Keeping Your Totaled Car
It’s possible that you may want to keep your car, even after your insurance company deems it a total loss. Insurance.com explains that this is a possibility, but the title will become what is called a ‘salvage title.’ This means that you will have to complete any necessary repairs in order to be able to drive the vehicle. Typically, the insurance company will sell your car to a salvage yard at an auction. So if you want to keep your vehicle, they will deduct this amount from your ACV settlement.
When considering whether or not to keep your totaled vehicle, keep in mind that there’s a reason the insurance company didn’t want to fix it. Oftentimes, there are damages done in an auto accident that aren’t easily visible, and once a technician starts to take the car apart, they may find more repairs than you bargained for. This is why insurance companies don’t like to provide comprehensive and collision coverage on a previously totaled vehicle. It is difficult for them to estimate the full extent of the damages.
Understanding why an insurance company would consider your vehicle a total loss after an accident and knowing what happens next will help you get through this difficult time. While losing your vehicle isn’t the end of the world, it’s good to know what your options are if it happens.
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Leslie Kasperowicz;holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc…
Written byLeslie Kasperowicz Farmers CSR for 4 Years
Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his familys insurance agency,;FCI Agency, for 15 years . He is;licensed as an agent;to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. Hes also been featured on sites like;Reviews.com;and;Safeco.He;reviews content, ensuring that ex…
What Does Insurance Pay When A Car Is Totaled
How and how much your insurance pays for a totaled car depends on a few factors, including the company and the state you call home.
For example, these are the reimbursement options for a totaled car in Washington State:
- Replace your car with an available and comparable vehicle.
- Offer you a cash settlement based on the actual cash value of comparable cars in your area.
- Offer you a cash settlement based on alternate appraisal methods, like Kelley Blue Book.
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What Happens To My Car If Its Totaled
Usually, the insurance company will take ownership of your vehicle by transferring the title 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.
What If The Accident Wasnt My Fault
If the accident wasnt your fault, that changes things. If you still owe money after the other insurance company has given you a figure on what theyll pay for the total loss, ask for the difference. If youre not sure how to navigate this scenario, hire a personal injury lawyer to work with you. This is the best way to get the full amount you owe on your car.
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Can You Keep Your Car After Its Totaled
As we mentioned above, when a car is determined to be a total loss, youâll turn it over to your insurer and it will be sold for scrap or go to a salvage yard. But in some cases, you can choose to keep your car and try to repair it yourself, although it will still have a salvage title, meaning you wonât be able to drive or insure it unless thetitle is rebuilt.
If you elect to retain salvage, i.e. choose to keep your car after itâs been deemed a total loss, youâll still be paid out the carâs ACV, but your insurer will subtract both the deductible and the carâs salvage price. A note: If you paid for your car with the help of acar loan and are still paying it off, the decision about what to do with the totaled vehicle isnât yours to make, youâll need to consult with your lienholder.
One reason you may want to keep a totaled car is if youâre looking to buy a new one. Some dealerships will allow you to trade in your totaled car . You may want to consider hiring an appraiser to make sure the dealership is offering you the best amount for your totaled car.
Rental Reimbursement Auto Insurance
If your car is totaled by a problem covered by your policy, rental reimbursement insurance covers rental car bills or other forms of transportation, like subway and bus passes. This type of coverage can only be added to your policy if you carry collision and comprehensive insurance. It can be valuable coverage to have considering the total loss process usually takes longer than your typical fender bender car insurance claim.
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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 My Car Is Totaled Do I Have To Pay Off The Loan
Okay, youve accepted that your car is a total loss. But what if theres still a loan on the vehicle? Are you responsible for paying the balance?
Usually with a total loss, your insurance company or the at-fault drivers insurance company will cut a check for your cars actual cash value. If youre financing your vehicle, the insurance company will pay that amount to the lender, and if theres any remaining money, itll be paid out to you. So, the short answer is, as long as your car is insured, you or your lender will be reimbursed for its actual cash value if its been totaled. This reimbursement is then usually used to pay off the loan.
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Option : Let The Insurance Company Pay You
The easiest way to deal with a totaled car after an accident may be to simply let the insurance company pay you.;
Depending on the insurance laws in your state, this might involve:
- Replacing your totaled vehicle with a comparable one
- Offering you a cash payment that’s equivalent to your totaled vehicle’s actual cash value
Note that if you believe the insurance company’s offer is too low, you can challenge it.
If you opt for a cash payment and still owe money on a car loan, the insurance company will generally make the check out to both you and your lender. After your loan has been paid off, any remaining money is yours to keep. However, if the insurance company’s payment is less than you owe on the car, you are responsible for paying the difference.
Who Is Responsible For Paying The Car Off
Ultimately, you are. You agreed to borrow a certain amount of money at a certain percentage rate and to make all payments until the car is paid off. Without the collateral of the car the lender will expect loan repayment in full. There is a considerable danger in rolling over your note to buy a new car and include the balance due on a previous car. If you get into an accident, you can end up owing a lot of money on a totaled car.
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Gap Insurance Covers The Shortfall
Gap insurance is the type that pays the difference between the lease payoff amount and the regular insurance coverage value when a leased car is totaled. Some lease contracts automatically include gap coverage, so check your lease paperwork if your car is wrecked to determine if the leasing company will cover the gap. If you have leased and did not buy gap coverage or have it included in the lease, you can buy gap coverage at any time directly from insurance companies and brokers. Gap insurance must be purchased before the leased car is wrecked, however.
