Determining Fair Market Value Of A Totaled Car
Your insurer will perform a complete assessment of your vehicle to determine its fair market value. In addition to your cars year, make, and model, your insurer will consider your cars overall condition, any pre-loss damage it may have suffered, and the price of equivalent cars on the market. Your insurance carrier will establish the pre-loss value of your vehicle using industry-trusted resources and come to a figure accordingly.
If your car is totaled in an accident and you make a claim under your own policy, previous changes to your vehicle may not be eligible for coverage or may have limited coverage available under the terms of the policy.In other cases, these items may detract or add to your vehicles value.
How To Know If Your Car Is Totaled And What To Do Next
An average of six million car accidents happens in the U.S. every year. Three million people are injured in those accidents. 6% of those car accidents are fatal. 72% result in property damage. If you and your passengers walk away from a car accident unscathed, you’re lucky. If you were injured, seek out medical attention immediately. Once you’re feeling well, it’s time to focus on your car. If the accident was serious enough, your insurance might declare your car totaled.
Auto Repairs Are EXPENSIVE
But it’s not always apparent if an insurance company will consider your car totaled. And most people have no idea what the appropriate steps are.
We want to help guide you through the process. Keep reading to learn what to do with a totaled car.
What Happens If You Total A Leased Car
Similar to what happens when your car is totaled, youll receive a check for the leased vehicles value. The problem is, youll owe the remaining payments to pay off the lease, which typically amounts to more than the vehicles cash value. Youll need to come up with the difference out of pocket, unless you had gap insurance coverage for any shortfalls.
My Cars Airbags Deployed
Regarding your airbags, itâs a misconception that when they deploy in a car accident, your car becomes totaled. In some instances of a car accident, airbags may deploy, but that doesnât necessarily mean your vehicle is totaled. Again, the declaration falls on your car insurance adjuster to make their assessment of the damage and whether it is a total loss.
If the cost of replacing the airbags exceeds the carâs ACV, then itâs totaled. If not, then the airbags may be replaced. Know that airbag replacement typically costs $1000 for each individual airbag. There are all sorts of small moving parts and modules in a car that also must be replaced in the process which can cost extra money.
How Much Does Insurance Pay For A Totaled Car
If your vehicle is a total loss, you have two choices: You can take the cash settlement for the ACV of your vehicle or, if your state allows, you can retain the salvage and request the title and damaged vehicle be returned to you.
Most customers choose to take the settlement value, which is the figure generated by the industry-leading vehicle valuation database. Payment goes to the customer if the vehicle is owned outright. If theres a lienholder, such as a bank or a credit union, payment goes to that lienholder. All payments are made after subtracting the customers deductible.
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Don’t Forget There’s A Deductible
You’ll probably have to pay a deductible. That means if your car is worth $10,000 but you have a $1,000 deductible, the insurance company will only give you a check for $9,000.
And it gets more complicated if you agree to their terms and you’re still paying off your car. For instance, if your deductible is $1,000 and you still owe $5,000 for your car but it’s worth only $2,000, the insurance company will only pay you $1,000.
That means, you still owe $4,000 for a totaled car. And you’ll still have to buy a new car.
The Total Loss Claim Process
The total loss claim process starts with you making a car accident claim. You’ll either make a claim with your own car insurance company , or with the at-fault party’s insurer .
Depending on the circumstances of the accident and the specifics of the insurance coverage at play, you might receive a fair settlement offer for the actual cash value of your car quickly, or you might need to negotiate for a better offer.
Once you’ve agreed on a total loss settlement, the insurance company will pay out your car’s ACV and you’ll transfer the title to the insurer. If you own your car outright, the entire insurance settlement will go to you.
If you financed your totaled car, the insurer will pay your lender first. If your car’s ACV is more than what you owe, you’ll keep the difference. If your car’s ACV is less than what you owe, you are still responsible for paying the balance of your loan.
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Should You File A Lawsuit To Cover Your Losses
If you were involved in an accident where the other driver was clearly at fault, you might get a phone call from the drivers insurance company. They may want to know your version of what happened, how youre feeling, and where you work. You are under no obligation to give them a recorded statement. Insurance agents can be tricky they may be looking for any excuse to pay you less than what your claim is worth. Sure, youd like a fast resolution, but not if its far less than you deserve for your medical bills, lost wages, and property damage. For this reason, it is always wise to have a team of New York City personal injury lawyers advocating on your behalf and communicating with the insurance companies for you. Professional representation costs nothing upfront, but rather, costs you a third of the total settlement if compensation is secured. Keep in mind the statute of limitations for filing a lawsuit following a car accident in New York is three years, but its best to start working with a law firm right away, while the evidence is fresh.
What Happens When Your Car Gets Totaled
Usually, the insurance company will take ownership of your vehicle with a totaled car title transfer to their name. After that, theyll likely sell it to a salvage buyer. If you decide to keep your car, the salvage value will be deducted from your settlement total. Some states have specific guidelines relating to owner-retained total losses, so be sure to check with your claims adjuster to fully understand what this entails.
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If You Are Renting A Car While Waiting
Many drivers need a rental car while waiting for a decision on a payout, and use insurance to cover the rental costs. But be aware there is a limit to rental car coverage.
After issuing your payout documents, insurance companies will typically keep paying for the rental for a day or two, Miller says.
In other words, once you have the documentation in hand from the carrier with the payout, you have a limited amount of time to make a decision about a new car and turn over your rental.
Will The Insurance Company Buy Me A New Car
If your car is very new — say, less than three months old — most major insurance companies will replace it with a new car.
But beyond that point, some companies offer guaranteed replacement coverage at an extra cost, so you don’t have to worry about how much you’ll be paid — it will cover a new car.
