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Totaled car? 5 insurance questions to ask

 

If your car's involved in a serious accident, your insurer could declare it a "total loss." This means the car will cost more to repair than it's worth.

In this case, you'll get the cash value of the car at the time of the accident minus your deductible. But that amount usually isn't enough to buy a new, similar car.

It may seem like the aftermath — finding a new car and dealing with the insurance company — is worse than the accident itself. Learn what you’ll need if you go through this process.

1. Who determines whether my car is totaled?

An insurance claims adjuster will come up with the actual cash value, or precrash value, of the car, says Carroll Lachnit, features editor at Edmunds.com. It will be based on mileage, condition, standard features, extras on the car such as a sunroof, and where you live. Sales tax, title and registration fees also will be included in the actual cash value.

If repair costs approach 50 percent of a car's value, that's typically the threshold for when a car will be totaled, Lachnit says. Some appraisers aim for 80 percent.

2. Will I get paid if I'm stay making car payments?

Not at first. Since you don't technically own the car if it's not paid off, your lender will be paid first and you'll get any balance. If the car is worth less than you owe, you still have to pay off the loan. If liability is clear and not much investigation is needed, you should get a check in a few days, says Kip Diggs, a spokesman for State Farm Insurance. If liability is unclear, it can take longer.

In this case, you can be financially rescued if you already have GAP insurance. GAP, which stands for guaranteed auto protection, pays the difference between what the auto insurance company says the wrecked car is worth and what you, the driver, owe on the auto loan. This applies only if the auto insurer decides your car has been totaled.

3. Am I covered for a rental car?

A week's car rental is typical after an accident, but check with your insurance agent — before you get in an accident — to see how long you'd be covered if your car is totaled.

4. Can I keep my totaled car?

Probably, but it's not a good idea. No matter how much you love your car, keeping a totaled car that can't be fixed can create hassles with trying to drive it or sell it. By law, the car must be branded as "totaled," meaning that any new owner must be made aware of that fact on the car title.

5. What if I disagree with the assessment?

If you don't think the car is a total loss, you can have it repaired by whomever you want, Diggs says, or have a mechanic or someone else inspect it to determine how much it would cost to fix. You also should provide documentation about why you think your car is worth more and should get your own assessment of its value.

If you disagree with the value set through NADAguides.com, the insurance company may go to independent sources such as used-car dealers and classified ads to determine a price.

See also:

If a borrowed car is wrecked, who pays?

One car insurance claim can send your rate soaring by 76%

Story updated April 1, 2016

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