Once your car is declared totaled, which means the repair costs exceed its actual cash value, there are several steps you need to take:
Contact Your Insurance Provider: Your first course of action should be to contact your auto insurance company. They will guide you through the claims process. If you have comprehensive or collision coverage, your insurer will likely assess the car’s market value and offer you a settlement.
Understand the Payout: The insurance company will calculate the actual cash value (ACV) of your vehicle before the accident, accounting for depreciation. This is the amount you will receive, minus any deductible that applies.
Negotiate if Necessary: If you believe the insurance company’s valuation of your car is too low, you can provide evidence such as recent repairs, vehicle condition, and comparable sales to negotiate a higher payout.
Consider Buying Back: Some insurance companies allow policyholders to buy back their totaled car at its salvage value. This could be an option if you wish to repair it on your own or use it for parts, but note that even repaired vehicles may be subject to inspection and could be branded as “salvaged” on the title, affecting their insurance eligibility and resale value.
Loan Payoff Concerns: If you have an outstanding car loan that exceeds the insurance payout, you are responsible for paying off the remaining balance. GAP insurance, if you have it, can cover this difference.
Return the Vehicle: If you lease the car, the insurance payout usually goes directly to the leasing company. You may still be responsible for any remaining lease obligations not covered by the insurance payout.
Shop for a Replacement: Use your payout to purchase another vehicle if needed. Your insurance company may also offer assistance or discounts for vehicle replacements through partnerships with dealerships.
Research Title and Insurance Implications: When purchasing your next vehicle, research how a salvaged title may affect its insurance coverage. Consider comprehensive or collision coverage to protect against future damages.
These steps will help you effectively manage the situation financially and logistically, while transitioning to a new vehicle.