What Happens If You Owe More On Your Loan Or Lease Than Insurance Pays Out
The insurance company wants to know if you have a loan or if the car is leased. Then they will want to know if its a loan, how much do you owe, Miller says. Thats because you might owe on the vehicle more than the carrier pays out, or you might not be current with payments on your car loan.;
If you havent made payments, or are upside down or late, now there is a gap what you owe and what youre getting paid, Miller says. You are responsible for the shortfall, but if you have gap insurance with your auto policy, this is where it kicks in.;
Gap insurance bridges the difference between what you owe and the amount of the payout from the insurance carrier.; If you dont have this optional coverage in your policy, then you need to come up with the rest.;
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What Happens If The Insurance Payment Isnt Enough To Pay Off Your Loan
Gap insurance, also known as “loan/lease payoff coverage,” covers the difference between what you owe on the vehicle and the vehicles actual worth. Progressives gap insurance will cover up to a maximum of 25% of the actual cash value of your car.
For example: Your insurer determines the actual cash value of your totaled car was $35,000. However, you owe $37,500 on your car loan. Your loan/lease payoff coverage takes care of the extra $2,500. Without gap insurance, youre responsible for the $2, 500 balance left on your loan.
Gap coverage can cover the difference between what you owe on the vehicle and the vehicles actual worth.
Keep in mind, new car owners may be most susceptible to the situation above. Newer vehicles typically depreciate as soon as you drive the vehicle home from the dealership.
Replacing Your Totaled Car
When your insurance company deems your vehicle a total loss, you will likely have to find a replacement. Unfortunately, your insurance provider is not going to buy you a new vehicle. They only have to pay you the ACV of the one you lost. The good news is, according to Insurance.com, many states will make insurers pay the sales tax on your new vehicle. Of course, they don’t actually pay it on the new vehicle you buy, but rather include it in the settlement for the vehicle you lost.
What is covered in regard to sales tax will vary by state, but Insurance.com shares a few examples:
This list demonstrates how varied the requirement for paying sales tax can be from state to state. If your car is totaled in an accident, you’ll want to look into the rules on this in your state to ensure you’re being reimbursed properly when you purchase a replacement vehicle.
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What If I Disagree With The Insurer’s Valuation Of My Damages
If you disagree with the insurer’s valuation of your damages, your only real options are to accept it, try to negotiate further with the insurer about the figures, or file a lawsuit.
Regardless of whether you want to negotiate or sue, you will need to have some basis for disagreeing with the insurer’s figures. You will need hard evidence that the car was worth more than what the insurer said it was worth. You will need two types of evidence: evidence as to exactly what type of shape the car was in, and evidence as to the car’s actual value.
The best way to prove the car’s actual condition is reasonably current photographs of the car. If you generally have reason to think that your car is worth more than its Blue Book value because you have done some serious upgrades and work on it, you should get into the habit of photographing your car regularly. That way, you can always prove what your car looked at any time.
The best way to prove a car’s actual value is through the opinion of a qualified appraiser. If you disagree with the insurer’s valuation of your car, you are going to need to hire a qualified appraiser to come up with an opinion as to your car’s value. Simply going online and trying to use an online car value calculator won’t be good enough. You are going to need actual live testimony from a qualified expert.
Is My Car Totaled If The Airbags Go Off
It’s a popular misconception that a car is automatically totaled if its airbags deploy. This is because it is expensive to replace airbags. The process involves replacing the airbags themselves, and also the sensors and system that operate them.
It costs between $1,000 and $6,000 to replace car airbags, according to various sources. If you have an older car and its airbags deploy, your insurance company will probably decide its totaled.
But if you have a newer car, or if your car is worth a lot of money , your insurer may decide its cheaper to replace its airbags than it is to treat it like a total loss. This is especially the case if the accident or incident that caused the airbags to go off was minor and didnt cause much damage otherwise.
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What Happens When Your Car Is Totaled
If the accident is your fault and your car costs more to repair than what its worth or cant be repaired, your insurance company pays you the value of the vehicle if you have the right coverages. If you were deemed not at fault, you can choose to file a claim with the other drivers insurance company.
What Insurance Can Help Pay For A Totaled Car
The two most common are;collision coverage;and;comprehensive coverage. If you have these optional coverages on your ERIE auto policy, you have protection up to the actual cash value amount if your vehicle is declared a total loss. Collision protects you if you hit another car or overturn. Comprehensive protects against events like fire, vandalism or;hitting a deer.
What happens when your car is totaled and you still owe money on it?
Its true: A new car depreciates the moment you drive it off the lot. Since the cash payout for a totaled car is based on actual cash value ;not;the amount you have left on your car loan you could be in a tough spot if your car is totaled and you still owe money.
Good news: Theres a way to protect your investment. Consider adding the;New Auto Security Coverage Endorsement* to your ERIE auto policy for a few extra dollars per month. If you have a lease or loan on your vehicle, the endorsement will help if you owe more on the vehicle than what its worth. Talk to your agent about how this coverage works.
See whats different about;car insurance from ERIE;and request a free quote online.
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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.