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What to Do If Your Car is Totaled in an Accident

April 02, 2021

image of a car after an auto accident

No one wants to hear their car has been totaled after an accident. Indeed, no one wants to be in an accident in the first place. But unfortunately, car accidents are very common, with the resulting headache often being that your car is totaled. When the damage isn’t enough to total your car, you can often get assistance from your trusted local mechanic to help you with insurance claims processing. They can also perform the body work necessary to bring the vehicle back to pre-loss condition.

What Does “Totaled” Mean?

First off, what does it mean when a vehicle is totaled?

Also known as a total loss, this means your car is one of two things: A) not repairable or B), it would cost more to repair than what the vehicle is worth. Even if you wanted to make the necessary repairs, your auto insurance company will most likely refuse to pay for them if the car has been deemed totaled. They basically don’t think it’s worth it. Let’s say the necessary repairs on the damage would be $14,000 but the vehicle’s value is only $12,000. The car would be declared totaled.

Depending on your individual policy, your insurance may owe you the cash value of your car. To determine that cash value, they will consider the following factors:

  • Vehicle make and model
  • Age
  • Condition
  • Mileage
  • Resale value, or salvage value, of the metal and parts
  • Chance of unseen damage such as alignment problems or leaks
  • The price the vehicle could command in the local market, based on the selling price of similar vehicles in your area, says Allstate.

When the Loss Isn’t Your Fault

Not every totaled car has someone to blame. Sometimes, acts of nature can total a car, such as when a tree falls onto your car while you’re parked downtown. If you have comprehensive coverage, you can be reimbursed for the actual cash value, minus the deductible. Side note: actual cash value is basically the price your car might have gotten on the open market had the damage not occurred. This is different from replacement cost value, which is what it would cost to buy a brand new car comparable to your damaged one. Not every car insurance company offers this.

In the event your car was totaled as a result of an accident caused by another motorist, collision coverage will probably kick in first. It’s up to your insurance company if they decide to seek repayment from the other party.

Will My Insurance Company Pay Up For a Totaled Car?

When you own money on a car, essentially when you have a loan out on it, you are required to have both collision and comprehensive coverage. Once you pay off the loan and the car is yours, it’s your choice whether or not to have that coverage. But without this extra coverage, you may be responsible for paying to replace a totaled car out of your own pocket, particularly if you were determined to be at fault.

Comprehensive insurance only covers damage or disasters that are unrelated to the crash; collision insurance kicks in after a car crash and address the actual damage to your vehicle or surrounding property.

Sometimes, your insurance company won’t cover your claim when the vehicle involved is totaled. Common reasons for claim denial include:

  1. Lack of appropriate coverage.
  2. Failure to pay premium payments on time.
  3. Driving while intoxicated at the time of the crash.
  4. Statute of limitations ran out on reporting the damage to the insurer.
  5. A fraudulent claim was filed.

Here’s what usually happens when you file a totaled vehicle claim:

  1. First, pay your deductible before a claim check can be issued.
  2. Negotiate with the insurance company if you believe your car to have a higher value than they do.
  3. After claim approval, your insurance company will own the totaled car. They can choose to sell it for parts or scrap metal. If you want to keep the totaled car, your insurance company may deduct the salvage value from the claim payout.

Paying a Loan on a Totaled Car

If you had been financing your car at the time it was totaled, your insurance company could cut a check made payable to your name as well as the lender’s. This means you will have to agree with your lender on how that reimbursement will be released. This is how it usually goes: the lender is reimbursed first; any remaining compensation is then paid out to you.

Sometimes you could still owe the lender more money for the vehicle in excess of the insurance payment you got, which means it’s your responsibility to pay the rest of the balance on the loan. Let’s say you owe $20,000 on the loan, but the vehicle’s value depreciated to $18,000 at the time of the accident. If you have collision coverage, you would get reimbursed by the insurance company for the actual cash value of your car, or $18,000. You would owe the lender that amount plus the other $2,000 from your own pocket. One solution is to add on gap coverage to your policy to avoid having to pay the lender that extra money, but few people think ahead and secure this coverage in anticipation of an accident like this.

If you find yourself in a situation where your car may be totaled as the result of an accident, it’s important to have patience throughout the process even though it is frustrating. If your car is not totaled, it’s important to get the damage fixed right away by a qualified mechanic.

Contact Hance’s Uptown Collision Center

The time after an accident can be very scary and confusing. For assistance with insurance claims or auto body repair after an accident, contact us in Dallas at 214-214-4791 or Plano at 214-225-5880. We would be happy to take you through the process step by step. Schedule a convenient appointment with us today.

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