First, you have to know what exactly your insurance covers. It’s a bad idea to start thinking about coverage after you are involved in a collision. As soon as you order a new insurance policy, try to find out the details of your coverage.
After an accident, make sure your company has your story as to what happened and check your policy to verify all information.
You can never be too sure what the other driver is saying to his/her car insurance company.
If both insurance companies are in agreement, you are going to be paid for your totaled vehicle. This is certainly a convenient policy; without it, you would have no vehicle to drive.
The money that is coming to you is meant to help you settle the note with the lien holder and to buy you a new vehicle.
Naturally, you do not want to do anything dishonest. When insurance is involved you will occasionally have some opportunity to commit fraud.
A case of fraud might include filing a damage claim for damage that did not actually happen. Or, filing a damage claim for something that happened a few months ago, but that was not involved in this particular incident. Do not do this.
It will not only be discovered during the investigation–which could cost you your relationship with the insurance company–but may also be uncovered as a felony crime.
What if your car is still drivable?
Usually, if your car is damaged beyond repair in a collision, the insurance company will call it a “total loss” and will pay for the full price of the vehicle, which will be comparable to the Kelly Blue Book list price.
Technically, of course, any vehicle could be fixed. In many cases, though, the damage is so severe that the insurance company would rather save time and money by buying you a new car than repairing a totaled one.
This policy is only available if you have full coverage, which is collision plus comprehensive.
The insurance company also considers a car “totaled” if it cannot be repaired safely or if the state has a law that if a car’s damage is that severe, it must be declared a total loss.
The one to make this claim will be the insurance claims adjuster.
At this point in time, the insurance company will pay the actual cash value of the vehicle, minus any deductibles you agreed to pay. You do still own the totaled vehicle unless stated otherwise by the insurance company’s policy.
If you still have ownership of the vehicle, then you have the right to sell the vehicle to a salvage buyer, or in some cases, even keep the vehicle for yourself.
What the Insurance Company Really Wants
If you want to keep your totaled car, then the insurance company will usually allow you to—but they will want to pay the actual cash value of the car less the deductible as well as the fair salvage amount.
If the insurance company keeps your car then they pay more money towards your damages.
However, if you want to keep the car for profit, they feel they deserve a discount. The insurance company was counting on that wrecked car as income by selling it for salvage parts.
In many states, you will have to obtain a special title called a “salvage certificate,” or perhaps a “reconditioned title.”
This title clearly indicates to all future buyers that the car was previously damaged. That’s not to say that it will never be sold again—some cars can be rebuilt. It will just be harder to sell than an average car with a clear title.
Remember this scenario only applies if you own the vehicle.
If you are leasing a car, then the lien holder (the bank or the dealership) will be paid for the loss and if the insurance check exceeds the final note, you get to pocket that money.
The reverse is also true; if the settlement is less than the price of the note, you must make up the difference.
What if you want to keep your car?
If you decide to keep the car, then it’s your job to cash in the check which will be less than before since you chose to repair the car yourself.
You also have the obligation of getting a salvaged title with the local DMV.
Fees can get pricey here, especially considering the fact that the insurance company never really gives you the total worth of the parts of the car, just the car’s general worth—and even that figure is still a bit stingy.
It may better suit you to sell the car for parts rather than repair it.
However, if you are determined to repair your car, you will be responsible for the dismantling and selling of the car, not to mention storage.
If you go this route, let your insurance agent know as soon as possible to prevent any misunderstandings with the insurance company.
You can use our free car insurance quote tool online to find car insurance companies that cover total loss damage, collision, and comprehensive damages.