What are the car insurance issues when my car is totaled?

Car insurance companies may label your car a "total loss" if the cost to repair the vehicle approaches or exceeds the actual cash value of your vehicle. You may disagree with your car insurance company's insurance adjuster and file a formal disagreement, which could lead to a new verdict. There are certain car insurance issues you'll need to navigate if your car is totaled. These include working with a total loss insurance adjuster and potentially filing a disagreement with their assessment.

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Chris Tepedino is a feature writer that has written extensively about car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. H...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jun 24, 2021

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Here's what you need to know...

  • The damage that results in a totaled vehicle could be from an accident, a natural disaster, severe weather, or theft.
  • To be determined totaled, your car does not have to reach the total amount of the value.
  • In order for your car to be covered if it is totaled, you need to have  comprehensive coverage or collision.

So, your car is totaled. You may have been in a huge car wreck or had a storm rain down hail on your car. But, for whatever, reason, your car insurance company is labeling it a total loss.

What does this mean and how can you receive reimbursement for the lost value of your vehicle?

That’s what this article is all about. We’ll cover the car insurance coverages for totaled vehicles you need to make sure you get reimbursed in this situation as well as the steps in handling the process with your car insurance company.

Auto insurance is important. It can save you a great deal of money if you need to repair your vehicle. But your vehicle being labeled a “total loss” can be an entirely different situation than just filing a normal claim.

Knowing how to communicate with your insurance company can help you get through the situation of a totaled vehicle more smoothly. If you’re in the middle of searching for a new car insurance company, it can help to compare quotes from different companies to see which offers coverages or services that fit your needs.

Enter your ZIP code into our free online quote comparison tool to get the best car insurance rates for your area, based on your demographic information.

Let’s get started.

What does “totaled” mean from an insurance company‘s point of view?

When you hear that a vehicle was “totaled” what comes to mind?

The word “totaled “usually brings to mind a completely smashed vehicle, broken windows, a vehicle that you cannot drive, and a crash that results in severe injury for the driver.

The truth is, that is not always the case. A totaled vehicle may not just be a result of a car accident but any number of situations such as severe weather, vandalism, or theft.

The basic definition of a “total loss” when it refers to cars is when the cost of repairs for your vehicle exceeds the actual cash value of the vehicle — typically assessed through Kelly Blue Book or your car insurance company’s insurance adjuster.

After the incident, your car may be driveable but still labeled a “total loss.” Or you may not be able to drive it and it is not labeled a “total loss.” It depends on the extent of the damage, the actual cash value of the vehicle, and the estimate of the cost of repairs from your insurance company.

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How is a car determined to be totaled?

Most insurance companies will send a total loss adjuster to your home or where ever your car was towed after the accident to access what the damage caused by the accident.

The total loss adjuster will look at numerous issues to decide if your car is a total loss: technology, the actual cash value of the vehicle, and the cost of repairs being the main three. To be determined totaled, your car does not have to reach the total amount of the value.

The adjuster may determine that your car is a total loss if it is close to, equal to, or over the amount of your vehicle.

Make sure that you are a part of the process when the state of your vehicle is being determined. Do your own research to find out the current market value of your vehicle and ask your own mechanic’s opinion.

Sometimes, you may not agree with an adjuster’s determination. If you disagree, you have the right to file a disagreement with your insurance company and ask for another adjuster to look at the situation.

You should know that this will increase the amount of time it will take for you to get your vehicle repaired or to receive your check, but you have to watch out for yourself. Determine what is best for you financially, and what is the safest way to get back on the road.

What car insurance coverages will help you if your car is totaled?

There are two main car insurance coverages that will reimburse you if your vehicle is labeled a total loss: collision or comprehensive coverage. Let’s break down the two.

Collision auto insurance coverage will cover any type of collision or driving-related incident. This means if you get into a wreck but are considered at fault or if you get into a single-car accident.

This last part is crucial if you live, like 70% of U.S. residents, in an area that sees heavy winter weather conditions. As we show in our 2021 report covering 25 facts about winter weather car crashes, snow and sleet cause 18% of all weather-related car accidents, including 13% of all weather-related traffic deaths.

Single-car accidents are not uncommon and collision auto insurance coverage is the only insurance coverage that will reimburse you for repairs needed from those situations. And then there is comprehensive car insurance coverage.

This coverage protects you financially for any situation other than collisions: vehicle theft, vandalism, riots, and even weather damage. To receive reimbursement for the actual cash value of a totaled vehicle, you need one of these two types of auto insurance coverages.

You may also want to have rental car coverage. This will cover the cost of a rental car while your vehicle is repaired or while you shop for another vehicle.

The amount of time that you are able to use a free rental car is determined in your policy.

If your need for the rental car exceeds the amount of time determined, you will have to pay out of pocket or go without the rental car.

Should I purchase Guaranteed Asset Protection car insurance coverage?

Guaranteed Asset Protection (GAP) coverage is a helpful type of auto insurance if you purchase a very expensive vehicle or you plan on driving your new vehicle more than the average person.

GAP coverage comes into play when your car is totaled but in a different way than collision or comprehensive coverage. Instead of reimbursing you for the actual cash value of the vehicle, it pays the remainder on your loan, so that you’re not stuck with a car note but have no car.

It works for people who are “upside-down” on their car loan, meaning they owe more on their loan than their car is worth (actual cash value). With GAP coverage, comprehensive, and collision coverage, you can be completely protected if your car gets totaled.

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How do I find the right car insurance company?

Finding the right auto insurance company that offers the type of coverage you need and whose total loss policy you agree with is easy.

You can compare companies, coverage options, and policies online side by side using our free car insurance comparison tool below. It saves you time and money while allowing you to find the company that is right for you.

Just plug in your ZIP code into our free online quote generator to start comparing the best rates for you and your area today.

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