If your vehicle has been deemed a total loss by your insurance company, you will soon be on the hunt for a new car. However, you might be wondering what the process will be for getting a new vehicle. Getting a new car after your vehicle is totaled can be a complex and confusing process. Working with the insurance adjuster to get a settlement, paying off existing car loans, and getting a new car can sometimes be overwhelming. If you need a new car after yours has been totaled, there are some basic steps you need to follow. Keep reading as we tell you exactly how to get a new vehicle to replace your totaled car.
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6 Steps To Get A New Car After A Total Loss
Getting a new car after an accident can sometimes be difficult, but the process will go much more smoothly if you know the proper steps. If your car is a total loss, this adds complexity to the process. However, if you follow the steps below, you can be in a new car quickly and get back on the road.
#1. Start Your Car Insurance Claim
The first step you should take after your accident is to notify your auto insurance company. Obviously, that should be done as soon as possible after taking care of any emergency situations at the scene of the accident. Even if the accident is not your fault, you still want to notify your car insurance company of the accident. If the other driver is at fault, your insurance will usually not be required to pay anything on the claim. However, they might sometimes be required to pay, especially if the other driver does not have enough coverage.
The sooner you notify your insurance company of the loss, the quicker the claim can get started and resolved. You will likely need to provide your insurance company with details and documentation about the accident, like a police report, the date and time of the accident, and other information. Once your claim has been started, an adjuster will be assigned to your claim, and you will work with this adjuster throughout the duration of your claim.
#2. Get Your Vehicle To A Repair Shop
The next thing you need to do after you have notified your insurance company of the claim is to get your car to a car repair shop. Some insurance companies require that you use a shop on their list of approved shops, but others allow you to take the car to any shop you choose. Whichever is the case, you need to get your car to a shop right away so that they can begin to assess the damage.
Your insurance company will assess the damage on its own in most cases, but you will also need to get a repair estimate from a body shop. The shop will usually perform a more thorough assessment of the damage than your insurance company. The reason this is so important is that the amount of damage is the biggest factor in whether or not your car will be totaled. If your car is going to be totaled, you want to know as soon as possible so that you can start the process of getting a new car.
#3. Gather Your Paperwork
A lot of paperwork is required with any insurance claim, but a claim for a total loss requires even more paperwork than a traditional repair claim. You will want to gather the obvious documents, like the police report, your insurance policy, and information related to any other drivers in the accident. With a total loss claim, there are also some additional documents that you will need to gather.
In addition to the documents mentioned above, you should gather your loan documents if you have one. If you don’t have a car loan, that makes things a little easier. For those that do have a loan, you should go ahead and contact your lender to obtain the payoff amount. Remember that you are still responsible for making payments on your car loan, even after your car has been in an accident. Once you settle your insurance claim, the insurance check will be used to pay off the loan balance.
In some cases, you might owe more money on your car loan than the vehicle is worth. When that happens, you will be responsible for paying the difference between the actual cash value and the loan balance out of your own pocket unless you have gap insurance coverage. Gap insurance will cover this difference for you, so it is crucial to purchase this insurance if you have a large car loan.
#4. Research Your Car’s Value
Go ahead and start gathering as much data as possible about your car’s value. In most cases, your insurance company will give you a check for the actual cash value of your vehicle. This value is calculated based on the vehicle’s year, make, model, condition, and mileage just prior to the accident. Some insurance policies will provide a new car replacement instead of an ACV payout, but this case is rare.
Don’t depend solely on the offer from your insurance adjuster! Do your own research on Kelley Blue Book and other industry tools to determine how much your car was worth. Look at sites like AutoTrader and others to determine how much similar vehicles are selling for in your area. This data will prove extremely valuable in the next section when you negotiate a settlement.
#5. Negotiate A Settlement With Your Auto Insurance Company
If you suspect the insurance company is making you a lowball offer, be prepared to challenge them with the data you have gathered. You can always refuse their offer and attempt to negotiate a higher settlement. If necessary, you might even be required to get a lawyer involved if they refuse to budge.
Thankfully, many insurance companies will make you a very fair offer, and you will be pleased with their offer. However, there are times when more negotiation is required. Simply demanding a higher dollar amount is not likely to get you very far, but the insurance company will be much more likely to listen to your position if you have the data to back up your statements.
#6. Shop For Your New Car
You’ve made it to the fun part! It’s time to start shopping for your new car. So, who gets the insurance check when a car is totaled? If you didn’t have a car loan on your totaled car, you would receive the full check from your insurance company for your total loss claim, less any deductible that may apply. However, if you had a car loan, the check will be made payable to both you and your lender. Once the loan is paid off, the lender will give you the amount that is left over.
You can then head down to a local dealership to start searching for your new ride. At this point, the process is the same as searching for a new car at any other time. You should research the market value of the cars you are considering and prepare to make an offer on one. Once you have purchased your new car, you will need to register it with the DMV to get your tag and registration. Enjoy your new vehicle!
Definition Of A Total Loss
You might wonder, “When is my car considered a total loss?” The answer varies from state to state as well as from one insurance company to the next. State laws often dictate when a car must be considered a total loss, although many insurance companies have thresholds that are lower than state law requires. Many states require a vehicle to be totaled when the cost of repairs exceeds 75% of the actual cash value of the car. However, your insurance company might set the limit at 60% of the ACV. The threshold is often set lower than state law requires because repair costs often increase once the vehicle has been torn apart, and additional damage is found.
