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What happens if your car gets totaled? How much does it cost to repair or replace it? And who should pay for it?
It is essential to know what to anticipate in the aftermath of a collision, particularly if it was a significant one in which you were involved. The good news is that there are measures to reduce the potentially financially damaging effects that the total loss of your vehicle could bring. Here's what you need to know.
What Exactly Does 'Totaled' Mean?
A vehicle can be declared a total loss when its value has been reduced to zero. This usually occurs when a vehicle sustains significant damage and cannot be repaired at an acceptable price.
The insurance company will then declare the vehicle a total loss and may offer you a settlement based on how much money they think the vehicle is worth. If you accept this amount, you'll receive a check from the insurance company and have no further claim against them.
If you disagree with their assessment, you can take the matter to court, where a judge will decide whether the vehicle is actually worth as little as the insurer says it is. In most cases, however, the judge will rule in favor of the insurance company because it is difficult to prove the true market value of a damaged vehicle.
So how do insurers determine the value?
Value determination varies from state to state. For example, a vehicle is considered totaled in California if it has sustained "substantial damage" and cannot be repaired at an auto body shop. In New York, a vehicle is considered totally destroyed if it has been damaged so severely that it has lost 75% of its value.
In most states, however, a vehicle will be deemed a total loss if it has suffered substantial damage and cannot be repaired at a dealership. This assessment also applies to vehicles that were hit by another vehicle, which means they may not be drivable.
How much will insurers pay out for a totaled car?
Insurers typically offer two types of settlements:
- Replacement Cost - This is the amount needed to purchase a similar replacement vehicle.
- Actual Cash Value (ACV) - This is the amount that the insurer believes the vehicle is actually worth.
Whether you receive cash or an ACV payout, the insurance company will deduct their share of the bill from the final settlement.
Steps to Take After a Total Loss Accident
Once you've received notification that your vehicle was declared a total loss, here are some steps to take:
- Call your insurer as soon as possible to report the accident. They will ask you questions such as where you were driving and whether you had any passengers. You also need to provide them with information about the other party involved in the accident.
- Contact the police to report the incident. You may need to use the police report later to help you file your insurance claim.
- Have the vehicle towed to the nearest authorized tow truck service provider. The tow truck driver will remove the vehicle from the road and store it until the insurance company pays him/her before removing it to a salvage yard.
- Ensure you keep copies of everything related to the accident, including police reports and photos of the damage to your vehicle, to assist with the claims process.
- Submit your full claim to your insurance company as soon as possible. Following your claim submission, your insurance company will write you a letter verifying the particulars.
You should also review your policy to see if you are eligible for additional coverage and make the appropriate adjustments. There are various types of loss settlements, some of which include additional benefits such as cash settlements, temporary replacement automobiles, or rental cars.
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Frequently Asked Questions
In most places, even if your vehicle is a total loss, you can keep it and be responsible for paying for any necessary repairs. The amount the insurer pays you will be reduced by the car's salvage value, which is the amount of money they would have received if they had sold your vehicle to a junkyard instead.
Insurance companies typically respond to claims within 30-60 days. However, they also require comprehensive documentation such as police reports, photos, and receipts to be submitted - not submitting these on time may delay or even jeopardize your payout.
Yes. You can submit a claim to be reimbursed for various costs, including medical expenses, lost income, and rental car fees. You typically have ninety days from the day you initially filed a claim with the insurance carrier to submit these claims.
If you are not at fault for the accident that totaled your car, you may not be required to pay the deductible. In most states, the negligent driver's liability insurance pays for all costs associated with the collision, including any deductibles.
Suppose the other driver is found to be at fault for the accident that totals your automobile. In that case, the at-fault driver's property damage liability insurance may reimburse you for the total value of your vehicle.
Several states, however, have "no-fault" rules that mandate individuals must report accidents to their own insurance companies regardless of who was at blame in the incident. In a jurisdiction that does not require drivers to prove fault for accidents, collision coverage may kick in to replace your vehicle if it is destroyed.
Yes - in most cases, you are still liable for repaying the debt if the car you drive was leased to you or financed by a third party. Any reimbursement from a claim will likely have to go toward covering the costs.
The amount you owe your lender for the car may be greater than the money you receive from the insurance company. If this is the case, you are accountable for making the payments on the outstanding car loan or lease balance.
However, some comprehensive coverage also includes what is called 'gap insurance,' which covers any difference between the car's actual value and the outstanding loan balance, so you should always check your insurance policy.
As mentioned earlier, you should always keep copies of all documents related to the accident, including police reports, photographs, and receipts. These items will help prove your claim and make sure you aren't being overcharged.
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