“We have determined your vehicle to be a total loss.” These words are dreadful to hear, especially after a week or two of waiting and bumming rides from friends after your car accident. As you start to realize how much you are going to spend on Uber this month, you may wonder how much does insurance pay for totaled cars?
The Insurance Claim Process
The insurance claim process begins at the scene of the accident. A car accident creates confusion and chaos. You may have been in a few, or are lucky enough to have avoided them in your driving career. Oftentimes after a car accident, you deal with law enforcement and swap insurance information all while your car is hauled away by a local wrecker company.
After the dust is settled and your nerves calm down, you are going to wonder what happens next to your wrecked car. Your insurance provider will contact the tow company that hauled your vehicle and send an adjuster to make an assessment at their impound yard. If they decide the car is totaled, they will then determine who was at fault and therefore responsible for settling on a price for the vehicle.
Who is at fault?
Who was at fault for the accident will determine whose insurance will be offering a settlement for your totaled car. The police department or law enforcement agency that was on the scene of the wreck will make a report. This report is acquired by the insurance companies involved and the cause of the accident will decide which party’s insurance is liable. If your vehicle was the only one involved, or you caused the accident, you will be dealing with your own insurance company. If someone else caused the crash that totaled your car, their insurance will be the one to offer you a settlement. The amount of the settlement depends on the type of policy that was purchased.
Types of Insurance
If you are at fault for the accident, your insurance policy will determine how much you will get paid for your totaled car. The two most common types of insurance in this situation are full coverage and liability.
Full Coverage Insurance
If you have full coverage insurance, your policy will cover the cost of damage for the other person’s vehicle along with your own. If the car is totaled, they will make you a settlement offer for the vehicle. Full coverage insurance is required if there is a loan on the vehicle, and the settlement will go to the loan institution first before the remainder is paid to you.
If you only carry liability insurance on your car, your policy will only cover the cost of damage to the other person’s vehicle. This is unfortunate for you, as you will be liable for all of the costs of your own car’s damage, including dealing with a totaled car at some impound yard. Oftentimes the insurance will still take the car, but if not you can always use Junk Car Medics to haul off your totaled car.
Offer of Fair Market or Replacement Value
When it comes to the initial settlement offer you will receive, it may be fair market value or replacement value. Fair market value is the market value of the vehicle in your area, while replacement value is the approximate cost to replace your exact car. These estimates will be lower than you expect, and sometimes the insurance company will offer a settlement price up to 20 percent lower than fair market value or replacement value. The insurance company is trying to cut costs in all areas that it can. They may not know about certain upgrades or modifications you have done with your vehicle. Use the facts and negotiate a better price for your vehicle.
Negotiate a Higher Price
If you are unhappy with the settlement that the insurance company offers you, you can try to negotiate a higher price for your car. This may not be easy, but could really pay off if you have a good reason why they should pay you more money for your totaled car. Do your research on salvage prices and your car’s value in your area. You also want to have any receipts for upgrades that you have done to your car. New tires, stereos, rims, performance, and body improvements are all things that add to your car’s value. While there is no guarantee they will go any higher, you don’t have to immediately accept the first offer they send your way.
Options With Your Totaled Car
If there is a lien on your vehicle, the lienholder has first rights to your car. If you own the car without a lien, you can decide what to do with it. You can let the insurance have the car and they will pay you the settlement and haul it off to an auction or a salvage yard. Or you can keep your vehicle if you think you can scrap the car for a better price or want to keep it and fix it due to sentimental reasons. The insurance company will then reduce the scrap value of the car and pay you the difference. You will also receive a salvage title for the car, but you can make it legal to drive again if that is your goal. Regardless of your choice, it is important to consider all of the options with your totaled car.