What Happens When Your Car is Totaled?

By the Mercury Team

A totaled car means that the repair costs exceed the vehicle’s actual cash value (ACV) — i.e., how much your car is worth at the time of your loss. When you’re involved in a car accident or your vehicle sustains significant damage, you might ask yourself, “Is my car totaled?” It’s a question no driver wants to ask, but it’s an important one to address. In this blog, we’ll walk you through the steps you need to take, the potential impacts of a totaled car, and how to go about finding a replacement.

My Car Was Totaled — Now What?

Your auto insurance company will usually inspect your damaged vehicle before declaring it a total loss. Depending on your car insurance coverage, your insurer may reimburse you with the amount they deem the car worth, minus your deductible. For example, if your car is valued at $4,000 and your deductible is $500, you would receive $3,500.

You might also wonder: Who gets the insurance check when a car is totaled? If you own the car outright, you’ll receive the check. However, if you have a leased car, your collision coverage pays your lending institution the actual cash value of your vehicle minus the deductible.

Once they determine your car is totaled, here are a few scenarios that can happen:

The accident was your fault.

If you totaled your car after hitting a vehicle, tree, guardrail, or another object, and it was your fault, your insurer will pay you the vehicle’s value — minus the deductible — under collision coverage.

The accident was the other driver’s fault.

You have two options if the other driver is responsible for totaling your car:

• You can have their insurer pay you the value of your totaled vehicle with the at-fault driver’s liability coverage.
• You can use your collision coverage to help cover the damages.

Your car gets damaged outside your control.

If your car gets totaled due to a fire, falling object, vandalism, or any other event outside your control, comprehensive coverage pays the vehicle’s value minus the deductible.

You get hit by an uninsured or underinsured driver.

If your car gets totaled by a driver with no insurance or inadequate coverage, uninsured/underinsured motorist coverage can help cover your vehicle up to a specified dollar amount on your policy. The availability of this coverage varies by state, so check with your insurer to see if you can get coverage.

What to Do After Your Car Is Totaled

Discovering your car has been totaled can be a stressful experience, but knowing the right steps can make the process more manageable. Here’s what you should do:

Contacting Your Insurance Company

After the accident, contact your insurance company as soon as possible. When you call, be prepared to provide all necessary details about the incident, including police report numbers and photos if available. During this conversation, ask about the claims process, required documentation, and rental car coverage if you need temporary transportation. Don’t forget to request a timeline for the claims process and an estimate of when you can expect a settlement offer.

Understanding Your Policy and Coverage Options

Review your insurance policy carefully, paying close attention to coverage limits and deductibles. If any terms or clauses are unclear, don’t hesitate to ask your insurance agent for clarification. You should also find out if you have gap insurance, which can be helpful in covering the difference between your car’s value and what you owe on your loan. If you’re interested in keeping the salvaged vehicle for repairs, discuss this option with your insurer. Additionally, ask about how the settlement will be calculated and whether there’s room for negotiation.

Handling the Vehicle’s Title and Paperwork

Finally, address the paperwork and legal aspects of your totaled vehicle. Get a salvage certificate from your insurance company or state DMV, and cancel your vehicle registration. Remember to remove your license plates from the totaled vehicle. It’s also a good idea to gather any maintenance records and receipts for recent repairs or upgrades., as these may affect your settlement. If you’re financing the vehicle, reach out to your lender to discuss how the settlement will be applied to your loan. Throughout this process, keep copies of all documents related to the accident and insurance claim for your records.

Impact on Insurance and Finances

Having a totaled car on your record may affect your future insurance premiums, especially if you were at fault for the accident. Insurance companies often view total loss claims as a higher risk, which can increase rates when it’s time to renew your policy. The extent of the premium hike can vary based on factors like your driving history, the specifics of the accident, and your insurance provider’s policies.

Here are a few strategies to help manage potential increases in your insurance premiums:

• Shop around for new quotes: Not all insurance companies assess risk the same way. Shop around and compare quotes from different insurers to make sure you’re still getting the best deal.
• Take a defensive driving course: Completing a defensive driving course shows your commitment to safe driving, which could earn you auto insurance discounts.
• Increase your deductible: Opting for a higher deductible can reduce your monthly premiums. Just keep in mind that you’ll need to cover more out-of-pocket costs if you file a claim.
• Bundle your policies: Combining your auto insurance with other policies, like home or renters insurance, can often lead to discounts, helping you save on your overall insurance costs.

Buying a Replacement Car

After totaling your car, you’ll need to think about your next vehicle purchase, whether it’s new or used.

Start by setting a budget that includes the purchase price, taxes, fees, and any necessary repairs or upgrades. If you’re considering a used car, research the vehicle’s history thoroughly using resources like Carfax or AutoCheck. A pre-purchase inspection by a trusted mechanic can also help avoid any hidden surprises.

For new cars, take advantage of dealership promotions or manufacturer incentives, which can sometimes offer big savings. And whether new or used, make sure to test drive the car to ensure it meets your needs and feels comfortable.

If you’re financing your replacement car, compare loan offers from multiple lenders to find the best interest rate and terms. Keep in mind that a larger down payment can reduce your monthly payments and overall loan cost.

Additionally, consider whether leasing might be a better option for you, especially if you prefer driving a new car every few years and want lower monthly payments. Just be aware of mileage limits and potential fees associated with leasing.

Conclusion

Dealing with a totaled car can be stressful. But with the right coverage, you can get the compensation needed to explore new car options, replace your vehicle, and return to the road.

If you’re looking for reliable coverage at an affordable price, consider Mercury. We offer cheap auto insurance options that don’t compromise on quality, ensuring you’re protected no matter what happens on the road.

Contact us today for a fast, free quote!