Accidents are unpredictable. You can’t tell the degree of the damages that it may incur unless it happens. Some may stay safe and get little to no damages. On the other hand, some drivers suffer much worse. They may feel the burden on their physical injuries and mental effort in settling the accident.
Many drivers ponder the question “What happens if my vehicle is totaled in an auto accident?” Will it affect the insurance rates? Do I have to continue paying my auto loans? Many questions might be popping inside your mind. Don’t worry! We are going to inform you about what you need to know.
Let’s start by informing you about the steps that you have to take if you get involved in an auto accident. Following that is a guide in filing an auto insurance claim. Of course, we will take you on a crash course in the aftermath of a total loss. There are other things you need to be aware of, and we will let you know about them.
If I am in an accident, what are the things that I should do?
One of the most common mistakes that people make at the scene of an accident is to panic. Well, they can’t avoid that, it is human nature after all. There are several steps that you have to remember. These will help you in getting safe physically, legally, and financially. Below are some things that you must do at the scene.
For instance, you are driving on a road with some drivers on the way. Another vehicle bumped on the rear end of your car. The impact made you swerve. In addition, you are sure that it damaged your car.
As much as possible, you must pull over to the roadside. Be careful in pulling over. Check yourself for any possible injuries that you may have sustained. Don’t forget to check on your passengers for injuries if there are any.
If anyone got injured, then call 911. It is best to ask for some help if there are people nearby. In case you are on a road with high traffic, it is best to alert the other drivers to reduce their speed. You can use road flares as signals. This will help in preventing any car from joining the situation.
Alert the police and relevant officers
Involving the police in a car accident is the right thing to do. Especially if there are people that sustained injuries. They will be a big help in speeding up the process. If needed, they will tell the medical units to administer first aid and tend to the ones hurt. After that, you may ask them for a copy of an accident report.
You must file an accident report. Heading to the police station if they can’t go to the scene is a good idea. Giving an account of what happened and filing a report is useful in case the other party files a lawsuit against you. It is helpful in making an insurance claim.
Gather details of the scene
If possible, gather details of the scene. The more detailed it is, the better. Of course, just looking at the scene from different angles won’t help much. You need to have concrete information. Assess the possible damages made to your car. If your phone didn’t get damaged, then take photos.
You can gather information from the other party. You can ask for their license, their insurance ID, and other info like the model of their car. Take note of the place or location where it happened. In addition, keep in mind the time and the weather during that accident.
Immediately start the claims process
Don’t wait for a long time before calling your insurance provider. Call and inform them about what happened in the shortest time. Filing a claim later will be harder because the details of the accident won’t be as clear anymore. It will be more difficult to remember it vividly.
They will send an insurance adjuster to the scene to assess it. They will, of course, investigate what happened and determine who caused it. That is if you are in a fault state. Fault states give importance to knowing who caused the accident. Depending on the outcome, the at-fault party’s insurance pays the other party.
The adjuster will let you know the estimate of the repair costs. If the damage is within acceptable limits, then they will reimburse you for the amount. On the other hand, if the damage incurred to the car exceeds its true value, then they will still reimburse you. However, they will likely declare the car totaled.
How do I file an auto insurance claim?
Due to the accident, your mind might be jumbled up. That will lead you to an adrenaline rush and you might forget to file a claim. In case, here are some steps that you should take in filing a car insurance claim.
- Call your insurer. As mentioned above, calling your insurer as soon as possible will make the claim process faster. The sooner you call, the faster your claim will be.
- Ask for the necessary documents. To support your claim, you need to prove by giving evidence. Asking for the necessary documents will give you a clear direction on what papers you need to gather. This way, you may reduce the time that it takes to gather them.
- Ask if there’s a time limit. There are insurers that give limited time for filing claims. It may depend on the state’s laws. You will likely make the claim in the shortest time if you think it is a total loss. However, it is still recommended to understand the time you have in filing claims.
