What Happens When Your Car Gets Totaled in a Car Accident?
In early February this year, I was in a hit-and-run accident that left my car totaled. Yes, they did end up finding the guy who hit me. He didn’t have insurance, but what was great about the cops finding him was that he did take fault for the accident which made dealing with my own insurance company a little bit easier.
Thankfully, I did have full coverage on my car which means that I also had Uninsured Motorist coverage for when a driver is uninsured. However, the process of dealing with insurance and replacing my totaled car was not something that I would like to go through again. I had a lot of questions since this was the first time going through such a big car accident (I’ve been rear-ended almost a dozen times…)
In this article, I will share with you how to deal with insurance and replace your totaled car based on the tips I received from others as well as the information I learned going through this very process.
Please let me know if you have questions in the comments below!
When is Your Car Considered Totaled?
In Colorado, your car is considered totaled when the cost of the maintenance needed is more than or equal to the value of the car. Even if the damage isn’t extremely extensive – insurance will still consider your car totaled. They don’t take in account the fact that the car may still have value in your own eyes.
Each state has a different threshold for when they consider a car totaled, but in general, insurance doesn’t want to have to pay for repairs on a car that doesn’t have much value left in it.
If you really wanted to – you could keep the car. But you would have to pay for the repairs 100% out of pocket.
In my case, the estimated amount of maintenance needed to get it up and running again was about $30,000… I only had a 2011 Honda Pilot with over 130,000 miles on it. So It was definitely not worth $30k.
So it would not be a smart investment for our insurance company to pay to fix the damages on my car.
Thankfully, the tow truck guy that showed up saw this before we did. He knew that my car would be considered totaled so he helped us to save some money and he gave us a few tips on dealing with insurance.
Saving Money on Towing
Our insurance policy covers towing up to $100. Sometimes towing costs more than that if a car needs to be taken far.
However, most towing companies won’t charge you if they end up towing your car back to their tow yard. After the accident, my first thought was to have the car towed to a repair shop (because I didn’t think it was totaled!) But once our tow truck guy explained that he’s seen accidents like this he knew that the car would be considered totaled.
He told us not to get it towed to a shop because I would just need to get it towed away again – then we would be out of pocket for a 2nd towing trip.
But if the car goes to their tow yard, insurance would be responsible for coming and claiming it.
Well, he ended up being correct, and he helped us save around $100!
Getting Paid for Your Totaled Car
What insurance does is evaluate the car to figure out how much it is worth so they know what to pay you. They will offer you the Fair Market Value of the car. They typically have a 3rd party come to assess the vehicle.
Insurance will then go and sell your car.
Colorado is an advanced pay state which means I got my check before they sold my car. The money was directly deposited into our bank account.
Get The MOST For Your Totaled Car
Tip 1: Do your own research to come up with a reasonable price for the car.
Try to find the same year, make, model, and trim of your car. I put together a whole spreadsheet and sent it over to my adjuster.
Tip 2: Never accept their first offer. Present your research.
The first offer will most likely be a lower than fair market value. Unfortunately, this is how insurance companies can get away with needing to pay tons for damaged cars. Be sure to present your research.
Tip 3: Ask them to increase the search radius for their evaluation
By increasing the search radius, you can include cars potentially of a higher value that are farther away.
Taking Care Of Your Injuries
If you have injuries that you are getting treatment for, be sure to collect all of your receipts. And it’s not just your receipt to show proof of purchase, but your insurance (or the responsible party’s insurance) will want itemized receipts with CPT codes, dates of service, and your name on them. This is something I’ve become very familiar with asking for thanks to CHM – the health cost-sharing ministry I’m a part of.
Car Buying Tips
Tip 1: Buy Used
New cars are nice in some ways, but the amount of money that you lose to depreciation in those first couple of years is more than you think!
On average, cars lose 50% of their value in only 4 years!!!
If you find a very well taken care of the car that’s only a few years old, it will feel practically new anyway.
Tip 2: Check the Carfax
Carfax is a great way to learn the history of the car. You can typically learn if it’s been in any accidents if it’s ever been stolen, when it had any recalls, when it was sold, and if the previous owners brought it to a certified shop then you will be able to see all the maintenance done on the car!
Most dealers will give you the Carfax of a car for free otherwise you can purchase them online as well.
Tip 3: Make Sure it Has a Clean Title
If the car has ever been totaled then the title will not be considered clean. You want to make sure you have a clean title because a lot of insurance companies will not ensure a car with a “dirty” title.
Tip 4: Use Edmunds Total Cost to Own
Edmunds has a really awesome tool where you can compare the total cost to own a vehicle for 5 years. They take in account all the extra costs you might not think about. These extra costs include: depreciation, interest on your loan, taxes and fees, insurance premiums, fuel costs, maintenance, and repair.
Check it out to compare prices
Tip 5: Take It to a Trusted Mechanic
Take the car to a trusted mechanic to check it out before you buy it. Depending on what kind of work might be needed on the car it could give you some negotiating power or a really obvious answer to pass on the vehicle.
Tip 6: Take Your Time!
Don’t make an emotional purchase. Take into consideration the gas mileage, how long you want the car to last you, and what you really want to use the car for. Consider how much it will cost to own your car, and try not to be swayed into buying a car just for status.
If you ever feel pressured to buy a car, consider finding a new dealer. We loved working with the dealer we found because we never once felt pressured to buy the car we did. We took a whole 8 days to think it over from the time we first went to test drive the car to actually making the purchase.
Related: What Does the Bible Say About Consumerism?
New Insurance Policy
Be sure to ask if your insurance policy can be backdated to when you lost your car. That way you can earn a refund for what you paid when you didn’t have a car to even ensure. My insurance provider offered this right away without me asking which was awesome – and the refund was applied directly to my new policy.
Things I’m Thankful For During this Process
In the end, one of the best tips that I got was from the women’s ministry leader at our church during a coffee date. She told me that sometimes you just need to make a decision and trust God with the future.
Basically – I was getting so caught up in trying to make the best financial decision and I was totally forgetting that, even if right now I end up making a bad financial decision, God will work all things out for my good and more importantly for His glory.
Here are a few other things I’m very thankful for!
- It was just the car that was damaged and not my limbs that needed to be replaced
- My injuries were very minor – just whiplash
- We had an emergency fund in place to deal with this
- Our wonderful church family. Many of them offered cars to borrow while we searched for a new car
Have you been in a major accident? Share your stories, experiences, and tips in the comments below!
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