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How Do I Cope With a Totaled Car?

By Mike Richards Updated: 10/15/2019 Posted: 10/23/2015

If you’ve been in a car accident, and have escaped with few to no injuries, you’re in luck. But what are you going to do about your totaled car? The fate of the car (and your wallet) is often in the hands of your insurance company. Once the car gets towed off, they take over.

Knowing what happens next can ease a bit of the stress that goes hand in hand with an accident, and can also help you to develop strategies for dealing with the insurance company.

You Can’t Put the Genie Back in the Bottle

If you are in an accident, there’s a good chance that your car will be considered a write-off. With today’s unibody frames and expensive components, it frequently costs a lot more to repair a vehicle than it does to replace it.

You need to know what your options are while you’re waiting for the check from the insurance company. Will your insurer cover a rental car? How long will it take them to get you a check? What if you don’t agree with the amount on offer?

You’re going to have to sit down with your insurance agent and take a look at the fine print in your insurance policy. Actually, you should do this before you get in an accident. A lot of people simply pay for their insurance, get their policy in the mail, and then file it without ever reading it. Just as an example, do you know if you have gap insurance?

What is Gap Insurance?

This is insurance that’s intended to cover the difference between the actual worth of your car, and what you still owe on it. Regardless of what happens to your car, your lender expects to be paid. Generally speaking, if you’re less than halfway through the term of your loan, you should be carrying gap insurance.

If you still have a fair bit of time to go on the loan, check with your insurance agent. Most companies will allow you to add gap insurance at any point, but if your car has been written off, you’re too late.

How Do Insurance Companies Determine if a Car is a Write-Off?

Each company has its own formula for determining if a car is totaled, but it’s always based on how much it will cost to repair the car versus its actual value. If it would cost more to fix the car (minus your deductible) than its actual value, and what the company estimates it can get for the totaled car at the salvage yard, the vehicle will be written off.

Keep in mind that the amount of damage only matters insofar as it relates to the value of the car. Accordingly, the company would probably agree to pay for $3,000 in repairs to a year-old Porsche, but would consider a 10-year-old Camaro with similar damage to be a write-off.

Know Your Rights

Each state regulates insurance companies, and the rules are more stringent in some states than in others. So if you’re in an accident, you should research the Department of Insurance in your state. You can do this online, and you should find all the information you need as to how claims are handled, as well as the responsibilities of the insurance company, and your rights. You’ll need this information if the insurance company isn’t treating you fairly.

The Amount of the Settlement

If the insurance company determines that your vehicle is a write-off, it should pay you the market value of the car as it was before you had the accident, less your deductible and any costs that relate to disposing of the car, plus the estimated sales tax and the cost of registering a replacement vehicle.

Protect Your Rights

The best way to ensure that you get a fair settlement is to be proactive. Check out websites like Kelley Blue Book to help you determine the estimated market value of your car.

If you don’t do the research, your insurance company can throw out any number, and you’ll have no way of disputing their assessment. The amount they’re offering should be at least close to the figure you’ve arrived at after researching the market value of the car before the accident and then subtracting your deductible and their expenses.

Disputing the Settlement

If you feel that you have grounds to dispute the settlement, your insurance company may insist that you hire an appraiser, at your expense, who will provide a second opinion. There are usually state-mandated procedures for arbitration, but regardless of the outcome, you will still have to pay for the appraisal, and probably have to cover some of the arbitration costs as well.

Keeping the Car

You may decide that you would prefer to keep the totaled vehicle and repair it. You will likely have the right to do so, especially if you don’t owe any money on the vehicle. It’s not always the best course of action, but if it’s what you want to do, you have to let your insurance company know.

Keep in mind that not all states will allow you to retain ownership of a written-off car, and some insurance companies will refuse to insure a vehicle that has been written off. Additionally, if you keep the car, you’ll likely get less of a settlement, because the company could deduct the salvage value of the vehicle.

When to Expect a Check

There is no time limit set between the date of the claim and the time that it’s settled. It usually takes about a month, but it could be as long as two months, even if nothing is disputed.

The Final Word

A totaled car is never a good thing, but you can minimize the negative impact if you do your homework and know your rights. So, review your policy with your agent, preferably before an accident occurs. Know your rights. And keep in mind that retaining a totaled vehicle is not usually a good idea.

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