Auto Insurance After A Total Loss: What You Need To Know

If your car is in an accident and it takes a serious beating, your insurance company may deem it totaled. This means that the cost to repair the damage is greater than or close to the value of your car. If your car is totaled, your insurance company will pay you the value of the vehicle minus any deductible. You will then have to pay off any remaining balance on your car loan. If you disagree with your insurance company's settlement offer, you may be able to negotiate for a better settlement.

What does 'totalled' mean?

When a car is involved in an accident, insurance companies will assess whether it is 'totalled' or not. This is a classification given to cars that are considered a total loss after sustaining damage from an unexpected event, such as a car accident.

Insurance companies will determine a car to be totalled when the cost to repair the vehicle , plus its salvage value, is less than the cash value of the car. This means that the cost of repairing the car is more than the car is worth. For example, if a car is worth $8,000 and the cost of repairs is $10,000, the vehicle would be considered totalled.

Insurance companies will use computer programs and databases to estimate the cost of repairs and the value of the car. They will also take into account various factors when determining the value of the car, including the age of the car, the type of car, the condition the car was in before the accident, and whether the insured party was at fault and to what degree.

If a car is deemed totalled, the insurance company will give the owner a cheque for the value of the car. The owner then has the option to either accept the payment and let the insurance company deal with the car, or to keep the car and buy it from the insurance company. If the owner chooses to keep the car, the insurance company will subtract the car's salvage value from the amount it was planning to pay. The car will also be issued a salvage title, which may make it harder to sell or insure in the future.

What happens if I keep my totalled car?

If you want to keep your totalled car, you can! However, there are a few things you should know. Firstly, your insurer will pay you the vehicle's actual cash value minus any deductible due and the amount your car could have been sold for. This means that you will get a smaller insurance payout if you decide to keep your car.

Secondly, your state may not allow you to drive or sell vehicles with salvage titles. A salvage title is what your car will be issued with after it has been totalled and repaired. A vehicle with a salvage title could be harder to sell or insure in the future.

Thirdly, there may be a lot of red tape involved with getting your car back on the road. Your car will probably need to be repaired, pass a state inspection and be issued with a new title.

Finally, keeping a totalled car can be more trouble than it's worth. Repairs could cost more than originally estimated and it may be difficult to insure or sell the vehicle in the future.

How do I get the most money from insurance?

If your car has been "totalled" or "totalled loss", it means that it is not repairable, or it would cost more to repair than what the car is worth. When this happens, your insurance company will reimburse you for the actual cash value of your car, minus your deductible.

• Conduct independent research on your vehicle's worth: Before accepting an offer from your insurance company, get an independent valuation of your vehicle. Factors that affect its value include the make, model, year of manufacture, condition, features, pre-accident condition, number of miles on the odometer, and additional damages not caused by the accident. You can use car valuation websites or take your vehicle to different used car yards to get an idea of how much it is worth.
• Provide supporting documentation: Gather all relevant documents, including accident reports, insurance policies, maintenance records, and details of your car when it was purchased. These documents can help establish the condition of your car before the accident and support your claim for a higher valuation.
• Understand your auto insurance policy: Read through your policy to understand the coverage limits, exclusions, and other relevant details. Make sure you know how much you are entitled to in the event of a total loss.
• Provide documents and be persistent: Print copies of all interactions with your insurer, including emails, letters, and phone call logs. Write down the details of your discussions and any promises made by the insurer. Be patient and persistent, as negotiations may take time and multiple attempts.
• Stay calm and polite: Maintaining a respectful and polite tone during negotiations can be an effective strategy. Losing your temper may delay negotiations and damage your case.
• Be clear with your intentions: State your preferred settlement amount and provide reasoning and evidence to back it up. Bring copies of the latest valuation report, an independent appraisal report, the policy document, and receipts for any aftermarket accessories.
• Speak with a manager: If you are not making progress with the insurance company's representative, request to speak with their manager, who may have more authority to make decisions.
• Request a third-party appraisal: If negotiations with your insurance company fail, you can request an appraisal from a neutral third party to determine the market value of your vehicle. An impartial appraiser can establish a fair market value and prove that the insurance company undervalued your car.
• Make a counteroffer: If you still feel that you are being lowballed, decide on an appropriate counteroffer and present it to your insurance provider along with all the documents and information you have compiled.
• Know your rights and seek guidance: If you believe you are not getting a reasonable offer, contact your agent or your state's Office of Consumer Affairs for guidance.

What happens to the title of my car?

If your car is totaled, you will need to transfer the title of your vehicle to the insurance company. The insurance company will pay you the fair market value for your car, essentially buying the car from you. You will then provide the title of the car to the insurance company, and they will send the car to be salvaged.

If you own your car without any financing, the physical title should be in your possession. If you are financing your vehicle, the loan company will have the title. Once the title is located, you and the insurance company representative will need to fill in and sign the document. You will sign the title as the seller, and the insurance company will sign as the buyer.

If you keep your car, the title may be branded as "salvage". The same thing will happen to the title if you decide to keep your car after it has been totaled. A car with a salvage title can be more difficult to insure.

What happens if I still owe money on my totalled car?

If your car is totalled and you still owe money on it, you are still responsible for paying off the remaining balance of your car loan. This is because the insurance company will only pay out the car's actual cash value (ACV) at the time of the accident, which may be less than the loan balance.

For example, if your car is valued at $10,000 but you still owe $12,000 on your loan, the insurance company will pay out $10,000 to your lender and you will be left with a debt of $2,000. This situation is known as being "upside down" on your car loan.

To avoid this, you can purchase gap insurance, which covers the difference between your car's ACV and the amount you owe on your loan. Gap insurance is typically purchased through your lender or insurance company and can be useful if you have a long loan term or have put little to no money down on the car.

If you do not have gap insurance and are left with a remaining loan balance after your car has been totalled, you will need to continue making loan payments until it is paid off.

Frequently asked questions