- Provide the information you are being asked. Keep your insurer aware of the details of the accident. Make it thorough and clear. In case they have more questions, it is necessary to cooperate with them.
What does it mean if my insurer declared that my vehicle is totaled?
A total loss car is considered as such if the repairs cost much more than the actual cash value (ACV) of the vehicle. In simple terms, it is known as a totaled car. In some states’ laws, a car is likely to be totaled if it meets the cap. There are different thresholds state by state. For instance, a vehicle gets totaled if the repairs exceed the value of the car in Denver, Colorado. Most companies use the 65% threshold on the other hand.
The actual cash value is the value of the property after depreciation. Let’s put it in simple terms. For example, you bought a shirt for $20. After three months of use, its color has faded. If you are to sell it, then it will cost lower than the original 20 dollars. Let’s say that it can be sold at $15. That’s the actual cash value of the shirt.
How about in terms of vehicles? Supposed that you have a brand-new car worth 100,000 dollars. The moment that you drive it on the road, its value decreases. After a year, the car is only worth 90,000 dollars. That’s when you got into an accident.
When you ask for the repair costs, they say that they amount to 95,000 dollars. Depending on the company’s terms and conditions and state laws, they may declare it as totaled. If it gets declared as such, then your insurer will reimburse you for the 90,000 dollars (ACV), minus your deductible.
What types of coverage pay for a totaled car?
Since we are talking about vehicles, you might be wondering about what types of coverage pay for a totaled car. There are many types of car insurance. Full coverage usually includes liability insurance, together with collision and comprehensive coverage. Liability insurance pays for the other party, both for bodily injuries and property damages.
Let’s put it this way. If you and another car collided, then your liability insurance pays for their medical expenses, as well as the repairs of their car. That means you can’t get anything from your liability insurance, aside from protection from paying the other party’s bills.
Eliminating auto liability coverage, we only have collision and comprehensive insurance. These two types of coverage are exactly the ones that reimburse you for a total loss. In general, these are required if you are on an auto loan or leasing a car. Below are further explanations for the said coverages.
What is collision coverage?
What is the first thing that comes into your mind upon hearing the word “collision”? You can hear a BOOM! Collisions often happen on the road. Maybe you haven’t experienced one, but many others have. One word to describe them is: troublesome.
You have to deal with the other driver. Aside from that, your car gets damaged. You have to report to the police. There are many things to do and it is burdensome. Financially, you will be in trouble for repairing your car if you don’t have enough money, or you don’t have insurance.
That’s where collision insurance comes into the picture. This coverage reimburses you for the repairs or replacement of your car after a collision. It doesn’t matter if you are at fault or not, it will pay. Of course, your deductible will be subtracted from the amount you will receive.
What is comprehensive coverage?
Comprehensive coverage reimburses you for the damages made to your car aside from collisions. The word “comprehensive” can mean complete or almost all points of something. However, in insurance terms, though comprehensive doesn’t pay for all types of damages, its scale is still broad.
You can be reimbursed by this coverage if your car is damaged by a tornado, a deer, vandalism, or if stolen. This type of coverage is especially helpful when no one can be blamed when your car sustains damage. Even if you can’t blame someone, you can still get a payout for the repairs.
How do collision and comprehensive coverage work if my vehicle gets totaled?
Do these coverages only work when your car is a little wrecked? No, it is more than that. If your vehicle is totaled, these two will pay. However, which insurance will kick in? As mentioned above, they both have their own areas.
If the total loss is caused by a collision, then collision insurance will pay, minus the deductible. Supposed that you have a 1000-dollar deductible. If you are expecting a 70,000-dollar payout, then you will receive 69,000 dollars.
At some point, you may say, “I’m innocent.” What if a tree branch or a whole tree itself fell on your car? That’s when comprehensive insurance kicks in. Same with collision coverage, you will have to pay a deductible. Here’s a tip, don’t park with trees nearby!
