Insurers will declare a car a "total loss" if damage to the car (a) makes the repair cost higher than the value of the car (b) is so high that it cannot safely be repaired or (c) is so severe that state laws require the car be declared a total loss.
What is the inspection process?
Your insurance adjuster will schedule an inspection, determine the value of the car, and will conduct the inspection. After the damage is determined you will be told if the car is a "total loss". Once you get the information your car is "totaled", your insurance adjuster will ask you to (a) leave the key to the car, (b) remove all personal items from the car (blankets, glove-box items, papers, all possession in the trunk) (c) complete necessary forms for the transaction and (d) provide any leasing or financing information about the car.
When my car is totaled what does the insurance company pay?
If you paid the premium so that your policy covers a total loss, you insurance will reimburse you the actual cash value of your car less any deductible and less state taxes and fees. Your insurer will actually get the title from you and take ownership of the car. The insurer then will resell it to a salvage buyer (or you may keep it, depending on the wording of your insurance contract).
Can I get a rental while I find a new ride?
If you purchased rental insurance coverage when you bought insurance, ask your insurance company to pay for a rental vehicle after your accident. Your contact of insurance will specify how long rental coverage lasts. Ask your insurance adjuster for as much time as possible after your car is paid off to continue renting until you can get a new car. You may be required to go to a specific rental car company to make the arrangements
How is my car value decided?
The insurance company uses book values based on car age, mileage, options, pre-crash condition, and other criteria to decide that the value of your car is and what the cost of the repairs will be. The insurance company does not care whether your car is paid off or not. Your policy language provides that it it he insurer's decision to make concerning book values when repairs are involved.
Does my car lender get paid?
The answer to the question who gets paid depends on whether you own, lease or finance your car. If you own the car outright you will get the money. If you lease, the leasing company gets paid because they hold the title to the car. If the car is financed the financing company gets paid. If the money amount exceeds what you owe the financing company, you will receive the balance.
Is gap insurance coverage available?
If the value amount is less than what you owe the lender, you will be responsible to pay the rest of the car loan balance because that is the contract you signed. This is why it is a good approach to purchase "gap insurance" to cover your unpaid loan balances. Check with your car lender as some finance deals and leases require gap coverage to be in place. Also, check with your insurer to purchase gap insurance. If you do not have it, get gap coverage even if that means you have to go to a different insurer to write the policy on the gap between car value and loan amount.
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