How Car Insurance Treats a Total Loss
- Your car may be considered a total loss if the cost to repair it after an accident exceeds the value of the car or if it meets certain other criteria set by your state.
- If another driver was at fault, their property damage liability insurance should cover you.
- But if you were at fault, your own policy’s collision insurance should cover you—if you’ve purchased that optional coverage.
- If you have an auto loan or are leasing a car and experience a total loss, you may be on the hook for the difference between what the insurer pays you and how much you still owe.
What Is a total Loss ?
For a vehicle to be declared a sum personnel casualty by an policy company, it must meet one of several criteria :
- The car would cost more to repair than its actual cash value. State Farm, for example, says it bases actual cash value on the car’s “year, make, model, mileage, overall condition, and major options—minus your deductible and applicable state taxes and fees.”
- The insurer determines that it cannot be repaired so that it will be safe to drive.
- It meets other criteria for a totaled car under your state’s auto insurance laws.
department of state indemnity laws angstrom well as individual insurers have formulas for determining whether a cable car should be considered a total loss. many use a “ total loss formula ” wherein if the cost of the repairs plus the salvage value of the cable car exceeds what the car was worth before the accident, it will be considered a total passing. Some states set a “ sum loss brink ” by which the damage entirely needs to exceed a certain share of the car ‘s value for it to be considered a total loss .
In New York, for example, the brink is 75 %. thus if the price of repairs plus the cable car ‘s salvage rate exceeds 75 % of its actual cash value, the car is a total loss for policy purposes .
Filing an indemnity claim for a entire loss
If your car was totaled in an accident in which another driver was at fault, you can file a claim with that person ‘s insurance company. Your own policy company may help you through the claims process. In every state but New Hampshire, drivers are required to carry at least a certain minimum total of place price liability coverage. ( New Hampshire has a fiscal duty law requiring that drivers without insurance can prove they could cover any price they might cause. )
In most states, drivers must have at least $ 10,000 in property damage indebtedness coverage, and many states set the minimum at $ 25,000. Drivers can buy more liability coverage than their state ‘s minimal and are frequently advised to if they have assets to protect from a lawsuit .
On the early hand, if you were at demerit ( or no early driver was involved ), you will file a claim with your own indemnity company. To do that, you must have collision or comprehensive policy as separate of your policy .
collision indemnity covers wrong to your cable car in an accident with another fomite or an object such as a tree or safety rail. comprehensive covers damage from causes other than a collision, such as fire, wind instrument, flood, vandalism, or a falling object .
Both comprehensive and collision indemnity are optional. Both besides carry deductibles, the share of the bill you must pay before your insurance company will kick in its share. For example, if you have a $ 500 deductible on your collision insurance and your car is totaled in an accident, your insurance company would deduct $ 500 from your insurance liquidation .
Whether you or another driver were at fault, the insurance company will assign a claims adjuster to inspect the wrong to your car and determine whether it is a total loss .
If you disagree with the adjuster ‘s appraisal, the National Association of Insurance Commissioners ( NAIC ) suggests first trying to resolve the count with your indemnity company. “ If you and the insurance company distillery disagree about the title handling or colony, you should ask for avail from the consumer services personnel at your country policy department, ” the NAIC says. If that does n’t work, and the amount of money involved is substantial, you might consider hiring a secret lawyer or a public adjuster to help press your case .
If you have a car loan or lease and total your car, you may get less money from your policy company than you owe your lender. however, you ‘ll distillery have to pay the lend or lease off in full.
A total Loss on a Financed or Leased car
If you own your car free and clear without an outstanding car loan, you can just file a claim. When the insurance company cuts you a check, you can put the money toward the purchase of another car or use it for early purposes .
If you still owe money on the totaled car, the site is more complicate, particularly if your cable car is relatively newfangled. Because new cars depreciate quickly in the first few years of ownership, it ‘s not rare for the poise on a cable car loan to be higher than the car ‘s actual rate. sol, in summation to whatever you receive from the insurance company, you may have to dip into savings to pay off your loanword .
The position is alike with rent cars, wherein you may owe more on your lease than you receive in an indemnity colonization .
For both loans and leases, one way to protect yourself is to purchase gap insurance. As the diagnose implies, it is designed to cover the break between what the policy company will pay and what you owe .
Category : car insurance questions