Do I still have to pay my auto loan after the total loss?
It hurts to lose your car. However, it hurts more when you still have to pay for it after it’s gone. If you are wondering if you still have to make loan payments, then the answer is yes. It is recommended to continue paying until the insurance payment is given out.
Typically, the lender will request for the payout to be payable to both of you. The lender will be paid first, before giving the rest to you. Why is that? The lender has the right to protect their investment in the vehicle that you are driving. Of course, they don’t want to lose money in case you don’t replace the car or pay it off after it is totaled.
You might be worried about what happens if you still owe some amount from the lender after the reimbursement. For instance, the loan amount is 50,000 dollars. If you have received 45,000 dollars as reimbursement, then you still owe the remaining 5,000 dollars. There’s a way to prevent you from paying that remaining amount.
Have you heard of “gap insurance”? If you haven’t heard of it, then here’s a brief explanation. It pays when your car gets totaled and your loan amount is greater than the depreciated value of your car. The word “gap” means guaranteed asset protection in insurance terms. In simple terms, it literally pays the gap between your balance and reimbursement. With a little addition to your rates, it can save you a lot in the future.
Is it automatically considered a total loss if my car’s airbags deployed?
One common mistake that people assume is that the car is a total loss if the airbags are deployed. It isn’t true at all times. Well, guess you can’t blame people for thinking so because of the many incidents that end up like those. The outcome will depend on the car’s situation.
For example, you are driving on the road when a dog runs on the way. You swerved to avoid it, but you didn’t avoid a pole on the roadside. The airbags of your car deployed. The repairs cost quite a lot, add to the fact that replacing the airbags will be costly. Your insurer then said that it is a total loss because the repair costs exceeded the car’s actual cash value or the threshold.
However, what if we take a look into another perspective? Supposed that the damage made to the front part of your car cost lower. Including the replacement of airbags, the price stayed below the threshold that determines if the car is totaled. That means it is not likely to be considered a total loss.
What happens to my car?
Yes, your car is destroyed. If you have a car loan, then the reimbursement most likely went to the lender. However, what will happen to your car after that? It is either you keep it or you sign it off to the insurance company. It may depend on the state’s laws. Supposed that you kept it, can you still drive it and have it insured? Well, it is possible.
The state will brand your car a salvage title if it is totaled. Having a salvage title means you can’t have the car insured. Most states prohibit driving around without a minimum amount of auto liability insurance. That means you can’t drive it unless you are brave enough to face legal consequences.
The vehicle can be rebuilt and insured
There’s a chance for you to use the totaled car again. You can improve the car’s title to be a rebuilt title. To make that possible, you need to have the car repaired. After that, you will have the authorities inspect it if it is safe to drive. If it passes the standards, then it will gain a rebuilt title.
Rebuilt vehicles can be insured, albeit a little difficult. You can’t expect to have it fully covered. Nonetheless, you can still buy other types of coverage and the minimum state requirements. Below are some steps that you may have to prepare to get the rebuilt vehicle insured.
A statement from a certified mechanic
In having your car repaired, it is best to find a mechanic that has good hands. If the one that you found has good skills, then you can rest assured about the quality of the car once it is repaired. Find one that is certified.
Why do you need to prepare a statement from a certified mechanic? Since insurers include the car in assessing your risk, they will have to make sure that the car is safe. Otherwise, they will potentially lose a lot if they insure you without checking the car’s quality.
The car’s photos
The insurance provider may ask you for photos of the car from different angles. Sending these photos will act as a preliminary check of the car. In some cases, you will have to capture a video for a better check.
Of course, the insurer will also inspect the car physically. After all, the eyes can see more than the camera. If the car passes their requirement, then they might insure you, albeit at a price higher than usual.
The estimate of the original repair costs of the car
This indicates the damages that need to be tended to. Providing this will serve as proof that the said damages are indeed repaired. This way, the insurance company will be assured that the risk significantly lowers.
