you owe on your car loan. If you receive a lower payoff than your auto loan balance, its your responsibility to settle the remainder. Learn more about why payouts can be less than what you owe, and what you can do if this situation happens to you.
What Is A Total Loss Vehicle
A “total loss” declaration after a car accident means a car insurance company has determined that the cost of repairing your vehicle would be above a certain percentage of the vehicle’s actual cash value . Usually the threshold is somewhere between 70 percent and 80 percent of ACV or market value. In some states, the definition of a “total loss” vehicle is set by statute.
Can I Keep My Car Even If It Was Rendered A Total Loss As A Result Of An Accident
Experienced Attorneys Helping Jacksonville Car Accident Victims
Being involved in a car accident comes with many stresses, one of which can involve affording the purchase of a new car if yours has been rendered a total loss. Many people would rather just keep their vehicle, especially if the damage was largely cosmetic. Car owners retain the right to keep a totaled vehicle following a collision in Florida, but they need to be aware of the process to make sure that they still receive full compensation for their losses. The Jacksonville car accident lawyers at The Lawrence Law Group can help you in following the proper procedures after a collision in which your car was totaled. Our attorneys can also assist you in taking further legal action against responsible parties so that you receive compensation for medical costs, lost wages, and pain and suffering. If you have questions regarding your legal rights and options following a car accident, contact our office today to find out more about our services.
Can I Keep My Car Even If It Was Rendered a Total Loss as a Result of an Accident?
In Florida, the following criteria must be met to deem your vehicle a total loss:
Discuss Your Questions with a Jacksonville Attorney
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How Do I Know If My Car Is Totaled
“Totaled” may conjure up images of a car flattened like an accordion. But this is typically not the case, particularly given the high cost of some repairs.
Thats because in the world of insurance, “totaled” is a question of math: If it will cost more to repair the car than it was worth before the crash, the car is considered totaled. And the repair costs typically need not even be that high. In Iowa, for example, state law requires that an insurance company declare a vehicle as salvaged, or totaled, if the repair costs would exceed just 50% of the vehicles pre-crash value. In nearly every other state, however, insurers can make their own determination or, where states do dictate a loss percentage, insurers are not required to declare a car a total loss unless the repair costs exceed 75% or more of the cars pre-crash value, according to a review by Matthiesen, Wickert & Lehrer, S.C., a law firm with offices across the country.
If your vehicle is determined to be totaled, your insurer will pay you the pre-crash market value, minus your deductible. That is, as long as you have comprehensive or collision coverage on the vehicle.
File An Insurance Claim
Make sure you understand what type of coverage you have, as it could affect your insurance payout. Collision insurance protects your car in the event of a collision, while comprehensive insurance covers acts of nature, such as hailstorms and falling trees. Deductible and coverage limits may differ.
When you have a car accident, file a claim with your insurance company to start the process. First, the damage to the car will be evaluated and an estimate created. The insurance company will compare the repair estimate to your cars current actual cash value , not what you paid for the vehicle. The actual cash value is based on the vehicles year, make, model, mileage and overall condition. The amount of your policy deductible and any state taxes and fees will also be deducted to determine the ACV.
This process could take a few days to several weeks, depending on the workload and capabilities of local adjusters and body shops. After a severe regional hailstorm or a hurricane, for example, it could take weeks for adjusters to inspect all the affected vehicles.
When you file a claim, the insurance company will want to know detailed information about your accident, including:
- What happened and where
- Loan information
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Tips To Get Your Insurance Money Fast
The Balance / Madelyn Goodnight
A total-loss auto accident can range from a disastrous collision to bumping a deer, depending on the value of the vehicle. Either way, a total-loss accident is usually more complicated than getting a vehicle repaired. More steps are involved in closing a total loss claim. Knowing what to do after a total-loss auto accident will speed up the claims process so you can get your insurance money fast.
The Insurance Company Is Not Paying Me Full Value For My Totaled Car How Do I Get Them To Pay More
While our firm does not handle property damage , we do have some advice. Some people think that the insurance company is merely paying you for your totaled car. The reality is, the insurance is buying your car from you at its value prior to the accident. Insurance companies use the lowest rates to value your car, so you need to use the highest rates.