In some cases, the insurance company may use both the salvage value and the cost of repairs to determine when to total your car. Some companies will add the salvage value and cost of repairs. If that total equals more than the ACV of the car, then they will total it. Consider an example where your vehicle is worth $10,000. If the cost of repairs totals $8,000 and the salvage value of the car is $3,000, then the insurance company would consider it a total loss.
Once your car has been totaled and you accept an insurance settlement, the car then belongs to the insurance company. Typically, they will sell the car to a salvage yard. The salvage yard might decide to repair the car and request a rebuilt title or salvage title. The amount junkyards pay for salvage cars ranges from a few hundred dollars to a couple of thousand dollars. If you wish to keep the car, you can sometimes work with the insurance company to negotiate a way to repurchase the car from them. Buying the car back is just one of the things you can do with a totaled car. You also have other options in some cases for what to do with a car that is totaled.
How Does Gap Insurance Work On A Totaled Vehicle?
It would help if you first understood that insurance covers the actual cash value of the vehicle in most cases. Often, people may have a car loan on a vehicle that has a balance greater than the value of the car. In this case, gap coverage is crucial. Gap insurance can save the day if your car is totaled and you still owe on the loan. Let’s look at a couple of examples to help understand how gap insurance works.
First, think about a scenario where your car is worth more than the amount of your car loan. In this case, you would not need to make a claim on your gap insurance policy. For instance, if your car was worth $20,000 and you only owed $10,000 on it, you would receive the difference of $10,000 after the loan was paid off.
However, think about the opposite situation. Imagine that your car is only worth $10,000, but you owe $15,000 on it. In that case, your gap coverage would pay for the $5,000 in negative equity in the event of a total loss. Without gap insurance, you would be responsible for paying that amount out of your own pocket.
Will My Car Insurance Company Buy Me A New Car After A Total Loss?
What happens when the insurance totals your car? Will you get a new one or just get a check? Some insurance policies include new car replacement coverage. If you have this type of language in your collision coverage or comprehensive coverage policy, your insurance company will buy you a new car after a total loss. Typically, this type of coverage only applies for a short time period after your initial purchase — like 90 days. After that timeframe, depreciation starts to lower the value of your car, and the policy will no longer pay for a replacement.
If you don’t have replacement coverage, your policy will usually only reimburse you for the actual cash value of your car plus any upgrades you have made to the car. This is the amount that most policies cover, and this is the amount that you can usually expect to receive in the event of a total loss. Be aware that you may need to provide evidence of upgrades that have been added to the vehicle before your insurance will cover them.
How Long Does The Claims Process Take For A Totaled Car?
So, how long after your auto accident will it take to get your insurance settlement? The answer depends on a few different factors. First, it often depends on who is the at-fault driver. If there is another vehicle involved and that driver is at fault, then the process might take longer when dealing with the other driver’s insurance company and their liability coverage. However, if you were the only one involved in the car accident, your insurance company would typically get your claim processed more quickly.
The other factor may depend on whether you need to use your collision insurance or comprehensive insurance coverage. The details of those two types of policies differ, and that difference can lead to different processing times for a claim.
In most cases, a total loss claim can be processed in 10 to 45 days. Most claims are either approved or denied within this timeframe. Once the claim has been approved, it can take anywhere from three to 30 days to receive the payout check. So, you could be waiting nearly three months from the time of your accident until you get a check from your insurance company.
The Bottom Line
If your car has suffered substantial property damage, you might face a total loss claim with your insurance. You will also be in the market for a new car, so there are steps you need to take to make that happen. First, you should notify your insurance company as soon as possible after the accident. Gather all the required paperwork and research the value of your car so that you are prepared to reach a settlement. Once you get the check from your insurance company, you can begin shopping for a new car and use the money you received as a down payment.
Frequently Asked Questions (FAQs)
What is the most important thing to do after your car is totaled?
The most important thing to do immediately after the accident is to make sure everyone involved is OK, and you should call for help if anyone needs medical attention. Next, you should notify your insurance company as soon as possible. This will allow them to start the claims process and help you get paid more quickly. Work with your insurance adjuster and provide any required documents in a timely manner. This will help your claim get paid faster.
What is the fastest way to get a new car after a total loss?
The fastest way to get a new car after a total loss is to provide all the required documentation to your insurance company as soon as possible. You will need information about your vehicle’s title, bill of sale, and other documentation related to your purchase. The faster you provide the required documentation, the faster your claim can be processed and paid.
How much money can you get for a totaled car?
The amount of money you get for your totaled car depends on how much your car was worth. The claim payout will usually equal the actual cash value of your car minus any deductibles that might apply. Do not expect to receive the same amount you paid for the vehicle because depreciation will lower the value of the car as it ages and as more miles are placed onto the vehicle.
What are the benefits of total loss insurance?
The biggest benefit of total loss insurance is that you will receive a payment for the value of the vehicle that was lost. This payment can be used as a down payment on a new car or even to purchase a new car in full. Without this type of insurance, you could be stuck paying for a car that has been totaled and cannot be driven.