How to Get the Best Totaled Car Insurance Payout
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- Totaled car definition
- Who pays?
- Totaled car payout
- Totaled financed vehicles
- Gap insurance
- Maximizing your payout
- Replacing your totaled car
A car is deemed a total loss when the repair costs exceed the car’s value or the vehicle is unfixable.
Dealing with the aftermath of an accident and a totaled vehicle can definitely feel stressful.
That being said, if you understand the process, you can maximize your chances of having a smooth claims process. Having the right car insurance coverage in place can help you get the best insurance settlement possible after an accident.
Understandably, most drivers are left with a lot of questions when dealing with a totaled car.
That’s why the insurance comparison and broker app Jerry has compiled all the information that you need to know about the totaled car payout process so that you can get back behind the wheel with an affordable new insurance policy fast.
When is a car considered totaled?
Put simply, a car is considered totaled if the insurance company decides that your car either cannot be repaired safely or the repairs will cost more than the car is worth.
Insurance companies must comply with state law when they are deciding if your vehicle is a total loss.
Some states will use a set Total Loss Formula. The cost of repairs and scrap value of the car must equal a certain percentage of the vehicle’s pre-value accident value—usually about 80%. Other states will use the Total Loss Threshold that is set by the state legislature.
To determine the value of your totaled car, appraisers will consider how much it would cost to repair your car and the actual cash value of the vehicle. The insurance company will then compare the two to decide if the car is considered totaled based on state law and figure the payout.
Whose insurance company will pay for a totaled car?
Insurance payouts on totaled cars depend on where you live.
If you live in a no-fault state
There are only 12 no-fault states: Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah.
If you live in a no-fault state, you can count on your insurance company shelling out for at least some of the damages when you are involved in an accident—regardless of who was at fault.
If you don’t live in a no-fault state
If you do not live in a no-fault state, you need to maintain collision and comprehensive insurance policy to ensure that your vehicle is covered.
If you are at fault, your coverage will pay for the damages. If another driver is at fault, their insurance will pay for the damages.
Collision insurance is designed to protect you if your vehicle is damaged in a collision, regardless of who is at fault.
Meanwhile, comprehensive coverage will cover you up to your policy limit for external events like floods, fires, theft, or vandalism that might leave your vehicle damaged or totaled.
If you have a policy that includes both collision and comprehensive insurance, you are considered to have full coverage. Full coverage can be a worthwhile upgrade if you don’t want to risk getting left high and dry after an accident.
If you want to save money while upgrading your policy, Jerry is an excellent place to start.
Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even cancel your old policy for you.
Even better, the savings keep coming even after Jerry finds you great insurance at the lowest price. Before every policy renewal period, you’ll be presented with new competitive quotes, which means you’ll always have the best coverage at the best price.
How is a totaled car payout calculated by your insurance?
If your car is totaled, the insurance company will calculate the amount of your payout.
Once you file a claim, the insurance company will launch an investigation and assign a claims adjuster to your case to determine your claim’s value.
The adjuster will examine the car to get a better idea of the full extent of the damages. The company may also review police reports and photos and talk to people who witnessed the accident to better understand what happened.
After determining a fair pre-market value for your car— known as an actual cash value— they will use the formula set by your state to determine if your vehicle is a complete loss. In most states, the insurance company will file a “salvage title” with the DMV and take possession of the vehicle.
Your total loss settlement will be determined in relation to your vehicle’s actual cash value and your policy limit.
As long as the actual cash value falls below your policy limit, you should be able to claim the full value of your car at the time of the accident—minus your deductible and disposal costs.
Once you finalize your settlement, your insurance provider will send you a check that you can use to shop for a replacement vehicle.
You will have to get an insurance policy for your new car, so save yourself the hassle of comparing endless quotes online and use Jerry to find the best insurance rate fast.
What if your financed vehicle is totaled?
If your financed vehicle is totaled, the maximum amount that you will be able to claim is the actual cash value minus the deductible and other expenses.
Unfortunately, loans have interest and other fees are factored into the equation. Newer vehicles also have high depreciation rates. Because of this, the actual cash value is often lower than the amount that you will have left to pay off on your loan.
Your insurance company will transfer the payout to your lender, but you will be responsible for paying the difference.
For instance, let’s say that you have $12,000 remaining to pay off on your car loan when your vehicle is totaled.
Your insurance company determines the vehicle’s actual cash value before the accident to be $10,000. You will still have to pay off the full $12,000 owing on your loan, even though your payout was $2000 less than you owe.
Unless you can successfully dispute the appraisal, you will have to make up that $2000 difference yourself.
What is gap insurance?
Gap insurance will help cover the difference between the actual cash value of a totaled vehicle and the amount you still have to pay off on your car loan or lease.
Gap insurance can make all the difference if you are involved in an accident with a financed vehicle. This coverage can save you thousands if a car you are still paying off is deemed a total loss.
You should consider gap insurance if…
- You lease your car and paid little to no cash down
- You paid little or no money down on your car and have an extended loan payoff period
- You are less than halfway through your auto term loan
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How to get the best totaled car insurance payout
Here are some tips to increase your chances of walking away from your claim with a favorable outcome.
Immediately report the accident
Always be sure to report an accident as soon as possible to maximize the chances of success. The longer you wait to report a claim, the less likely you will be able to provide all the evidence you need to support your case.
Most major insurance providers have handy mobile apps that you can use to report a claim, upload accident photos, and communicate directly with your claims agent.
Be cooperative during the claims process
Try to be as cooperative as possible. Be sure to pass on any relevant information like police reports, witness accounts, and personal insurance information of the other driver involved to help support your story.
If you are communicative and cooperative with your insurance company, it could potentially expedite the process and make the outcome more favorable.
If you are looking for the best rates on the insurance coverage you want without having to do all the legwork, think of Jerry as your insurance savior.
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How to get a new car after a complete loss
So you’ve got your settlement check, you have mourned your loss, and you are ready to get behind the wheel of a new ride.
Shopping for cars is exciting, but before you get too swept up in the process, remember that you will need to buy a new insurance policy before you can drive away in your new set of wheels.
The price tag of the vehicle itself isn’t the only thing to keep in mind, either. You will need to make sure that you have the type of insurance you can afford—and some cars are cheaper to insure than others.
If you’d rather leave the hard work of gathering quotes to someone else, use Jerry. This free app can collect quotes from up to 45 top insurance companies in seconds!
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Frequently asked questions
When will the insurance company send the check?
Once the insurance company finalizes the actual cash value of your totaled vehicle, they will send out your cheque shortly after.
Of course, the process leading up to the moment that a settlement is reached can be a long one, so you’ll want to make sure that you have alternative transportation arranged for in the meantime.
Can you repair a totaled car?
In a handful of states, you will have the right to take possession of a totaled car if you choose—but trying to repair a totaled vehicle is rarely worth it.
If you are worried about getting left stranded without a vehicle following a claim, consider taking out additional rental reimbursement coverage on your insurance policy instead.
How much does insurance go up after an accident?
After you make a claim, you are likely to see your insurance rates increase by anywhere from 3 -32% —but don’t despair! The average Jerry user saves $879 a year on car insurance.
It’s this simple: download the Jerry app or go to getjerry.com. In less than 45 seconds, Jerry collects all of your information from your existing insurer.
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