The insurance company will make you an initial offer. Ask to see the report showing the value of your vehicle. The report should have some online valuation, with 2 or three comparable vehicles for sale in you market. In order to counter this report, you need to find your own online values, and comparable vehicles.
Start by searching online vehicle valuation websites like kbb.com , nada.com, truecar.com, autotrader.com, edmunds.com, carfax.com. Choose the retail or private party value. Dont choose the trade-in value, because youre not trading the car into a dealership. Remember, youre selling your car to the insurance company, which is a private party sell.
After determining your top 3 highest valuations, find comparable vehicles for sell from dealers in the area. While searching for comparable vehicles, call the dealerships that have the vehicles listed for sale in the insurance companys report. Often, a vehicle included in the insurances report will be sold already. If the vehicle is not for sale, then it is not proper to use it as a valuation example.
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What Are The Downsides Of Buying Your Totaled Car
- Hidden damage: When evaluating a wrecked cars damage and repair costs, there is no way to know the extent of hidden damage. This is why insurance companies often declare a car a total loss when the damage may seem quite minor. They know the odds of repair costs rising once the process begins are high.
- Loss of value: Once an insurance company has declared your car totaled, its a stigma that will haunt it. Once repaired, the state will issue a new title to identify the vehicle as Salvaged or Reconditioned. Both will affect your ability to sell the vehicle in the future and may prevent some insurance companies from insuring it.
- Cost of keeping it: Yes, the insurance company will still cut you a check. It will, however, be minus the estimated salvage amount and the payoff amount of any existing loans on the car. You still must pay to get it into running shape and up to inspection standards. There may be other costs, as well. For instance, you may need to rent a car as you are waiting for yours to be repaired.
- Lots of hassle: You should also weigh the amount of time and effort you will spend fulfilling all the requirements to hang on to this car. When its all said and done, you may be saddled with a vehicle you cant insure or sell to anyone but a scrapyard.
TIP: If you do not plan on buying back your old vehicle, it is smart to use our Car Affordability Calculator to find out what you can afford.
Check On The Paperwork
After youve filed a claim, keep track of the paperwork. Hold onto any receipts for out-of-pocket expenses like towing or lodging and make sure to submit them. In addition, check in with your insurance company and your lender.
Follow the process through the insurance companys online claims site or call your contact. The claims processor may ask for more information, so watch for any messages through the claims portal, email or phone. Drivers should email or fax any outstanding paperwork as soon as they can in order to expedite the process. Your claims contact will let you know how and when you can expect to receive the claims settlement. Ask your lender for the loan payoff amount so you can see if the settlement amount will pay off the loan.
Top insurance provider claims websites
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What Did I Do Right
First, I was wearing my seatbelt but thats beside the point.
Second, I financed well below my vehicles value, which kept me from owing money after it was chalked up as a total loss.
Third, while I dont yet have a full six-month emergency fund, I had enough to cover the incidental expenses that followed without going into debt, or impact our ability to pay our regular bills.
Finally, I had health insurance, without which I would have been looking at a five figure bill to settle on my own.
What Happens When Your Car Is Totaled
The first question you may be thinking is, when is a car considered totaled? A vehicle is considered totaled when the insurance company informs you that the repair costs exceed the car’s fair market value and they are labeling it a âtotal lossâ.
Next, you are probably wondering how much will my insurance company pay? Keep in mind, when you purchase vehicle insurance, those policies come with limits. Therefore, your insurer will only pay according to the maximum stipulated in your policy. If you are in an accident with another party and they have lower limits, their insurance company may not pay the full amount to get your car replaced or repaired.
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How To Get A New Car After A Total Loss
Depending on the type of insurance you have and if the car was totaled, but you are not at fault, will determine how you get a new car. If your vehicle suffered damage due to weather or your accident did not involve another person, and you have comprehensive coverage that will kick in. The insurance company will pay your claim from that policy.
If, however, another driver hits your car and again, you are not at fault, your collision coverage will be activated if your vehicle is totaled and you file a claim. However, not all automobile accidents are cut and dry. If another driver is involved, your insurance company may contact the other driver’s insurance company and try to get them to pay for reimbursement.
