You got into a car accident and fortunately everything is okay… except your car. The vehicle caught the brunt of the accident and your insurance company declared it a “totaled car” or a “total loss.” But what does total loss mean?
Hopefully you’ll never have to get into such a harsh accident, but many insured people don’t understand what total loss vehicle means for them. What makes a car totaled? How much money will I get in a total loss settlement? Let’s go through the process and answer some potential questions you may have if you have a total loss claim.
What Does “Totaled” Mean?
Generally a car is totaled if the estimated cost of repair to the vehicle exceeds the vehicle’s value. However, this can vary from state to state as some laws dictate that a totaled vehicle could be defined by a specific threshold. For example, the state of Alabama classifies a vehicle totaled if the damage exceeds 75% of its value rather than 100%. Check your state’s laws for specific details.
What Happens If My Car Is Totaled in an Accident?
If you have comprehensive coverage and collision coverage, you should be compensated for your loss. If you’re in a car accident, contact your insurance agent and initiate a claim. Get the damage inspected at an auto repair shop. The shop will provide an estimate for the repairs to your insurer. The insurer will then determine whether or not the vehicle is a total loss due to the repair costs. If the cost of repair exceeds the worth of your vehicle, your insurer will cut you a check for the damaged car’s cash value, minus your deductible.
What Determines the Value of My Vehicle?
A lot of different factors go into determining a car’s value. Your insurer will take into account your car’s age, mileage, condition, and resale value among other factors to determine its cash value.
Do I Still Have to Pay Off My Loan on My Totaled Car?
If you have totaled a car that you have purchased on a lease or loan, your insurance company will make your claim check payable to both you and your lender. You will have to negotiate with your lender on how to release that money. Usually, the lender gets paid first and then you would get whatever amount remains, if any.
There are times where the claim check won’t fully pay what you owe to the lender, so you’ll still be responsible for the remaining balance on your loan. However, if you have gap insurance added to your car insurance policy, the insurer will pay out the remainder of your car loan on the totaled vehicle regardless of its worth at the time of the accident.
When Should I Expect Compensation?
Most insurance companies will issue a check to you within days of finalizing the cash value of your totaled car. You should ask your insurance adjuster when you can expect payment.
Can’t I Just Keep the Car and Repair It Myself?
Typically, your insurance company will pay you your claim then auction off your damaged car for salvage and keep the proceeds of the sale. However, in some states, you may be permitted to keep the totaled car if you wish, particularly if you own it outright. You will have to let your insurance company know immediately.
Once you have the totaled vehicle in your possession, most states will require you to register it with a salvage title. You will have to be responsible to ensure the proper repairs are made. It should be noted that repaired vehicles with a salvage title are usually difficult to trade-in for other vehicles at dealerships and many insurance companies won’t provide comprehensive or collision coverage for cars that were rebuilt. Keep your totaled car is typically more trouble than it is worth in most cases.
Now that you know what “totaled” means, you also know what kinds of auto insurance coverage can help you in case the worst happens. Freeway Insurance can offer you great rates on comprehensive and collision coverage, gap insurance, and other car insurance policies that fit your needs and your budget. Get a free car insurance quote online or give us call to start saving and stay protected.