What Should I Expect from the Insurance Company if My Vehicle is Totaled?

Q: What should I expect from the insurance company if my vehicle is totaled?

If repairs exceed your car’s value (or the insurer’s total-loss threshold), the insurer will declare a total loss and offer the vehicle’s actual cash value (ACV) as of just before the crash, typically minus your deductible. If you have a loan or lease, the payoff to the lienholder comes out of the settlement first; Guaranteed Asset Protection (GAP) coverage can help if the payoff exceeds the ACV. Depending on policy and state rules, the settlement may also include sales tax, title, and registration fees. You can ask the adjuster for the valuation report and challenge inaccurate comparables or condition notes before accepting. Once you agree, you’ll sign title documents and the insurer (or salvage company) takes possession; if you keep the vehicle, your payout is usually reduced by the salvage value and your title may be branded. Towing and storage, as well as rental coverage, are handled per your policy limits—so notify the insurer quickly to avoid extra charges.

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Insurance companies consider a vehicle totaled when the cost to repair the car exceeds the actual cash value of the car. Sometimes insurance companies declare a car totaled when the cost to repair the vehicle reaches about half (or more) of the market value.

The insurance company pays the driver the market value of the car after the accident if the car is totaled. If the other driver’s insurance company handles the claim, (Indiana is a fault-based insurance state), it may pay a portion of the cost that is in proportion to its policyholder’s fault for the accident. So if the at-fault driver was 60 percent at fault and the value of the car is $10,000, then the at-fault driver’s insurer may pay $6,000 for the totaled vehicle.

What If I Owe Money on My Totaled Car?

A lot of people take out loans to pay for their vehicles. The at-fault driver’s insurer may make a payment directly to the lender that loaned the money for the vehicle. But sometimes the actual cash value of the vehicle (as determined by the insurance company) is lower than what is owed.

So if you’re in an accident and your car has a value of $10,000 but you owe $12,000, who’s responsible for the extra $2,000? Unfortunately, you would be liable for the difference unless you have the appropriate insurance.

Guaranteed Asset Protection (GAP) coverage covers the difference between the cash value of your vehicle and what you owe on the vehicle. So in the above scenario, if there is a $2,000 difference between what the at-fault driver’s insurance company gives you for a totaled car and what you owe, your GAP coverage could take care of the $2,000.

How Can I Prepare Myself to Deal with the Insurance Company?

After an accident, drivers should save records and paperwork related to the accident to prepare themselves for a possible dispute with the insurance company. Drivers may get estimates from repair shops they trust to fight back if the insurance company undervalues the repairs their cars need.

For instance, the insurance company’s repair shop may claim the vehicle needs $2,000 in repairs, but your repair shop says $5,000 is needed to fix it. The difference may mean not only the difference between fully and partially covering repairs, but in some cases, it also might mean the difference between declaring the car totaled or not.

Other records can include crash reports, witness statements, medical bills, time missed from work, and any other expenses directly related to the accident. These are important to dispute assignment of fault and low settlement offers that do not account for all damages you’ve suffered.

Seek Help from an Attorney if Your Accident Was Serious

Hensley Legal Group can help Indiana drivers investigate and present their case to insurance companies to secure a fair estimate of repair bills and assessment of whether their vehicle is totaled. Contact our office at (317) 472-3333 to set up a free consultation to speak with a lawyer.

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