There are some no-fault states where regardless of how the accident occurred, no one is considered at fault, and therefore your insurance company would be liable for any repairs or the full value if it was totaled. In a traditional-fault state, whoever is at fault for the collision, their insurance company would pick up the tab for all damages, repairs, and claims.
Some Insurance Companies Offer Better Car Replacement Insurance
With better car replacement insurance, you get money for a newer or better model of your car. For example, Erie Insurance will reimburse you the cost to replace your totaled car with the newest comparable model year if youve owned it for less than two years. If youve owned it for more than two years, Erie will replace your totaled car with a model that is two years newer.
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How Long Does It Take To Get The Insurance Check For A Totaled Car
Most companies will issue payment within a few days of finalizing the actual cash value. If you leased the car, the payment goes directly to the leasing company. If you financed the car, the payoff amount goes to the finance company or bank, and you get the rest. Finally, of course, if you own the car yourself, you get the entire check.
How Do You Receive Payment For A Total Loss
The amount of money you receive for a total loss is the ACV, which is the same number that determines if the vehicle is a total loss. This figure involves the pre-loss market value minus the depreciation when it was new. Ultimately, the ACV is based on wear and tear, the vehicle’s age, and other factors deemed relevant by your insurer.
Once you agree to the number, the insurer will give you the money if you own the vehicle. If it’s financed or leased, the compensation goes to the lender or leasing company.
If you total a financed or leased vehicle, you might owe money. New car replacement coverage can make up the difference, while gap insurance can help cover any remaining balance on a leased vehicle.
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Get Loan Details On The Payoff Amount For Your Car
If you still owe money on the car, youll need to get a payoff quote from the lending institution. Theyll get a number to you which your claims adjuster will need.
Request that the details be sent electronically so you can forward that quote onto your adjuster. Who gets the insurance check when a car is totaled? That all depends on the cars actual cash value, its salvage value and how much you still owe on it. If youll be applying for a car loan after a total loss, remember to talk to your insurance agent about getting lease or loan gap insurance on the new vehicle.
How Does The Insurance Company Determine The Value Of A Totaled Car
Adjusters use comparables in the area to help determine the ACV or the car’s actual cash value. An important fact to keep in mind is that the ACV is the car’s value just before the crash. Damages from the crash are not included in the total.
Other factors and determine the value include to make, model, year, and condition of the car before the crash.
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Will The Insurance Company Buy Me A New Car
Probably not, though it is OK to check with your insurance company. Some major insurance companies will replace the car if its a new car. But in most cases, you will be the one purchasing a replacement car. In this situation, most people will want to put the insurance check somewhere safe and start shopping around for vehicles. You can certainly do some scouting out of cars before you get the check, of course.
Depending on your location, your insurance company may be required to pay sales tax, title and vehicle registration fees on your replacement vehicle. Dont forget to ask your insurance agent about this.
Car Jargon You Need To Know When Buying A Used Car
A title agency is where you go to get the car registered in your name. This is also where you can find out whether the car you bought has a clean or salvage title.
A CarFax is a document that lists certain details about the car, the most important of them being the damages to car from any previous accidents.
The good news is that if you unknowingly bought a salvage-title car, then you can get the title changed to rebuilt car in four simple steps, which we will talk about at a later date. Before we discuss why buying a salvage-title car is not a good idea, lets have a look at this scenario:
David was excited to by his first car. He had been saving for quite some time, but decided to take out a loan instead. Cars dont come cheap, and he knew that future repairs would eventually make themselves known. So he took out a loan of 15k and bought a car from his neighbor. He figured that buying from his neighbor would be the same as buying from a dealership. Plus, if any trouble did arise in the car, he could easily reach the previous owner. The car had been on sale for a week and it looked pretty well. He got it inspected and asked his neighbor for the CarFax. Everything looked in order and he finally bought the car.
Salvage vehicle laws vary from state to state. Before 2017, certain states had no IVIS system, which is why salvage-title cars got easily past the system and dealerships were able to obtain a clean title.
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