One of the worst things that can happen to any car owner, whether driving an off-road vehicle, electric car, or a sedan, is discovering that their ride had been totaled in an accident. This situation becomes even more complicated and frustrating when you realize you only have liability insurance. Such a scenario can be financially and emotionally burdensome, leaving you with many questions and uncertainties.
Understanding the seriousness, today we bring you this article that aims to guide you through the steps that you should take in case you find yourself in this kind of situation. It will help you understand your options and the best course of action.
All your queries, from “My car is totaled and I only have liability insurance” to “Does liability insurance cover my car if I hit someone” will be answered here today.
What Is Meant By ‘Totaled Car’?
A vehicle is considered totaled when its cost of repairing exceeds its actual cash value or when it is deemed unsafe to repair. In simpler words, a car is officially totaled or at a total loss if its repairing cost turns out to be more than its worth.
In some US states, an automobile, whether a Nissan Versa or the newest Bugatti, is labeled as totaled if its cost of repairs is more than 75% of the car’s value.
For Example, if your ride was worth $20,000 before the accident and the repair cost after the accident is expected to be around or close to this price, then depending on your state, your vehicle would be considered totaled.
It does not matter whether you can afford to pay for the repairs or not. In general, fixing such a car would not be worth it because you could easily buy a similar vehicle for what it would cost to restore your ride to its previous condition.
Who Decides If Your Car Is Totaled?
Generally, insurance companies determine when a car is totaled. They assess the damage and compare your ride’s repair costs to its pre-accident condition value. If the insurance companies think that fixing your vehicle is not economically feasible or is not worth fixing, they declare it a total loss, and thus, your ride gets totaled.
Is A Totaled Car Covered By Car Insurance?
When you are in an accident, and the entire fault was of the other driver, then if your ride gets totaled, the insurance company of that at-fault driver will pay for the damages caused by the accident.
However, things could take an ugly turn if the other driver is uninsured or you are the one who caused the accident. What to do? Well, this is where your own auto insurance can become your knight in shining armor.
The type of car insurance coverage you have and the situation that caused the accident decide if and how you are going to be covered. However, if you do not have the right coverage and security, say you only have liability insurance, there is a high chance that you will be on your own.
What Is A Liability Insurance And Its Coverage?
Liability insurance is the minimum coverage required by law in most American states. It covers the injuries and damages that you may cause to others in an accident. It does not cover any damages that you may cause to yourself or your ride.
In other words, a liability insurance will not provide coverage for:
- Damages to your vehicles during an accident.
- Injuries incurred to you and your passengers.
- Theft or vandalism.
Thus, if you want your insurance company to pay to replace your totaled car in an accident caused by you, you need to have collision, comprehensive, or new car replacement coverage.
Both comprehensive and collision insurance provide protection for your vehicle. Collision insurance covers damages that occur from crashes with other objects or vehicles. Whereas comprehensive insurance covers non-collision-related incidents like natural disasters, theft, and vandalism.
And the new car replacement insurance coverage helps you recover the full value of your newly purchased ride that gets totaled. Remember, it is for brand-new rides only.
7 Steps To Take When Your Car Is Totaled And You Only Have Liability Insurance
If you end up in an accident leading to your precious vehicle getting totaled and you only have the bare minimum liability coverage with you, then you need to be immensely careful. Not doing things the right way in the time of crisis can cost you dearly.
Here are the steps that we recommend you should take during a terrible situation where your vehicle is declared totaled as a result of an accident.
1. Assess The Damage
The first thing you need to do immediately after the accident is to ensure everyone involved is safe. Once you take care of that, assess the damage to your ride. It is always better to take pictures, videos, and notes about the extent of damage. Doing this will help you during your insurance claims or legal proceedings.
2. Reach Out To Your Insurance Company
You must notify your insurance provider about the accident as soon as possible. Even though you only have liability insurance, you must report the incident to them.
If you do this, your insurer can provide you with the right guidance on what to do next and help you understand your coverage and responsibilities as the car owner.
3. Get A Repair Estimate
Get a repair estimate for your damaged car from a trusted and reputed body shop or mechanic. This will give you an idea of how much it will take to repair your vehicle and decide whether it is worth repairing or not.
Please keep one thing in mind. If you decide to go with the repair, you will be responsible for paying all the repair costs out of your pocket, and liability insurance does not cover it.
4. Determine The Actual Cash Value Of Your Car
The next thing you need to do is find out the current market value of your automobile. You can get help from popular platforms like Kelley Blue Book, Edmunds, and NADA Guides. They can provide you estimates based on your vehicle’s make, model, year, mileage, and condition.
Knowing the actual cash value (ACV) will help you decide if repairing your damaged car is financially sensible or not.
5. Explore Financial Assistance Options
If repairing your vehicle is not a feasible option, then you will need to explore other transportation options for yourself, such as using public transportation, buying a used or new car, or relying on ride-sharing services.