If my car is totaled, will my credit be affected?
You don’t have to worry. Your credit is only affected if you don’t pay your loans, bills, credit card, insurance, and related financial settlements properly. All that you have to do is pay them diligently.
Supposed that you have a loan for your family vehicle, make sure that it gets paid even if the car is totaled. Settling the loan will not affect your credit. Otherwise, failing to pay will put dirt on your creditworthiness.
Will my insurance premiums be affected?
The answer is yes. Your insurance premiums will be affected after a total loss. Having your car totaled indicates that you have a relatively high potential risk. Hence, they will increase your rates. The increase may vary though, but how?
If the total loss is due to a collision, an at-fault one at that, then expect that the increase will be big. Being the one who caused the accident will imply that you are not a safe driver. Nonetheless, if another driver is the one responsible, then the possibility of seeing an increase in your rates is relatively low.
Those people who have accident forgiveness in their policy are lucky. If it is their first time to get into an accident, their insurer may forgive it and brush it off. However, it is not available to all. Some insurance companies allow their customers to purchase accident forgiveness. On the other hand, some grant it to their long-time customers.
What are some ways to lower my rates?
Since your rates are likely to increase, knowing a few ways to lower your insurance premium will be helpful. After suffering from an accident, hearing the word “surcharges” will make your head hurt. Nonetheless, it doesn’t mean that there’s no way out of it.
Take note that your insurance premiums don’t increase right after an accident. It will only happen when it is time for renewal. You can find some suggestions to answer the question: “What are some ways to lower my rates?” below.
Shopping around for a new policy will never be a bad idea. With or without an accident, you can do it. As we all know, there are changes that happen at least every year to the rates. They may increase. It is also possible for it to turn the other way around. Nevertheless, shopping around annually can potentially save you money on car insurance.
Take note that it is best to stay with your current insurer after an accident until the policy expires. Switching providers will only subject you to higher rates. As the accident is still fresh and acts as a red flag in your driving record, you will be considered high risk. You can still get and compare quotes from different companies though.
Increase your deductibles
Deductibles are a fixed amount of money that you share in repairing your car. For example, the repairs will cost 1000 dollars. If you have a 500-dollar worth of deductible, then you will receive the remaining five hundred as the payout.
The higher the deductible, the lower the rate. Of course, you have to prepare yourself for it. Though it will lower your rate, you have to worry about coming up with that amount in return. You should opt for the deductible that will fit your budget.
Take driving classes
After a vehicular accident, your risk increases in the eyes of your insurer. Taking driving classes will show that you want to improve in driving. It will imply that you want to lower the risk of yourself getting into an accident.
As we all know, the lower the risk of a client, the lower their rates become. Though this will not directly impact your premiums, it will be helpful. It only increases the possibility of a lower increase. Nonetheless, it will be worth it, especially when considering safety.
What if I disagree with the total loss payout that my insurance company gave me?
If you don’t agree with the valuation made by your insurance of your totaled car, then you may negotiate. However, expect that it will be hard. In order to negotiate for a higher payout, you may have to gather enough evidence that you deserve more than what you received.
For instance, you made some customization and upgrades to your car. If you think that those boosted up your car’s value, then you may provide proof that such things have indeed been done. It can come in the form of receipts, photos, and others.
To get things done much easier, it is recommended that you get a lawyer. This way, you won’t be lost in the process and you will be guided. They can also act as the mediator between you and the insurance company.
Suffering from accidents is painful – physically, mentally, and financially. Even so, you can’t just sit there doing nothing about it. Being uninsured by collision and comprehensive coverage will only make it hurt more.
Having insurance protects you from being financially unsafe. You can potentially lose so much money at some point. Though many states’ auto insurance laws only require a minimum amount of coverage, having more will be better.
We can offer you the best quotes that you can find. We will do our best to give you excellent service. At Advantage Insurance Solutions, ask us and no question will be left unanswered. Call us today!