Insurance Issues When Car is Totaled

When you are shopping around for auto insurance, you must prepare for what would happen if your car was totaled to avoid any type of insurance issues that may arise during your claims process. When a car is “totaled,” it is damaged beyond repair or the cost of repairing the vehicle will outweigh the value of the car. You need to keep that thought in mind as that is how the insurance companies will define the term when crunching the numbers for your settlement check.

After Your Car is Totaled

Cars are not known for their investment value as the minute you drive a car off the lot, the value immediately depreciates. The biggest insurance issue you may experience after totaling your car is that you will probably not get back the same dollar amount you invested in the vehicle. Typically a car that is totaled has its value calculated through the insurance company’s proprietary database of car values. Depending on your auto insurance company, you may only be reimbursed for 51%-80% of your car’s actual cash value plus your deductible!

Other Problems

The ultimate goal of auto insurance is that the policyholder should be “made whole” and be put back in the same place that they started from. If you love your car and want your insurance company to pay for repairs to fix it up, they may not do so because of the cost, resulting in another insurance issue for when your car is totaled.

Regardless of what insurance issue you may experience due to a totaled car, the best medicine is prevention. Make sure to investigate the terms of your insurance policy before an accident occurs so that you can educate yourself on the rights you may be entitled to for a totaled vehicle.