What Is Buying Back Your Car From an Insurance Company?
Auto insurance can be quite confusing in general, and the process of settling a total loss claim can be one of the most confusing situations you encounter. You must first accept that your vehicle is totaled, then decide what you want to do with the wrecked vehicle, and finally navigate the negotiation process to arrive at a settlement you think is fair.
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Total Loss Determination
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Though the specifics vary by state law, insurers follow a general process to determine whether their customers' vehicles are total losses in a claim situation. They perform an inspection and compare the damaged vehicle with other similar vehicles in the area to determine its cash value. Insurers also determine the vehicle's salvage value, which is the amount they expect to recover when they sell the damaged car at a vehicle auction. If the cash value minus the salvage value is less than or close to the repair cost, the insurer declares it a total loss.
Total Loss Settlements
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Typically, insurers settle auto claims by repairing the damaged vehicle. Customers most often accept repairs in lieu of cash to close their claims. In a total loss situation, when it would cost more to repair the vehicle than the value of the car, insurers do not offer repairs as a settlement option. Rather, they settle with a cash payment equivalent to the cash value of the car. Insurers buy the damaged vehicles from their customers, and the customers sign the vehicle title to the insurer. The salvaged cars then typically go to auction, where they are sold.
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Retaining Salvage
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Though customers usually relinquish their vehicles to their insurers after a total loss, sometimes you may want to keep the damaged vehicle, either to sell its parts, to repair it yourself or just for sentimental reasons. Many states permit this, though some do not. If you want to keep your car, tell your adjuster because the settlement process differs in these situations. You may get to keep the vehicle, but you will receive less cash from the insurance company as a result. It will reduce your settlement by the salvage value, and any corresponding taxes and fees.
Your Responsibilities
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If you choose to retain your totaled vehicle, you have several responsibilities. Each state sets its own laws, so ask your insurer to explain your state's requirements. Generally, you must repair your vehicle to your state's safety standard. Remember, you will not receive enough money from the insurer to cover this expense. Once repairs are complete, the department of motor vehicles, state police or other authorized agency must inspect it before it becomes street-legal again. The cost of these inspections are not covered by your insurer. You must then find an insurer willing to write a policy on your rebuilt vehicle.
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References
- Insure.com: What to Do When Your Auto Insurer Totals Your Car
- CarInsurance.com: How Do You Go About Buying Your Car Back After It Has Been Totaled?
- AMPM Insure: Totaled Car - What to Do If You Want to Keep It
- 2Insure4Less: Does My Auto Insurance Company Keep My Car If It Is a Total Loss and They Pay Me For It?
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