A car is considered totaled if the cost of repairing it after it has been involved in an accident is more than the current value of the vehicle. If you are driving an old car that has covered many mileages, it may be declared as totaled if you claim for damages after an accident. Cars that have been used for more than five years may lead to a totaled situation. It is important to discuss with your insurance company about your coverage options.
One thing you may need to consider is doing away with coverages like comprehensive and collision insurance and this means that you will not claim for damages on your car if you were at fault in causing the accident. However, if you are caught up in a totaled car situation, there are a number of things you need to do. When a vehicle is involved in an accident and you have exchanged the information with traffic police department, the other persons involved in the accident, and your insurance company, the insurer sends adjusters to inspect the vehicle.
The adjusters will consider aspects like the cost of repair, the mileage covered by the car, and the person at fault in causing the accident. If the car is regarded as totaled, the adjuster calculates the present market value of the vehicle based on the mileages it has covered and any modifications that you may have done and reported to the insurer. The insurance company writes you a check less the amount you have placed as deductable. Usually a totaled car is uninsurable and you will not be compensated as usual.
This means that the cost of damages which exceeds the values of the car will not be paid. What you get is an amount equivalent to the current value of the car minus the deductible you quoted for the vehicle coverage. The situation is even worse if the vehicle was acquired through a loan. If you are servicing a loan, and the claim coverage is less than the loan balance, you are put into a situation known as “upside down”. This means that you owe more on the damaged vehicle than it is worth.
You will have to meet the difference. In the event that you are leasing your vehicle, it is likely that you have a lease contrast with gap insurance. The gap insurance is meant to cover the difference between the present value of the car and what is actually owed. It is important that if you are leasing a vehicle and you do not have gap insurance, you get one as soon as possible as it may protect you when you are involved in an accident and your car is considered total loss.
The other question you may ask is if you will keep your totaled car. When the insurer gives you a check for a totaled car, it gains ownership of the vehicle. In most cases, the car is sold at auction and the money goes to the insurance company. However, if you act fast, you may keep the totaled vehicle. What you need to do is inform the auto insurance company in advance before it begins the auction process.
Waiting for long may mean that the insurance will proceed with auction plans and at this point, it becomes difficult to get it back. When you opt to keep the vehicle, the insurer will still reimburse the actual value of the car but less the deductible amount. In case the car was sold through an auction, the insurer may also deduct the amount it received. At times, this process may be difficult needing the involvement of a legal expert to help you out acquire your totaled car.
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