Imagine you pull up to a red light at a T-intersection in a quiet neighborhood in your hometown. You’re in the right lane and it’s a “no turn on red” intersection, so you wait. A garbage truck is next to you, stopped in the left turn-only lane.
When the light turns green, you begin your right turn. Inexplicably, so does the garbage truck driver. Within seconds, the garbage truck cuts across the front of your car, ripping off the hood and fender, and mangling the front-left wheel. Through no fault of your own, your car is trashed.
Dealing with a totaled car is overwhelming. Whether it’s due to an accident or unforeseen circumstances, understanding what to do in the aftermath will help you navigate this crisis as smoothly as possible.
How to determine if your car is totaled
After an accident, one of the first questions you may have is, “What happens if my car is totaled?” This determination is critical for insurance purposes and deciding whether to repair or replace your vehicle. Here are some indicators that your car may be totaled:
- Extensive damage: Severe damage like a bent frame or crushed roof often means the car is a total loss.
- Airbag deployment: Airbag deployment usually indicates a significant accident, which likely suggests major damage.
- Cost of repairs: If repair costs exceed 75-80 percent of the car’s value, it will likely be considered totaled.
Insurance companies use several factors to determine if a car is totaled:
- Actual cash value (ACV): This is the market value of your car before the accident. Insurance companies assess the ACV to decide if repairs are financially feasible.
- Repair costs: Insurance adjusters estimate repair costs. If these exceed a certain threshold or are greater than the ACV, totaling the car may be more cost-effective.
- Salvage value: This is the value of your car’s parts and materials if they were sold as salvage. A high salvage value often results in the carrier totaling the vehicle.
Coverage for a totaled vehicle on your property
So, a garbage truck just totaled your Chevy Traverse, now what? Hopefully, you have auto coverage to protect you from a total loss:
- Comprehensive Coverage: This covers damage not caused by a collision, like fire, theft, vandalism, or hitting a deer. If your car is deemed a total loss due to one of these events, comprehensive coverage can reimburse you for the vehicle’s value.
- Collision Coverage: This protects your vehicle if you collide with another vehicle or object. If your insurance carrier totals your car, what happens next will depend on your coverage. Collision coverage helps cover the cost of repair or replacement.
Keep in mind that coverage limits and deductibles will affect your reimbursement.
What to do after totaling a financed car
If you have a car payment, you’ll need to notify your lender and insurance company right away.
Contact your lender: Let your lender know about the accident, providing details like the date and extent of damage. They may require more documentation, like a police report or an appraisal of the car’s value.
Inform your insurance company: Contact your insurance agent to report the accident and start the claims process. Give them all relevant information, including:
- Vehicle registration
- Time, date, location of accident
- Accident photos
- Vehicle condition
- Injuries, if any
They’ll guide you through filing a claim and assessing the damage.
Once your insurance company declares your car is totaled, they’ll offer a settlement amount based on the ACV of the vehicle. This amount may not cover the full amount you owe on your car loan. If that’s the case, you have a few options:
- Use the insurance settlement to pay off the loan. If the settlement is higher than the remaining balance, then you have extra funds left over.
- Loan/lease coverage (gap insurance) can be used to cover the difference between the ACV of the vehicle and amount remaining on the loan or lease. This prevents you from having to pay out-of-pocket for remaining balances. If you don’t currently have this coverage on your auto policy, consider adding it.
- Negotiate with your lender for a payment plan for the remaining balance. They may extend the loan term or offer a reduced interest rate.
Getting a new car after a total loss
After your car is deemed a total loss, you’ll need to explore replacement options. One option is to buy a new car. Research different models, compare prices, and read reviews to find the best fit for you. Consider factors like safety features, fuel efficiency, and maintenance costs.
If the totaled car was paid off, applying the insurance settlement toward your new ride would be a smart thing to do.
You can’t prepare for a garbage truck turning right from a left turn-only lane, but you can be prepared for the damage it could cause. Contact your local agent today to make sure your wheels are covered.