You can consider the following financial assistance options to get yourself out of the situation:
- Personal Savings
If you have savings and having a personal mode of transportation is highly crucial for you, it might be the time you dip into them and purchase yourself a replacement vehicle.
- Auto Loans
If you do not have any savings but want a car, you can seek out to get an auto loan. Many financial institutions, from banks to rental car services, offer auto loans with varying interest rates & terms. Explore around to find yourself the best deal.
- Family & Friends
If you feel right about this, you can borrow money from family or friends. However, to avoid any future misunderstandings, be sure to set clear repayment terms.
- Charitable Organizations
There are some organizations across the US that provide financial assistance and low-cost vehicles to people in need. Research about local charities and community programs in your region and reach out to them.
6. Negotiate With The Insurance Company
If the accident was not your fault and the driver responsible for this incident is insured, their insurance should cover your damages. In this case, you may have to negotiate with their insurance provider to get a fair settlement. Provide them with all the necessary documentation, including the repair estimate and ACV of your car, to support your claim.
7. Consider Legal Action
If the insurance company of the driver responsible for the accident refuses to offer a fair settlement or outright denies your claim, the only way left is to take legal action.
Consult with a personal injury lawyer who specializes in auto accidents. They will help you understand your situation and rights better and guide you through the best way to proceed.
Tips To Prevent Issues In Future If Your Car Gets Totaled
No one can ever be too careful on the road. You can never know when you will end up in an accident and end up losing your precious ride.
If you have undergone the pain of your ride getting totaled or you are someone who wishes to avoid the headaches related to it in the future, we have some tips that can help you well.
- Review Your Insurance Coverage
If you currently only have liability insurance, then you need to review your insurance coverage. Liability insurance can never help you if your vehicle ever gets totaled. Get comprehensive and collision insurance for complete protection. Sure, these two coverages come at an extra cost, but they can provide you with peace of mind and financial protection in the event of an accident.
- Gap Insurance
Gap insurance comes in handy if you total a new vehicle that you are still paying off. It pays the difference between what your ride is worth and how much you still owe on it when it is stolen or totaled. Some lenders or sellers require you to get gap insurance when you buy or lease the latest car model. Going for gap insurance is necessary with a brand-new ride because if you do not have it, you are responsible for paying any amount you still owe out of your pocket.
- Emergency Savings Funds
Start establishing an emergency savings fund. Doing this will help you manage unexpected expenses like a totaled car. Generally, financial experts recommend people save three to six months’ worth of living expenses. Having a savings fund can help you in times of emergencies and even avoid debt.
- Safe Driving Practices
One of the best ways to avoid accidents is to practice safe driving habits. Always obey traffic laws, avoid distractions like loud music, talking on the phone, etc., and always stay alert while behind the wheel.
You can take the popular defensive driving courses as they can help improve your skills and potentially lower your insurance as you become a certified driver who is less likely to get involved in an accident.
The Psychological Impact Of Getting Your Car Totaled
Getting your vehicle totaled does not hurt you financially but also mentally. Dealing with a ruined ride and inadequate insurance coverage can take a toll on your mental health.
It is normal to feel anxious, stressed, or even depressed in such situations. Below, we have a few tips that can help you cope with the burdensome you are undergoing:
- Seek Support
Getting your car totaled and having financial trouble knocking at your door is bound to leave anyone miserable. The good thing is that you do not have to go through it alone. Talk to family, friends, or a counselor about your feelings. Sharing what’s going on in your head provides emotional relief and helps you gain perspective to handle the situation.
- Focus On Solutions
Instead of putting your energy into the negative aspects of the situation, focus on finding practical solutions. Put your head on how you can handle the circumstances or how you can get yourself out of the trouble. Taking a positive approach will help you remain calm and get rid of the feelings of helplessness.
- Practice Self-Care
Taking care of yourself should be your priority in such situations. Engage in activities that promote relaxation and personal well-being, like exercise, meditation, or any of your hobbies that bring you joy.
Additional Resources That Can Help You Handle The Situation
Apart from all the steps and guidance mentioned above, there are some additional resources that can help you when you get your vehicle totaled.
- State Insurance Department
You can contact your state’s insurance department for support and guidance. They can give you all the necessary information on your rights and help you resolve disputes with insurance companies.
- Consumer Financial Protection Bureau (CFPB)
The CFPB provides you with resources and advice on managing finances, including car loans and emergency savings.
- National Highway Traffic Safety Administration (NHTSA)
The NHTSA provides you with all the information related to a vehicle’s safety and recalls, along with driving tips, to help you stay safe on the road. So, if you are going to buy a new ride, explore its review by NHTSA to learn if it is a safe ride to purchase or not.
In conclusion, having your car totaled when you only have liability insurance coverage is a challenging situation. However, with the right guidance, exploring all available options, and following the right steps can help you navigate through this difficult time more efficiently and effectively.
