A car is considered totaled when the cost to repair is more than the value of the car. While some states do have different laws on this, in most cases the insurer determines whether a vehicle is considered a total loss.
So, if you are in an accident:
1. Contact your agent to initiate a claim.
2. Your carrier will determine if the vehicle is “totaled”, or is a total loss, based upon repair costs and value of the car.
3. If it is totaled, the carrier will typically issue a payment to you for the vehicle’s actual cash value less any applicable deductibles from your policy. Note: If the accident is caused by another driver, their insurance may also reimburse for the deductible.
What if I have a loan on my car?
In many cases, the lender will be reimbursed first and any remaining money will then go to you.
What if I owe more than the amount the insurance company gives me?
Let’s say you owe $16,000 on a car but the determined value of the totaled vehicle is only $12,000, Typically the $12,000 would apply to the amount you owe. Then you’d be responsible for the difference of $4,000. One way to protect yourself from this is to add “loan or lease gap coverage” to your policy. This optional coverage is often offered as a way to help protect you in these instances. Your agent should be able to talk to you about how that works for your policy.
The big question: Does the insurance company automatically remove the car from my policy when it is totaled?
Not typically. What if you decide to keep the vehicle and fix it? That is an option, and the carrier may not know what you plan to do. So, In this case, you don’t want the vehicle removed from the policy.
Once you no longer have the vehicle in your possession, you need to notify your agent to remove the car from your policy. The carrier does not typically remove it for you.
What if I decide to keep and fix the car?
You may decide to take the money and fix the vehicle. If that’s the case, you need to notify the agent that the car now has a salvaged title. Click here to learn about salvage title auto insurance
Have any questions? Feel free to give us a call at (603) 273-0953, or visit our website at keslarinsurance.com.
