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Can I keep my car if the insurance company totals it?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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Reviewed byDaniel Walker
Licensed Auto Insurance Agenthttps://res.cloudinary.com/quotellc/image/upload/insurance-site-images/insproviders-live/ca745a12-daniel-walker.png

UPDATED: Mar 19, 2020

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The lowdown...
  • You may be able to keep your car even if the insurance company declares it a total loss
  • Beware of hidden damage that may affect the car’s safety
  • Your title will probably indicate that the vehicle was totaled which may impact your ability to resell it at a later date

Being in a car accident is always upsetting, and it can be even more so if the insurance company deems your car a total loss. When that happens, the insurance company will usually give you a check for the cash value of the car and take possession of it. But what if you want to keep your car? Here’s what you should know.

When that happens, the insurance company will usually give you a check for the cash value of the car and take possession of it. But what if you want to keep your car? Here’s what you should know.

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How the Decision is Made

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When you are in a bad accident, your insurance company will look at the cash value of your car and what it would cost to repair it.

To determine the cash value, the insurance company looks at the so-called ‘blue book value’ which is recorded by Kelley Blue Book, which maintains records of what cars of nearly every make, model and year sell for, through dealers and in private sales.

They will also determine how much cars like yours have recently sold for in your geographic area. They’re looking for the actual cash value, or ACV, which may be different from what a dealer would give you for a trade-in or what you could sell it to a third party for.

If the cost to repair your car is about 65% or more of the cash value of your car, the insurance company will likely consider it a total loss.

In most cases, they will keep the car and send it to a salvage yard. The amount of damage necessary to consider a car a total loss can vary by state, so check with your state’s insurance commissioner for the specifics.

If You Want to Keep Your Car

If you want to keep your car even though the insurance company tells you that it is a total loss, contact your insurance company right away. If you feel that the value they used for your car is inaccurate, be prepared to say why. Perhaps your car had very low mileage on it or had special features that made it unusual.

Note that if your car has expensive after-market additions, such as a high-end sound system, it would have to have been declared on your insurance policy in order for the insurance company to factor it into their valuation of your car.

If your car is a limited edition or was meticulously maintained, be sure you have the paperwork to back this up.

If the insurance company agrees to let you keep the car, they will send you a check for the cash value of the car, after they subtract your deductible, and the amount they could get from a salvage yard for the totaled vehicle.

Make Sure Your Car is Safe

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The biggest concern insurance companies have with totaled cars is safety.

Often, when a consumer takes a totaled car to be repaired, there are safety issues that are not visible. You may think that the damage to your car is merely cosmetic, but your repair shop may find more damage once they get the car dismantled.

You should have the car inspected by a qualified mechanic you trust. Make sure the mechanic uses parts from the manufacturer.

Be especially cautious if there could be damage to the frame, or if the airbags deployed. Electrical problems are common in cars that have been badly damaged in an accident, and often don’t appear until you’ve had the car repaired and you’re back on the road again.

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Insuring A Car That’s Been Totaled

Another consideration when repairing a totaled car is getting insurance for it. Some insurance companies will not provide coverage for a car that has been totaled.

When your car is totaled, the insurance company will stamp the title to indicate that the car has been totaled and salvaged. Some insurance companies will refuse to insure a vehicle with a so-called ‘branded title.’

You may also have difficulty selling the car later on as well. Dealers and consumers can check a car’s pedigree easily and will see that the car was salvaged. A dealer will usually not accept a salvaged car as a trade in, and a consumer is unlikely to buy such a car.

What if I still owe money on my car?

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It’s possible to total a car you have a loan on, and have the insurance company give you a value that’s less than the amount you owe. This is the worst-case scenario: you have no car, no insurance check and you still owe something on your loan.

The first thing to do in this situation is the verify the valuation your insurance company gave you.

Check Kelley Blue Book and online dealerships to see what similar cars are selling for in your area. Then call the adjuster and discuss the valuation. The adjuster may have missed something, like low mileage or options, and they may be able to change their estimate of the car’s value.

If the accident that totaled your car was caused by another driver, you may be able to recover the difference between your insurance company’s valuation and your loan balance by filing a third-party claim against the other driver’s insurance. Contact the other driver’s insurance company to find out how to do this.

Check with your lender to see if you purchased gap insurance when you took out your car loan.

Gap insurance is used for exactly this purpose: it pays the difference between your car’s value and your loan balance if your car is totaled. If you did not take out gap insurance when you got your car loan, remember to do it the next time.

If the revised valuation still comes in at less than you owe, you were at least partially at fault, and you do not have gap insurance, you will need to pay your lender the amount you still owe after the insurance company pays your claim.

Call your lender to see if you can discuss the terms to pay off the amount. And don’t be tempted to repair your totaled car because you still owe money on it if it would not otherwise be safe to do so.

The most important factor in deciding whether to keep and repair your totaled car is your safety. You may have an emotional or financial attachment to your car, but that’s not a good enough reason to risk your safety, nor that of your passengers or other drivers.

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