When your car is declared “totaled” by your insurance company, it means that the cost of repairing the vehicle exceeds its actual cash value (ACV) or a predetermined percentage of its value. In such cases, your insurance company will typically pay you for the loss of your vehicle. Here’s what you can expect insurance to pay when your car is totaled:
1. Actual Cash Value (ACV):
In most cases, the insurance company will pay you the ACV of your vehicle at the time of the accident. ACV is the market value of your car immediately before the accident, taking into account factors such as age, mileage, condition, and depreciation.
2. Deductible:
Your insurance policy’s deductible is the amount you are responsible for paying before your insurance coverage kicks in. You’ll need to pay your deductible first, and then the insurance company will cover the rest up to the ACV.
3. Outstanding Loan or Lease Balance:
If you have an outstanding auto loan or lease on the totaled vehicle, the insurance payout will first go toward paying off the remaining balance of your loan or lease. If the insurance payout is higher than the loan or lease balance, you will receive the remaining amount.
4. Personal Belongings:
Your insurance may cover personal belongings that were in the car at the time of the accident, up to a certain limit. Be sure to check your policy for details.
5. Salvage Value:
In some cases, you may have the option to keep the totaled vehicle, known as “buying back” or retaining the salvage. If you choose this option, the insurance company will deduct the estimated salvage value from your payout.
6. Gap Insurance (If Applicable):
If you have gap insurance, it can help cover the difference between the ACV of your vehicle and the remaining balance on your auto loan or lease. Gap insurance is especially beneficial if you owe more on the vehicle than its ACV.
7. Taxes and Fees:
Depending on your state and policy, insurance may cover certain taxes and fees associated with purchasing a replacement vehicle.
8. Depreciation:
Insurance payouts are typically based on the depreciated value of your vehicle. This means that, in most cases, you will not receive the amount you initially paid for the car when it was new.
9. Negotiation:
Keep in mind that you have the right to negotiate with your insurance company if you believe the offered ACV is too low. You can provide evidence of your vehicle’s value, such as recent maintenance records or comparable vehicle listings, to support your case.
10. Rental Car Coverage:
If your policy includes rental car coverage, your insurance may reimburse you for the cost of a rental vehicle while you search for a replacement.
It’s important to review your insurance policy and understand its terms and coverage limits regarding totaled vehicles. Additionally, consider discussing your options with your insurance adjuster and possibly seeking legal advice if you believe the settlement offer is unfair. Being well-informed and prepared can help ensure you receive a fair payout when your car is declared totaled.
