What Do Insurance Companies Do When Your Car Is Totaled?
In some bad accidents, damage to a vehicle is severe enough to warrant totaling the car. This means that the cost of repairing the vehicle to operational condition would be more expensive than replacing it. When an insurance company believes your vehicle should be totaled, it takes steps to process your claim and get you the money you deserve.
Other People Are Reading
-
Inspection and Adjustment
-
Your insurance company may assume that the damage to your vehicle is bad enough to allow the vehicle to be totaled. However, it stills need to figure out exactly how much the vehicle is worth. To do this, the company sends a claims adjuster to look at the vehicle. The adjuster determines the value of the vehicle based on current market value, mileage and other factors. He writes an official report detailing his findings and then gives the report to the insurance company. The insurance company then uses the report to process your insurance claim.
Buy Option
-
Although most people let the insurance company keep their totaled vehicles, you have the option of keeping the car. This lets you sell the car parts yourself, or if desired, repair the car to a workable state. There are advantages and disadvantages to both these options. Your insurance company may ask you if you intend to keep the vehicle, but more than likely, the insurance company will assume you want the car taken off your hands.
-
Check Issuance
-
Once the insurance company knows whether you want to keep the totaled vehicle, they'll issue you a check for the actual cash value, or ACV, the vehicle has, minus your deductible if applicable. If you're opting to keep the vehicle, the insurance company also deducts what they think they might have gained through the sale of the vehicle as a whole or in parts, making your check smaller. Most people put the ACV check toward a down payment on a new vehicle or toward any remaining balance they had on a loan associated with the totaled vehicle.
Car Sale
-
If you decide to let the insurance company keep your totaled vehicle, it has the right to sell the vehicle for parts or scrap. It puts the car or parts up for auction. If the car or parts sell, the insurance company pockets the proceeds. If you change your mind about wanting to keep the vehicle, it sometimes is possible to buy the car at the auction.
-
References
- Photo Credit Jupiterimages/Photos.com/Getty Images
