The insurance agent declares your car “a total loss” when it has been severely damaged in a road accident and cannot be repaired. If your car is a total loss, your insurance company will pay you the fair market value of your vehicle as of the day of the accident. Read on to learn more about total loss and how to handle it.
How Do You Know If Your Car Is a Total Loss?
Insurance agents consider three factors before declaring your car a total loss.
- If the car’s actual cash value (ACV) is more than the cost of repairs – ACV depends on several factors like the age of the vehicle, mileage, features, etc.
- If the vehicle is still considered unsafe for road usage after a complete repair
- Based on the conditions set by your state laws
What Steps to Take If Your Car Is a Total Loss
Your insurance agent will ask you to do these after your car is a total loss.
If someone else has caused the accident, their insurance company should provide the settlement. Otherwise, you have to pay the deductible and settle the amount from your auto insurance.
You must hand over the ownership of your vehicle to the insurer to settle the claim. You can retain your vehicle by paying the insurer a salvage value if your state laws allow you. However, you cannot drive your car on the road without getting it inspected by the authorities.
Insure Your New Car
If your auto insurance policy covers rental car coverage, it will cover the expenses of a rented car for a certain period after the accident. If you have decided to buy a new car, remember to get the best auto insurance coverage for it.