For those who have been involved in a car accident that caused a lot of damage, you probably know the feeling of waiting to determine what the insurance company will say about your car and wondering, “Is my car totaled?” Once you discover that your car has been totaled, you will probably wonder what to do next. What can you do with a totaled car, and how can you get a new car? The amount of damage required to total a vehicle varies from state to state, but your options for handling a totaled vehicle are about the same. If your car has been totaled, here are the best things you can do with it.
Table of Contents
7 Things To Do With A Totaled Car
Believe it or not, you can do many different things with a totaled car. You might think you only have one option, but that is usually not the case. The best option for you will often depend on your situation, like whether you have an outstanding car loan, the value of your car, and other factors. Here are the best things to do with your totaled car after an accident.
#1. Take The Payment From Your Car Insurance
The best option for many people is to take the payout from their car insurance policy. This is usually the easiest option as well, and the money from the insurance policy can help you get a new car after your total loss. Depending on your state, the insurance company might have to replace your car with a comparable vehicle. Otherwise, they will give you a check for the actual cash value of the car based on the adjuster’s calculations minus your policy’s deductible.
If you have a car loan on the vehicle, the payout check will typically be written to both you and your lender. The lender will use the check to pay off the remaining balance of the loan and give you the difference. If you owe more on the car than what it was worth, you will be stuck paying the difference out of your own pocket unless you had GAP insurance coverage on the loan.
#2. Repair The Vehicle
In some cases, you might be able to repair the vehicle even after a total loss. This method often requires negotiating with your insurance company to repurchase the vehicle from them after the accident. However, there are a couple of things to keep in mind. First, the vehicle will end up with a salvage title after the insurance claim for a total loss. Next, the cost of repairs could be so high that you end up with more money in the car than it is worth. Finally, most states require mechanics to have a special license to repair vehicles that have been totaled. The vehicles must be properly repaired and pass a special inspection before being granted a rebuilt title by your Department of Motor Vehicles (DMV). They cannot be driven on the road again until they pass this inspection, so you likely will not be able to do the repairs on your own.
#3. Sell The Car To A Junkyard
One option you might have for handling your totaled car is selling it to a junkyard. In some cases, the salvage value of your car could be worth more than the car’s actual cash value. So, you might be better off selling the car to a salvage yard instead of taking the auto insurance payout. Going this route will require you to work closely with your car insurance company throughout the claims process. Junkyards will typically pay based on the amount of scrap metal in the car, although they might pay based on the usable parts in the car if some items are undamaged. So, how much do junkyards pay for cars? Usually, you can expect to receive $200 to $500 from a junkyard.
#4. Donate The Car To Charity
It is possible that your car is still drivable even though it may be totaled. This is especially true for older vehicles. Damage to a few body panels might make the repairs cost so much that the vehicle is totaled, although this cosmetic damage might not prevent you from driving the car. In that case, you might decide to donate the car to charity. Some non-profit organizations will even take scrap cars. Going this route can help these organizations accomplish their mission, and it will also give you a nice tax write-off in most cases.
#5. Keep The Car But Don’t Repair It
Another scenario that might occur when your car is still drivable is that you decide to keep it and not perform any repairs. This often happens when you only have liability coverage on the vehicle and no collision coverage. In that case, you might not be eligible for any money from your insurance company to repair the damaged car, especially if you are at fault for the accident. State law requires liability insurance, but you are generally not required to carry collision insurance or comprehensive coverage unless you have a loan on the vehicle. So, if you don’t have the money to repair your totaled car, you might keep driving it without any repairs, if possible.
#6. Use The Car For Parts
If there are still usable parts on the car, you might decide to keep the vehicle and use it for parts. Many people choose this route when they have another similar vehicle that might need the parts later. Some people decide to remove specific parts from the car and sell them individually, but this can be time-consuming and tedious. If the car has usable parts, you might be better off selling the vehicle to a salvage yard.
#7. Trade It In For A New Car
Some dealerships will accept trades in any condition — even wrecked cars! While you might not get much money for the trade, even a few hundred dollars could help toward the cost of a new vehicle. Call different dealerships in your area and ask if they will accept total loss vehicles as a trade-in for a new car. You might be surprised to learn that most of them will say yes!
When Is Your Car Considered A Total Loss?
You might be wondering, “When is a car considered totaled?” The answer depends on your state and your auto insurance company. State laws often determine when a car must be declared a total loss. The damage is compared to the value of the vehicle, and a total loss is declared when these two values are about the same.
Most states require that a vehicle be totaled when the amount of damage reaches a certain percentage of the vehicle’s actual cash value (ACV). For instance, some states require a car to be totaled when damage reaches 75% of the actual cash value of the vehicle. Imagine you had a car that was worth $20,000. If that vehicle sustained $15,000 worth of damage, then state law would require that it be totaled.
