So, your vehicle has been deemed a total loss by your insurance company, now what will happen? There are a few things that will be required of you to complete the claim process to receive the payment of the Actual Cash Value of your lost vehicle. Here is what you can expect:
Pay Your Deductible
- If you were at fault for the accident and you carry collision coverage, then this coverage will be what pays you for the loss of your vehicle. You may still be required to pay the deductible for your insurance. For convenience, this amount may be deducted from your ACV settlement amount. If you only carry liability coverage, then you may not be covered because liability coverage does not extend to damage incurred by your vehicle.
- If you were not at fault for the accident and your vehicle is determined to be a total loss, it will be the other party’s insurance that will pay you the ACV of your vehicle. You wouldn’t have to worry about a deductible in this case
Transfer Ownership/ Title
When your car is declared a total loss, the ownership is transferred into the hands of your insurance company. Essentially “buying” your damaged beyond repair vehicle for the actual cash value of the car. From there, insurance companies will then transfer the title (or sell) the vehicle to a salvage company as a means to recuperate some of the funds lost in your claim settlement.
If, for some reason, you would like to keep the damaged car then the insurance company will (if they allow it) deduct a portion of your settlement in the amount that they would have gotten from a salvage yardfor it. Vehicles that have been labeled as a total loss cannot be repaired and then sold. Titles are updated to reflect the damage incurred by that vehicle. This label will also prevent an insurance company from covering the vehicle. Because of the extensive damage done to a vehicle (80% or more) it is inadvisable to continue driving the vehicle even after major repairs.
Receive Your Settlement
Once your total loss claim comes to a close and the deductible is paid (where necessary) and the vehicle title has been transferred, then you will be paid your Actual Cash Value settlement. This amount is determined based on the age, mileage, condition of the car and even the recommendations from Kelly Blue Book. The deductible or fees associated from your claim may be taken out of your settlement amount so nothing has to be paid out of pocket on your end.
If you are still paying off your vehicle, the ACV goes towards your loan. Any amount not paid off on the loan is still your responsibility and any amount left over after the loan is paid is yours to keep and spend as you like.