Totaled Car Guide: What To Do When Your Car Is Totaled
You’ve been in an accident and your car is damaged – extensively damaged.
You’ve exchanged information with others at the scene, talked to law enforcement officers and called your insurance company to report the accident.
The situation now may be under control, but what about the totaled car – that crumpled mess of metal was your primary means of transportation – that’s being towed away?
Your car was totaled . . . now what?
Your auto insurance company will send a claims adjuster to inspect your car and determine whether it can be repaired or is "totaled." A car is considered totaled if the cost to repair the damages exceeds its current worth.
If your car is declared a total loss, the adjuster will calculate its actual cash value, based upon accepted industry research guides, the mileage of the car, the local automotive market and similar factors.
Once the value is determined, the insurance company will write you a check, minus the amount of your policy deductible.
Now, say that you have a loan on the car and the insurance settlement is less than the loan payoff balance. You’re what’s known as "upside down" – you owe more on the car than it’s worth. And, yes, you do owe the difference.
What if you’re leasing the vehicle? Most lease contracts include gap insurance, which covers the difference between the value of the car and what’s owed. If you don’t have gap insurance, consider getting it for your protection.
Want to keep your totaled car?
After your auto insurance company gives you the check for the totaled car value, it owns the vehicle. Oftentimes, the vehicle will be sold at auction – usually for parts – with proceeds going to the insurance company.
But you also may keep the totaled car. Just inform your insurance company as soon as possible. If you wait too long and it goes to auction, it's difficult to get the vehicle back. And in most states, you’ll need an auto salvagers license to attend the auction and bid on your car.
If you choose to keep the vehicle, your auto insurance company will still reimburse you for its actual cash value, less your deductible. The company also may deduct the amount it may have received if the totaled car was sold at auction.
Now that your car has escaped the auction block, you’re responsible for having it repaired to safe driving condition, including any work required to pass inspections.
Once your formerly totaled car is fixed, getting new liability insurance coverage shouldn't be a problem – as long as the passes inspection. Getting other types of coverage, however, may be, so you’ll need to talk to your insurance professional.
Finally, you also may need to buy a salvage title for your car.