Getting into a car accident can be traumatic and stressful. However, once the dust settles, you have another issue to deal with: what to do with your car. If the accident was minor, you can probably have the car repaired and keep driving it. In a more serious accident, though, it’s likely that the car will be declared “totaled,” or declared a total loss.
Quite simply, a total loss means that the insurance company has determined that the vehicle will cost more to safely repair than it’s worth. The actual threshold for declaring a vehicle a total loss varies by state and insurance company.
In some states, a car is a total loss if the cost to repair it exceeds a percentage (anywhere from 50 to 100%) of the car’s value. Other states use a Total Loss Formula that calculates the cost of the repairs plus the scrap value of the car; if that exceeds the pre-accident value of the car, then the car is totaled.
Because there are so many variables that influence whether a vehicle is a total loss, it can be difficult to tell at first glance whether your car is in fact a complete loss. Even what appears to be a minor accident might cause invisible structural damage, for example, that renders the car unsafe. For this reason, only your insurance carrier can make the final determination, and there are a series of steps to take to begin this process.
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Make a Claim Report
After an accident, one of your first calls should be to your insurance company or agent to make a claim report. Assuming you aren’t injured in the accident, you can even do this from the scene after contacting emergency services. Some companies will immediately send an adjuster to the scene and arrange for your vehicle to be towed. In every case, the insurance company will begin processing the claim and helping with the next steps.
Tow Your Vehicle
After the accident, your vehicle will likely need to be towed to a repair shop. In the event that you aren’t able to direct the tow company to a specific shop, the police will direct the tow truck driver to bring your vehicle to a designated shop or lot where it will be stored until it can be evaluated.
If you can, remove all of your personal belongings, including the vehicle registration and other documents from the glove box. Keep in mind that child safety seats, including booster seats, will need to be replaced and should not be used after the accident.
Ask Your Insurance About a Temporary Replacement Vehicle
After your car has been towed, talk with your insurance company about a temporary replacement vehicle to drive while your car is being repaired or replaced. If your insurance policy has a rental reimbursement option, you will be allowed to rent a vehicle and it will be paid for as part of your claim. There are typically limits on how much you can be reimbursed, and how long you can rent a car, so be clear on the details.
While the insurance company processes your claim and the repair shop and adjuster determine the status of the car, gather any paperwork related to the car that you’ll need in order to sign the car over to the insurance company and have it declared a total loss.
This includes the vehicle title, paperwork regarding your vehicle financing, vehicle registration, sales receipts, tax receipts, and receipts for upgrades you made to the car, such as installing a remote starter or custom exhaust. If you don’t have the vehicle title, contact your state’s motor vehicle department to request a new copy. If you still owe money to the bank, get in touch with them to confirm they have the vehicle title.
Verify the Remaining Balance on Your Vehicle
Once your car is deemed totaled, assuming the other driver was at fault, their insurance company will issue a check for the value of your car. The amount you receive depends on the actual cash value of the car, the salvage value, and how much you still owe on it. In some cases, you might not receive any money for your car, as the payment will be sent directly to the bank instead.
A total loss accident doesn’t release you from the obligation to repay the loan. Therefore, you’ll need to check with your lender to determine the vehicle payoff amount, and forward that information to your insurance company.
Carrying lease or loan gap protection can help ensure that you aren’t left owing payments on a totaled vehicle. This insurance coverage will pay the difference between the actual cash value of your car and what you owe. Depending on the value of your car and how much you’ve already paid, this could mean thousands of dollars in your pocket to put toward a new car.
Research How Much Your Car Is Worth
Once your car has been deemed a total loss, the adjuster will make a recommendation for a payout amount based on their assessment of the vehicle’s value. Before accepting any offer, do your own research to determine whether the offer is fair and in line with the actual value of the car.
One place where you can find an estimate of your car’s value is the Kelly Blue Book. The insurance company is likely to use this tool as well to determine the value of the car. This is also where the receipts for upgrades and maintenance can help you make your case; showing that the car was in above-average or excellent condition can increase the payout. Reviewing the prices for comparable vehicles in your area can also help you gauge whether the offer you’ve received is fair or needs to be negotiated.
Submit Any Documents You Are Sent As Quickly As Possible
Throughout the claim process after your vehicle accident, the insurance company will send you requests for information and paperwork. For example, you’ll need to sign the title over to the insurance company, granting them ownership of the totaled car, or grant them power of attorney to take ownership of the vehicle once the loan is repaid. The faster you get these documents signed and returned, the faster your claim will be processed and you can begin shopping for a new car.
Getting a New Car After a Total Loss
If your car is totaled, you will need a new one. You have a number of options.
- Use the money from the settlement as a down payment on a new car. This requires taking out a new loan.
- Purchase a used vehicle with the settlement cash.
- If you did not have gap coverage, you can roll the remaining balance on your old car into a loan for a new car.
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