Some auto insurance companies set limits that are lower than state law requires. Even though your state might set the limit at 75%, your insurance company might set the total loss limit at 60% of the actual cash value of your vehicle. Many insurance companies set the total loss threshold lower than state law requires because they understand that repair costs will often increase once the body shop starts to take apart the vehicle. The insurance adjuster usually makes his estimate based on the property damage that he can see, but there are likely other parts that need to be replaced that cannot be seen until other parts are removed.
How Much Will Your Car Insurance Pay You For A Totaled Car?
In most cases, your insurance company will pay you the actual cash value of your vehicle. This value is determined based on the vehicle’s condition immediately prior to the accident. The ACV of the vehicle is determined based on the make, model, mileage, and condition of the car. You can perform your own research when determining the value of your car by using industry tools like the Kelley Blue Book.
You should always know that total loss claims are negotiable, and you don’t have to accept the first offer your insurance company makes you. If you are not happy with the loss settlement offered by your insurance company, then you can attempt to negotiate with them. You should be prepared with documentation and evidence to support your position. Bring your research to them and work with the insurance adjuster to come to an agreement on the value of the vehicle. If you cannot reach an agreement and are certain that the insurance company is not offering to pay you fair market value, you can always seek the help of an attorney.
How To Handle A Car Loan On A Totaled Car
Many people have auto loans on their cars since very few people can afford to pay cash for a new car. So, how do you handle your car loan when your car is totaled? The answer depends on how much money you owe on the vehicle. First, let’s assume that your vehicle is worth more than the balance on the loan.
Imagine you owe $10,000 on your car, and the actual cash value is $15,000. You are still responsible for making payments on your car loan until you reach a settlement with your insurance company on the loss amount. So, who gets the insurance check when a car is totaled? The insurance company will typically issue a check payable to both you and your lender if you still have an outstanding loan. The lender will use $10,000 of the check to pay off the remaining balance of the loan, and you will receive the $5,000 difference.
On the other hand, some people owe more money on their vehicle than the car is worth. In that case, you will be responsible for paying the difference. If you owe $10,000 on your car, but the vehicle is only worth $8,000, you will have to pay your lender $2,000 not covered by insurance. If you have GAP insurance, this type of insurance will cover that difference. For that reason, GAP insurance is critical if you get a car loan that is close to the value of the car.
What To Do If You Suspect Your Car Is Totaled
So, what should you do if you have been in an accident and suspect your car might be totaled? First, you should contact your insurance company and notify them of the loss as soon as possible. An insurance adjuster will contact you to begin talking about the amount of the loss and whether your vehicle will be totaled.
Go ahead and start researching the value of your car so that you can be prepared to negotiate with the insurance company. When the adjuster begins talking about car values, you will have enough information to determine whether their offer is reasonable. If you intend to keep the car, be prepared to discuss that with your insurance company as well. Attempt to work with them to reach an agreement that works for both parties, but don’t be afraid to challenge them when the situation requires it.
The Bottom Line
Car accidents are never fun, and things can get even more complex if your car is totaled. Many people think you have no options with a totaled car, but that is not always the case! There are several different things you can do with a totaled vehicle. You may accept the insurance payment, repair the car, sell the car for parts, or use a few other options. The best option for you will depend on your personal situation, and you might not have as many options if you have a loan on the car.
Frequently Asked Questions
What happens to cars that are totaled?
Most cars that are totaled have an insurance payout from the insurance company to the owner of the vehicle. At that time, ownership of the vehicle is transferred to the insurance company. The insurance company usually sells these vehicles to a salvage yard or salvage car buyer. The salvage yard may decide to sell the car for parts, or it may decide to repair the vehicle and apply for a salvage title. Therefore, some vehicles that get totaled end up back on the road with a salvage title.
When is the best time to buy a totaled car?
The best time to buy a totaled car is usually after all repairs have been completed by a certified mechanic. The car will be issued a salvage title, and you can sometimes purchase a car with a salvage title for as much as 40% lower than the fair market value for a similar car with a clean title. If you are attempting to purchase your own car after an accident, you should inform your insurance adjuster as soon as possible. You may be able to work with your insurance company during the settlement process to come to an agreement that allows you to purchase the car.
What are your options for a totaled car if you don’t have insurance?
If you don’t have insurance, your options may be more limited. You can still keep the car and have it repaired. You could also choose to sell the car for parts or trade it in for a new car. If you are not at fault and the other driver has insurance, then their insurance company will give you a payout for your vehicle. Finally, you might decide to continue driving the car if it is drivable. You might make enough repairs to get the car back on the road and forgo repairing the cosmetic issues.