Reporting A Totaled Business Vehicle: Insurance Steps

If a business vehicle is damaged in an accident, the insurance company will determine whether it is totalled or a total loss. This means that the cost of repairing the vehicle exceeds its value, or that the vehicle is unsafe to drive even after repairs. In this case, the insurance company will pay the owner the actual cash value (ACV) of the vehicle, minus any deductible. The ACV is the market value of the car at the time of the accident, which can be determined using tools like Kelley Blue Book. If the owner still owes money on the vehicle, they may need to take out gap insurance to cover the difference between the ACV and the remaining loan amount. It is important to file an insurance claim as soon as possible after an accident to ensure coverage and avoid out-of-pocket payments.

What to do if you still owe money on a total loss vehicle

If your financed vehicle is deemed a "total loss" after an accident, you will most likely still be responsible for paying off the loan. This can be a problem if your car's value is less than what you owe on the loan. In this case, you will have to pay the remaining amount out of your pocket.

The value of your car on the day of the accident is called the actual cash value (ACV). Insurance settlements are based on the ACV of your car on the market, not how much you owe on the loan. Your insurance payout may be less than the amount you owe, which is common with newer cars due to depreciation.

To avoid this problem, you can purchase gap insurance, which covers the difference between your car's ACV and the remaining loan balance in the event of a total loss. Gap insurance can be purchased from your lender, insurance company, or a third-party provider. Before buying gap insurance, check if you already have it as some policies include it as part of their coverage.

If you still owe money on a total loss vehicle, here are some steps you can take:

• Contact your insurance provider as soon as possible to begin the insurance claims process.
• Compare your estimate of the car's ACV with the loan payoff to see if you owe more than the car is worth.
• Continue to make loan payments until the insurance settlement is finalized to avoid becoming delinquent on your loan, which will hurt your credit rating.
• If you disagree with the insurer's valuation of your car, you can negotiate for a higher payment based on low mileage, special features, or good overall condition.
• If negotiations with the insurance company are not successful, you can hire an independent damage adjuster to assess your car or consult with a car accident lawyer who can help you understand your options and negotiate for a better settlement.
• Once the insurance claim is settled, you can use the insurance payout to pay off the remaining loan balance. If the insurance payout is less than the loan balance, you may need to use your savings or consolidate the debt into a new loan.

How to fight a total loss settlement

If your business vehicle has been written off, you may be able to dispute the total loss settlement offered by your insurance company. Here are some steps you can take to fight a total loss settlement:

Step 1: Understand the Total Loss Threshold

In most states, a vehicle is considered a total loss when the cost of repairing it is close to or more than its value. The threshold for determining a total loss varies by state, typically ranging from 50% to 100% of the car's value. Understanding this threshold is crucial in determining your next steps.

Step 2: Gather Information and Evidence

Before negotiating with your insurance company, it's important to gather relevant information and evidence. This includes:

• Obtaining a copy of the insurance company's report and reviewing it for any inaccuracies or missing information, such as mileage, upgrades, and optional features.
• Gathering records that demonstrate the value and maintenance of your vehicle, such as receipts for repairs, upgrades, and any documents from the previous owner.
• Conducting research to find evidence that your insurer undervalued your vehicle or overvalued the cost of repairs. You can use resources like Kelley Blue Book, local body shops, garages, or online listings to find comparable vehicles in your area with similar features and mileage.

Step 3: Submit a Counteroffer

Prepare a detailed collection of evidence that supports your claim. This includes the research you've conducted, comparable vehicles in your area, and any additional information that showcases the value of your vehicle. Submit this evidence along with a counteroffer to your insurance company for their review.

Step 4: Request an Appraisal

You have the right to request an independent appraisal of your vehicle. Your insurance company may agree to this request to avoid the trouble and expense of hiring an appraiser. If they don't, you can hire your own appraiser to inspect your vehicle and provide an independent valuation.

Step 5: Negotiate

Remember that your insurance company has the funds you need to repair or replace your vehicle. However, you can exercise some leverage by refusing to settle right away. Insurance adjusters are often under pressure to close cases quickly and may have some discretion to increase the settlement amount during negotiations. Present compelling evidence, demonstrate that you're not in a hurry, and be prepared to negotiate to reach a fair settlement.

