"What can I do if I totaled a car with a lienholder, but I only have state-minimum liability insurance? "

I totaled my car and I still owe $11,000 on the loan. The problem is, I switched insurance companies recently and after reporting the claim, they informed me that I only have state-minimum liability coverage on the car. What are my options?

Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“That is a difficult situation. You should first review your policy documents from the insurance company to verify that you have no
collision coverage
. It doesn’t seem likely that you do, but mistakes can and do happen.
If you are certain that there was no collision coverage on the policy on the date of the accident, then your options are fairly limited.
You can request a formal written denial of coverage from the insurance company and try to mitigate your losses. Confirm that you are not accumulating additional storage fees if your totaled car was towed to a body shop or tow-and-salvage yard.
You should also contact the lienholder and explain what happened. They may agree to take the vehicle and deduct the salvage value from the amount that you owe on the loan, but unfortunately, you are still ultimately responsible for the remaining balance.”
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