How to Get a New Car After a Total Loss

Getting a new car after a total loss will depend primarily on the insurance coverage you have. If you solely have liability insurance, you won't collect a settlement for your totaled car. Liability insurance policies only cover another driver's damages in an accident you caused. 

If you're found to be at fault in an accident, you'll need optional coverages to replace your car after a total loss. Comprehensive and collision insurance can help you get a settlement to replace your totaled vehicle. Other insurance options, like replacement value coverage, can also help you buy another automobile, especially if your totaled car was brand new. 

What Is a Total Loss?

A total loss is an insurance term that describes a car so badly damaged in an accident that its repairs exceed its current value. Major insurance companies use a formula that adds up your vehicle repair costs plus its salvage value. If these two amounts total more than your car's actual cash value (ACV), your insurer may consider your vehicle a total loss.

A total loss is a car so badly damaged in an accident that its repairs exceed its current value.

An insurer may consider any vehicle, new or old, a total loss when the repair costs are too high. For example, an adjuster may consider a truck a total loss if its repair costs are $10,000, but it's only worth $4,000.

The insurer wouldn't pay to fix this vehicle; instead, they would write a settlement check for $4,000 based on the truck's current value.

Will the Car Insurance Company Buy a New Car After a Total Loss?

Some insurers will replace your car with a new vehicle if it's less than 90 days old and if you have new car replacement coverage, an optional coverage that you can receive for an additional fee.

Your insurer will only reimburse you for your car's actual cash value the same day as the accident. The settlement you receive may or may not be enough to pay off your entire loan if you're financing or leasing a new car, and if you have an older car, the payout may not be enough to buy a new car. 

Am I Covered for a Total Loss?

Your liability coverage won't cover your repairs. It only covers another driver's damages if you're at fault. An uninsured motorist policy covers your car damages if another driver hits you and they are uninsured.

If you are at fault, you can only receive a settlement for your totaled vehicle if you have comprehensive and collision insurance.

  • Collision coverage if you're at fault for an accident and hit another vehicle. 
  • Comprehensive insurance reimburses you for repairs caused by events out of your control, such as vandalism, theft, acts of nature and falling trees.
  • Gap insurance can pay the difference between an outstanding loan balance and the settlement you received.

Filing a Car Insurance Claim for a Total Loss

After your car is totaled, you'll need to file a claim with your insurer. It can take up to 45 days for your insurance company to process the claim for your totaled vehicle, so report the accident to your insurer immediately after reporting it to the police.

1. Filing an Insurance Claim on a Totaled Vehicle

You'll need an accident report from the police. You'll also need contact and insurance information from the other driver as well as  contact information from any witnesses. 

Contact your insurance carrier right away with this information to file a claim.

The claims process may take several days to weeks to complete, depending on the availability and workload of local adjusters.

The claims process may take up to 45 days, depending on the availability and workload of local adjusters. If a recent disaster has affected your area, you may have a long wait since adjusters have more vehicles to inspect.

Information You'll Need to File a Claim

Your carrier will use these details to process your claim. The adjuster will decide whether it's a total loss.

  • Date and place of the accident
  • The parties involved
  • Vehicle and insurance information from all drivers
  • The official police report
  • Loan information (account number, lender, loan amount)
  • Photos of car damage and the accident scene

2. Tow Your Totaled Car To a Repair Shop

You're not required to take your car to your insurer's preferred repair shop, but it may be more efficient in the end. An approved mechanic can give your insurance adjuster a full evaluation of your car's condition, damages and repair costs. 

3. Get Your Paperwork

Retrieve your vehicle's sales receipt, taxes and the title documents you received when you first purchased your vehicle. Scan and send them to your insurance adjuster. If you cannot locate your title, you can ask your Department of Motor Vehicles for a new one. Some states require the lenders to hold the title until you've paid it off, so you may not have one. 

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4. Research Your Vehicle's Value

Independently research your vehicle's value before your insurance adjuster gives you a settlement offer. You can search online using sites like Kelley Blue Book or Edmunds. You can also scan dealership websites for vehicles selling similar to yours. This research can help you determine whether or not your carrier has given you a fair offer.

6. Check Your Car Loan Balance

Finding out your car loan balance can help you find out whether your auto loan is greater than your vehicle's current value. You may have to finish paying off your loan with the settlement you receive from the insurance company unless you have gap insurance, which covers the remaining balance.

7. Submit Essential Documents To Your Carrier

Send all relevant documents to your insurance adjuster to ensure your insurer processes your claim quickly. Sign your documents. Use a scanner to make an electronic copy and send them back to your insurer.  When signing documents, make sure your signature appears as it did on your initial insurance documentation.

Save copies of all documents that you submit to your insurance company. Track your paperwork to keep track of your claim's progress.

8. Get Your Insurance Settlement Offer

The insurance carrier will require you to sign over your title if your vehicle is a total loss. Your insurer will also take physical possession of the vehicle so remove your belongings from the car. Finally, delete all data from your car's navigation system and your vehicle manufacturer's apps from your phone.  

If you own your vehicle, the insurance company will pay your settlement directly to you.

With financed or leased cars, your carrier will pay your settlement directly to the financing company based on your car's actual cash value and gap coverage, if you have it. 

If your settlement doesn't cover the entire loan amount, you must pay the outstanding amount. 

How Is the Value of My Car Determined?

Following your accident, your carrier will send an insurance adjuster to examine your car. This person will estimate your vehicle's value and determine whether it's worthwhile to repair it. The adjuster will consider the following factors:

  • The odometer's reading
  • The vehicle's body and its condition
  • Wear and tear on tire treading
  • Custom automobile features

Actual Cash Value vs Replacement Cost Value

The insurance adjuster will tell you whether your car is a total loss and propose a settlement.They will compare the prices of similar cars for sale in your area to calculate your vehicle's actual cash value (ACV). The carrier will add your state's sales taxes, title fees and registration costs to the baseline ACV amount.

If you have guaranteed car replacement or replacement cost coverage, your insurer will give you money to purchase a brand new car of the same make and model (minus your deductible) instead of its depreciated value.

If you don't believe the offer your insurer makes is fair, you can use your independent findings to counter the adjuster's estimates. 

Can I Keep My Totaled Car?

You can't keep your car and receive a payout. After your insurer declares your vehicle a total loss, you'll have to give them the title before they will issue you a check.

Your insurance company may sell your vehicle at a salvage yard to recoup some of their money. Most insurers will allow you to buy back your vehicle after a total loss. Once you buy back the vehicle, you'll receive a salvage title and can buy rebuilt title insurance

Some insurance companies won’t allow drivers to purchase collision or comprehensive coverage on rebuilt salvage vehicles.

Most states won't allow you to register the salvage title until you complete your repairs and your car passes inspection.

Note that when it comes time to insure a salvage car, some insurance companies won't allow drivers to purchase collision or comprehensive coverage because they can't accurately estimate the current value.

Buy a New Car After a Total Loss with Help from Insurance

Your car is an essential asset that needs insurance protection before the worst happens. When purchasing coverage, consider options like comprehensive and collision coverage that can help you replace your vehicle if it is totaled in a wreck.  Your insurance may only pay out the market value of the car, not what you owe so consider gap coverage if your car is eligible. However, some insurers offer new car replacement policies that replace your totaled car with a brand new one. 

Ultimately, your coverage should address your personal needs. If you're not satisfied with your current coverage or the way your insurer handled a claim, SmartFinancial can help you shop for a new and affordable car insurance policy. Get a free car insurance quote by entering your zip code below.

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