If your car is totaled in an accident or due to an act of nature, you need a new vehicle. The question is how do you get one. Depending on what type of insurance you have, getting a new car may not be that difficult. Some car insurance companies offer coverage known as New Car Replacement and/ or Guaranteed Replacement Coverage that will cover you getting a new car. If you do not have or your vehicle does not qualify for this coverage, you need to use the check that you get from your auto insurance company to pay off your current auto loan and purchase a new car.
- How Much Does Your Auto Insurance Company Pay You After Total Loss Accident?
- What do You Need to Do to Get the Insurance Check?
- What If My Car is New?
How Much Does Your Auto Insurance Company Pay You After Total Loss Accident?
In the event of a total loss, your auto insurance company will pay you the Actual Cash Value of your car. This is determined by how much similar vehicles of the same year, make, and model, similar odometer reading and equipment are selling for in your area. Your insurance adjuster makes this determination.
If you have paid off your loan, owe less on your loan than your vehicle is worth, or your vehicle is not financed, you will receive a check for this amount. You can use this check to pay off the balance of your loan if you need to.
If you owe more on your loan than the vehicle is worth, hopefully you have gap insurance or loan/ lease insurance to pay off the remainder of the loan. Otherwise, you must pay off the balance of your loan out of pocket. And you can use your insurance check to help purchase a new car.
What do You Need to Do to Get the Insurance Check?
- Report the claim: The first thing that you want to do when you are in an accident that you suspect to be a total loss accident, after seeking medical attention, is to report your claim to your insurance company as soon as possible. Learn more about what health insurance covers in car accidents.
- Have your vehicle towed to insurance company’s preferred shop: Even if your insurance company allows you a choice of repair shop, for a total loss it is best to have the vehicle towed to your auto insurance company’s preferred shop to speed up the claim process. Furthermore, it is much better to have the vehicle towed to your insurance company’s preferred shop than the tow yard because the tow yard will often charge a storage fee.
- Have your car’s title handy: You will need to have your car’s title so that you can sign it over to the insurance company if the determination is made that the vehicle is totaled.
What If My Car is New?
If your car is new and you have the right type of auto insurance coverage, you may not have to worry about how you can get another new car. With New Car Replacement and/ or Guaranteed Replacement coverage, your auto insurance company will replace your new car with another one that is the same make, model, and year as the vehicle that was destroyed.
There is normally a limit to how long you could have owned the vehicle and still use the New Car Replacement coverage. The time limit ranges anywhere from one year with American Family to five years with Travelers Insurance.
Erie Insurance’s New Car Replacement actually allows you to get a newer model car than the vehicle which you had in the event that your vehicle is totaled.
New Car Replacement coverage is generally rather inexpensive, only adding between $5 and $10 to your monthly auto insurance bill in most instances.
The quickest and easiest way to get a new car after a total loss is to have New Car Replacement or Guaranteed Replacement coverage. This type of coverage allows you to get a vehicle of the same year, make and model as the vehicle that was totaled; some auto insurance companies will even replace your totaled car with a newer model year.
If you do not have this type of coverage or you have had your vehicle for too long to qualify, your insurance company will pay you the Actual Cash Value of your vehicle in the event that it is totaled. If your vehicle is paid for, you can use this check to purchase another car.
If you still owe money on your auto loan, you can use this check to pay it off. You also need Gap insurance or loan/ lease payoff if you owe more than the value of the vehicle. After paying off your loan, you can now buy another car.