Step 6: Consider Filing a Complaint

If you believe your insurance company is acting in bad faith by making an unreasonably low offer, you can file a complaint with your state's Department of Insurance. They will investigate your claim and mediate the issue. If this still doesn't lead to a satisfactory resolution, you may need to consider arbitration or litigation as a last resort.

What to do if you want to keep your totalled car

If you want to keep your totalled car, you should be aware that your state may not allow you to drive or sell vehicles with salvage titles. You will also get a smaller insurance payout since your insurer will subtract the car's salvage value.

• Contact your insurance company: Inform your insurance carrier about your intention to keep the car. Typically, the insurance company will not care whether you keep your car or not because it will wind up paying out the same amount of money either way.
• Calculate the settlement amount: The company will begin with the car's fair market value. It will deduct whatever it would have recovered for selling it to a salvage yard from that amount. It will also subtract any deductible due from that amount. You get whatever is left over and the car.
• Weigh the pros and cons: Keeping a totalled car can lead to trouble beyond its worth. You will need to have it repaired, inspected, and reinsured to get the car back on the road. You may be limited in the types of coverage the insurance company is willing to sell you.
• Consider the financial implications: An older car with a low market value might be totalled with only cosmetic damage. In this case, you may not need to fix it at all. You can also use it as a parts car for restoration or repair projects.
• Be aware of the legal requirements: You must apply for a salvage or rebuilt title that identifies the car as having been a total loss. A salvage or rebuilt title will make insuring and eventually disposing of the vehicle tougher.

How to file an insurance claim if your car is totalled

If your car is damaged in an accident and the cost of repairing it is greater than its "actual cash value" (ACV), or market value, then it will be considered a "total loss" or "totalled". In this case, you will need to file an insurance claim. Here is a step-by-step guide on how to do this:

Step 1: File an Insurance Claim

Contact your insurance company as soon as possible to report the accident and file a claim. If another driver was involved in the accident, you should also contact their insurance company to report the incident. Total loss claims can take a long time to process, so it is important to do this as soon as possible.

Step 2: Tow Your Car to an Approved Auto Shop

It is recommended to tow your car to an auto shop approved by the insurance adjuster handling your claim. The shop will provide an estimate for repairs to the adjuster, who will then decide whether to total the car.

Step 3: Gather Your Paperwork

You will need to provide the insurance company with your car's title. If you do not have this, you can request a copy from your local Department of Motor Vehicles. If your car is totalled, you will likely need to sign the title over to the insurance company.

Step 4: Research Your Car's ACV

Before agreeing to an insurance payout, it is important to research your car's ACV. Look at auto websites, newspapers, and car dealerships in your area to see the current market value for similar cars (same model, year, make, and condition). You can also use online tools like Kelley Blue Book to estimate your car's value.

Step 5: Review Your Car Loan

If your car is financed, you will need to know how much you owe on your loan. The insurance company will first pay off your lender, and then you will receive any remaining money.

Step 6: Decide Whether to Keep Your Totalled Car

In most cases, you can choose to keep your totalled car. However, the insurance company will deduct the car's "salvage" or "junk" value (the amount they could get from selling it for parts) from your settlement. You will then need to have the car repaired, inspected, and reinsured before you can drive it again. This process can be costly and time-consuming, so consider carefully whether it is the best option for you.

Alternatively, you can choose to sell your car for salvage or part it out, but this may be more effort than it's worth. Another option is to donate your car to a charitable organisation, which may provide you with a tax deduction.

What insurers owe you for a totalled car

If your car is deemed a total loss by your insurance company, they will pay you the car's actual cash value (ACV) or fair market value—that is, the resale price of your vehicle before it was involved in a major accident. This amount is determined by the make, model, year, and mileage of your car, as well as its trim level, options, and pre-accident condition.

The ACV is not the same as the amount you paid for the car or the cost of buying a new, similar car. It also does not include the amount you still owe on the car loan or lease. You will need to continue paying off your car loan or lease even after your car has been totalled, unless you have Guaranteed Auto Protection (GAP) insurance.

If you have a car loan or lease, the insurance payout will first go to the lender or leasing company. If there is anything left, you will receive the rest.

You can expect the payout for your totalled vehicle within a few days of the ACV being determined.

Frequently asked questions