f you’re in a car accident or have a vehicle damaged during an incident of vandalism or theft and the cost to repair the car exceeds its value then the insurance company will declare your car totaled.
The way that you’re paid by an insurer for a totaled vehicle will depend on many things. The first is whether you have the appropriate coverage. If you do not have collision or comprehensive coverage then you may not receive any benefit when your car is totaled.
Actual Value versus Agreed-Upon Amounts
If you have the appropriate coverage, your insurance company will either pay you the vehicle’s actual value, which includes depreciation and is based the value shown in a resource book such as Kelley Blue Book, or they will pay you an agreed-upon amount that is stated in your policy. You must read your policy in order to find out if you have one that will pay actual value or an agreed-upon amount and remember, while all policies have limits for collision and comprehensive coverage, those limits don't determine what you will definitely receive, just the maximum that you can possibly receive.
If the amount that your insurance company reimburses you for the totaled vehicle is less than the amount you owed on the vehicle, you may have to wrap the remainder of your loan into a new auto loan or pay it off separately from your new vehicle loan. Either way, you will more than likely still owe the lender the difference between what your insurance company gives you and what you owe them.
The Policy Deductible and Salvage
You might be wondering how your deductible fits into this scenario. After determining the value that they will pay for your totaled vehicle, the insurance company will subtract the amount of your deductible and send you a check for the difference. Because auto insurance deductibles are per incident not per year, they will deduct the deductible even if you paid out for a prior accident that year.
After the vehicle’s been declared totaled and you’ve been reimbursed, the insurance company has basically purchased the salvage from you and can now sell off parts or sell it whole at an auction.
We can help you decipher your Dallas auto insurance policy and make sure that you’re covered the way that you want to be, through a policy you can afford issued by a highly rated insurance company. Give us a call today to set an appointment.