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Even the best drivers can have their cars totaled. The term “totalled” is only used in insurance when the damage to the car falls under a particular set of circumstances defined by the insurance companies. A car can only be considered totaled by the driver’s adjuster and the insurance company. Insurance companies usually designate cars as a total loss when the cost to repair the damage is more than the value of the car or if the car cannot be repaired at all for one reason or another. The threshold for declaring vehicles a total loss is determined by each state. However, insurers may choose to use a lower standard. Most suppliers use a variety of factors such as market valuation, year, make, model, mileage, and overall condition to determine a car’s value and designate a total loss.
Drivers dealing with a totaled car should be aware of the following:
- What insurance policies cover totaled cars? Comprehensive coverage is used to cover total loss that is not the result of a collision. It covers stolen vehicles that are badly damaged after recovery, vehicles that are damaged beyond repair by floods, fires, animals and fallen objects. Collision coverage covers total losses resulting from a collision with another vehicle or object. Uninsured/underinsured motorist coverage is used to protect drivers who have totaled their cars in accidents where the at-fault driver has no insurance or insufficient coverage.
- How much is the insurance indemnity for a totaled car? When a car is considered totaled, the insurance company will pay the actual cash value (ACV) at the time of loss. Wear and tear, mileage, previous accidents and more are taken into account when determining the actual cash value. In most cases, the amount of the settlement will be less than what the insured paid for his vehicle at the time of purchase.
- What can drivers do if they still owe money on their totaled vehicles? If a driver finances their car and still owes money, the insurer will send the total loss payment to the lender. If the payment is more than the driver owes the lender, the supplier will send the money to the lender to pay off the loan balance, then send the remaining money to the driver. However, in some cases, the insurance payment is not enough to pay the rest of the loan. In this situation, GAP coverage or loan/lease repayment coverage can help. GAP insurance covers the difference between the depreciated value of the car and what the driver owes on his loan. Loan/Lease Repayment Cover is used to offset the outstanding amount owed on the driver’s loan or lease if the car has been destroyed in an accident or stolen. Unlike GAP coverage, Loan/Lease coverage does not cover deductibles and only pays a certain percentage of the car’s ACV.
- Can drivers keep their cars totaled? Depending on each state’s regulations, drivers may have the right to keep their vehicles totaled. In most cases, drivers can buy back their totaled cars from their insurers. To put the totaled car back on public roads, it must be repaired, pass inspection, and the owner will need a rebuilt or salvaged title. If the owner of a totaled car does not want to drive the vehicle, he can use the parts of the totaled car in another vehicle or sell them for a profit. He can also sell it to a junkyard or donate it to charity.
- What can drivers do if their cars are totaled? First, they should immediately contact their insurers and file a claim. Once the claim has been received, an adjuster will be dispatched to assess the damage. To get a fair settlement, drivers will need to determine the true market value of their vehicles just before the damage occurs using tools such as Kelley’s Blue Book or by checking the prices of similar cars in the local market. If the car is financed, the financing company will also need to be informed. If the insured feels that their car’s ACV assessment is too low, they can negotiate payment with their suppliers.
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