If you don’t have this coverage, your company is required to “make you whole,” as defined in your policy. This means your company will pay you the actual cash value of the car — what it was worth the minute before it was totaled — minus the deductible for the collision coverage on your policy.
An insurance company is not obligated to pay off your loan, only to pay you what your car was worth — even if that leaves you thousands of dollars in debt. For that reason, many buyers add gap insurance to their coverage it will pay off the balance due to the lender if the car is totaled.
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What Happens If I’m At Fault For The Accident
If you are legally responsible for an accident, you’ll have to rely on your own collision and comprehensive car insurance to cover your totaled car.
Collision insurance pays for damage to your vehicle, regardless of who was at fault for the crash. Collision coverage pays out for car-on-car accidents and single car accidents. Most states don’t require drivers and car owners to have collision insurance, but lenders often make it a condition of a car loan.
Comprehensive insurance covers non-collision damage, like damage caused by a falling tree, severe weather, fire, theft, and vandalism. Depending on your policy, comprehensive insurance may also cover damage from hitting an animal.
If your car is totaled in an accident that you caused and you don’t have collision or comprehensive coverage, you’ll get no money for your totaled car.
Limitations When Fighting An Insurance Company Over A Totaled Car
Its important to remember that insurance companies are only required to pay a cars actual cash value , not the cost of a replacement car or the original price you paid for the vehicle.
Car insurance companies and state laws determine when a car is declared a total loss, so it is unlikely that you will be able to keep your insurer from totaling the car if they deem it necessary. But you can negotiate with your insurance company if you think the amount they propose the car is worth is less than the car’s ACV.
Its in the insurance companys interest to prevent a dispute from escalating, so sending a counteroffer directly is the best place to start. Otherwise, the cost of filing a lawsuit is usually not worth the potential rewards, but it depends on your situation.
Liability-only insurance is car insurance that pays for other peoples injuries or damage to other peoples property, but not the policyholders injuries or property. The term liability-only car insurance is used to distinguish policies with basic coverage from those with collision insurance and comprehensive coverage.
Liability insurance is the only type of auto insurance that is mandatory in almost every state. Its split into two main categories of coverage: read full answerbodily injury liability and property damage liability.
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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.
If You Don’t Have Insurance
Driving without insurance or other proof of financial ability is illegal in most states. And you typically can’t get a car loan without insurance. If you do total your financed car in an accident while you don’t have car insurance, you will have to continue to make loan payments until your loan is paid off. You will also have to pay for all accident-related expenses out of pocket. If the accident involves another driver or someone else’s property, you might get sued. You can also lose your driver’s license and face a hefty fine for driving without insurance.
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Talk To A Car Accident Lawyer
You might be able to handle your own total loss claim. But if you were injured or you want to dispute the insurance company’s decision to total your car, talk to a car accident lawyer.
An experienced car accident lawyer can answer your questions about the total loss process and explain your rights when you are negotiating a settlement with an insurance company.
Learn more about when to hire a lawyer after a car accident. You can also connect with a lawyer directly from this page for free.
Can You Keep Your Car If Its Totaled
If you decide to accept the insurers decision to total your car but you still want to keep it, your insurer will pay you the cash value of the vehicle, minus any deductible that is due and the amount your car could have been sold for at a salvage yard. It then will be up to you to arrange to make repairs.
They will cut you a check, says Ward, and then youre on your own.
Safety should be your primary concern when keeping a totaled car.
If damage to the totaled vehicle is mostly cosmetic, you may be able to put it back into service for a modest cost. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go.
There is a good reason why car insurance companies are cautious about fixing badly damaged cars, says Ward. Cars are complicated. All damages are not visible. Once you start dismantling, often you find additional damage.
You think twice about repairing a car that has been seriously damaged. If the professionals who work for your automobile insurance company think the car is beyond repair for a reasonable cost, it probably is. Damage, such as cracks in frames or to airbags, often cant be seen by just looking at a vehicle.
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Who Receives The Settlement Payment
That depends on whether the vehicle is owned, financed, or leased.
*If you have gap insurance, it may cover the balance of your loan.
Vehicle Write Off Value Calculation
Most insurers use a similar car write-off calculation. Its based on repair costs and vehicle evaluation. Here is a simple calculation used to determine if your car falls under a total loss :
Actual Cash Value Repair Costs + Salvage Value = DecisionIF Repair Costs + Salvage Value > ACV = WRITE OFFIF Repair Costs + Salvage Value < ACV = REPAIR
For example, lets say the actual cash value of your vehicle is $7,000 and the cost to repair it is $9,000. In this situation your vehicle would be a total loss because of the value is less than repair costs . In general, your provider will pay the lower amount when they compare repairs or cash value.
If repair costs are close to the current market value your insurer may still consider it a write-off, even if its less than the market value. Your insurer also factors in other costs associated with the claim rental cars, claims services, and other costs.
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Do You Pay A Deductible If A Car Is Totaled
Both collision and comprehensive auto insurance carry a deductible. The amount varies, but its usually between $500 to $1000. You pay a deductible when your car is totaled and you were found to be at fault. In this case, the claim would go through your own insurance company and they would subtract the deductible amount from the value of your car to resolve payment.
If the other party is determined to be at fault, their insurance should not take out a deductible before paying you. In some cases, you may have to wait for deductible reimbursement while payment from the other drivers insurance policy is pending.
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What Happens If You Keep Your Totaled Car
If you keep your car after the actual cash value, sales tax and applicable prorated taxes and fees are added together, the insurer deducts the salvage value from the total amount of the settlement. The insurer must report your totaled auto to the Washington state Department of Licensing .
If you have questions about what happens next with your totaled car, contact the:
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