What happens when my car is totaled?

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After your car is totaled, the insurance will sell it at a salvage dealer auction. With the title branded as salvage, the salvage dealer may repair and resell the vehicle or sell it for parts. You will be paid the actual cash value of the totaled vehicle.

Benefits

Selling the totaled car at an auction allows the insurance company to recoup some of the expense incurred by paying you the fair market value for the vehicle.

Significance

When the vehicle is totaled, the insurance company will pay you the actual cash value of the vehicle. This amount is equivalent to the value of the vehicle before the accident.

Considerations

The process of having your vehicle inspected and ultimately declared a total loss can take from weeks to months, depending on your insurance company.

Warning

If there is a loan on your car and the balance exceeds the amount paid by the insurance company, you will still owe the difference unless you have Guaranteed Asset Protection, known as GAP, insurance, which covers the difference between the totaled value and payoff.

Misconceptions

After an accident, the totaled car will go to a salvage auction. However, you may be able to pay the insurance company the salvage value of the vehicle and keep it for parts or to repair on your own.

Source:

Progressive: Total Loss

MSN Money: Car Unfairly Totaled

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What happens when my car is totaled?

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