Getting into an accident is scary, no matter how minor it is. If you walk away okay, you're thankful it was nothing serious and there are no medical bills to follow.
But what if your car wasn't so lucky and now it's totaled? This is difficult enough, not to mention the thought of getting a new one.
If you're waiting on totaled car insurance payout, you have several questions related to the health of your car and what to expect next. Learn more about the process and prepare yourself for each step of the way.
Understand What Happens When a Car Gets Declared Totaled
If you've gotten into an auto accident, it's not outside the realm of possibility that your car can get totaled. This is an unfortunate but common occurrence that happens regardless of where you drive or the type of vehicle you own.
After you've gotten into an accident, you and the other party need to exchange insurance information and have an adjuster come out and look at your car. The adjuster is the person who decides if your car is totaled, and how much you'll get for it based on age, miles, and condition.
In some cases, your car is not totaled, but it'd be better to scrap it for money. Once you go through the process with the adjuster, you'll gain a better idea of what comes next.
Know How to Calculate Totaled Car Insurance Payout
Understanding how much insurance pays for a totaled car varies because of several factors.
- The age of your car
- Present condition
- Number of miles on the car
There are certain cases that determine if your car gets labeled as totaled and not worth fixing, according to the insurance company. If it's impossible to repair the car safely, costs too much money to do so (normally more than the car is worth), consider it totaled.
Depending on the state you live in and what their regulations are, your car might not meet certain requirements after the accident. This means it gets marked totaled, but it changes by state.
You can find out what possible value you'll get for the car based on the Kelly Blue Book. Another way to determine is by calculating 20% to 40% of the car's fair condition value, erring on the side of 20% for safety.
Make sure you find out if your car was actually totaled. Getting the run-around from insurance agents isn't fair, but it does happen.
Know That Airbags Play a Factor in Value After Getting Totaled
In many modern cars, airbags deploy even if a serious accident didn't occur. Many insurance adjusters know this when evaluating a car and deciding if it should get marked totaled or not.
Replacing an airbag and dealing with collision costs has a direct effect on how much you'll get back from the insurance company. State regulation plays into airbag deployment and what this means for your car.
If you're the owner of a newer car, what you'll pay for repairs is less likely to cost more than the overall value of the car. This can leave you uncertain of what's going on when finding out how airbags affect the car value.
Check your state regulations and talk with the adjuster, if possible. You won't necessarily get the final number of what's coming to you, but you'll have a better understanding of the total amount you could get back.
Understand You Can Negotiate Vehicle Value
Once you've gotten the value of your vehicle, don't assume nothing else can happen once it's determined that your car got totaled. There's still an opportunity to negotiate the vehicle value.
This doesn't necessarily give you the number you're looking for, but it makes a difference in bringing it up closer to the amount you were expecting. Consider your car and what you believe makes it worth more than the insurance company is willing to offer.
Certain things can raise the value of your vehicle like:
- If it is under five years old
- Improvements and upgrades you've had put on the car
Know that the insurance company gets salvage value from your car once it's been totaled. That means they sell parts at a higher price and reap the value of those parts.
It's possible that if your car doesn't get totaled, it becomes a salvage car. This comes with its own set of issues, and it's important to read up and proceed with caution.
You're Still on the Hook for a Loan
If your car is still considered new and it got totaled in an accident, you're still responsible for the loan you took out on it. Even though it's totaled, you cannot drive it, and someone else caused the accident, you're still responsible for paying back the loan regardless.
Many people get confused when they find themselves in this situation, and believe there's some way they can negotiate the terms of the loan. A lack of vehicle and a remaining balance do not cancel each other out, according to the law.
In this case, consider what's going to cost more: getting a new car or paying off your loan. Depending on how much money you get back from your totaled car, you can use that amount to pay off what you owe for the loan an the rest for your new car, or at least as a downpayment.
This situation requires careful financial balancing, and it's sometimes difficult to know exactly how much to set aside based on your needs. Although some people think they've struck pay dirt when their car gets totaled and insurance needs to pay out, this is not the case when your car is new and there's still a loan on the line.
Determine what you're able to live with, and consider paying off your current balance first before you take out any additional money. You want to ensure you have a safe vehicle, but not at the expense of stretching yourself thin with your current finances.
Know the Benefits of Getting GAP Insurance
If you have a loan on your car and end up in an accident that results in a totaled vehicle, all hope isn't lost if you have GAP insurance. GAP stands for guaranteed auto protection and keeps you from fronting all the responsibility for a loan when your car is beyond damaged and no longer usable.
GAP insurance pays the difference from what your car is worth and the balance of your loan. While you won't get any of this money up front, it's helpful to know that the insurance ensures you're no longer managing a loan for a vehicle you can't drive anymore.
GAP insurance is not right for every situation. If your car is worth less than what you owe, this is the perfect instance when GAP insurance comes in handy.
The minute your car is more than what's left on the loan, you're better off using the proceeds to pay for what's left on your payments.
Not everyone needs GAP insurance and many people don't find it useful if they've never gotten into an accident before. You'll never know until you need it; if you think GAP insurance is helpful given your current financial situation, it's better to be safe than sorry.
If you've gotten into an accident and discovered your call was totaled as a result, this is a difficult situation. It's hard to know what to expect if you've never gone through it and have any questions about your car.
You can attempt to calculate the value to find out what your possible payout is. If you're not happy with what's offered to you, it's worth your time to negotiate in hopes of getting a higher amount from your car.
If you've had the foresight to purchase GAP insurance you'll have help managing your car loan balance. But even if you didn't, be aware you're still responsible for paying this amount off regardless of how much you owe.
Although the process seems difficult, know that you're aren't alone, and there are ways to manage your situation. If you're experiencing issues related to your car not getting totaled, but you still don't want to drive it, let us help.
Driving your car after a major accident is questionable for many people. The totaled car insurance payout varies on a variety of factors and it's possible for your car to get damaged without labeled totaled.
Check out our blog 10 things to do before you junk your car, and learn how you can get started.