Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Written by Rachael Brennan
Licensed Agent for 15 Years Rachael Brennan

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Jun 21, 2022

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Key takeaways...

  • A totaled car is considered “a total loss” by insurance companies
  • Insurers have the right to take the car if they choose in this condition
  • You may be able to recoup some money from the loss yourself if you were not insured
  • The ideal situation is to have collision coverage so that you can get a replacement

The time to think about insurance is before you have an accident. But sometimes things happen. You forget to pay your insurance premium and have an accident the day after your policy expires.

You get busy and don’t notice the cancellation notice. Perhaps you just thought you couldn’t afford your insurance premiums that month.

When your car is considered a “total loss,” if you had insurance, the insurer would have the right to take the car to recoup their losses. Then they can issue a check to replace your damaged vehicle. But if you were not insured, that’s a different matter.

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What to Do if Your Car Is Not Insured

Whatever the reason, if you end up with a totaled car due to an accident and you did not have insurance, the only things you can do are the following:

  • Sell it to a junk dealer – A car that has been totaled in a wreck is pretty useless to the owner. The car is either undrivable or in such a wrecked condition that it is likely not able to be repaired to restore it to driving condition. A junk dealer may pay you a few hundred dollars to purchase your car before selling the parts to make money on what is salvageable.
  • Sell the spare parts – If you are mechanically inclined, you could take it upon yourself to salvage the parts that are still in working order and sell them to a used parts store or junk dealer. Some people sell spare auto parts on eBay or other auction sites. Getting some money out of a totaled vehicle is better than none.
  • Try to repair it – You could try to repair it as best you can so that you can sell it. If you can get it running and do some body work to help the appearance, you may be able to sell it for a few hundred dollars. But, again, whoever purchases it needs to be aware that it has been in a wreck and that it will have to pass inspection to drive it on the road.
  • Offer it to someone to take it off your hands – If you are unable to save the car or to sell the parts, you could pay someone to take it off your hands. Sometimes that is the situation you find yourself in when you have a totaled vehicle if you had no insurance. In this case, you will just have to write it off as a total loss and move on.

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The Value of Insurance

Think back to our situation above, where you have totaled a car. But this time, imagine you were covered with proper insurance. If you total your vehicle under a collision insurance plan, you are covered for accidents.

If you have a comprehensive plan, other damage factors such as storm, hail, trees falling on it, vandalism, and theft, are covered.

Your bodily injury and property damage liability cover you for the liability aspects, and this insurance is required in most states.

In short, when you have car insurance, you can take that same totaled car in our scenario and have an insurance adjuster state that it is a total loss. And then, guess what? You can purchase a new car with the insurance claims money that you will receive.

This is a far cry from having to pay someone to haul off your totaled vehicle or selling off parts on eBay. It’s always sad when you lose a vehicle due to an accident or mishap, but it’s sadder when you get no monetary value out of it whatsoever and have to take a financial loss.

If you have car insurance, you can have your vehicle repaired or replaced in a matter of days.

How Insurance Companies Handle Total Loss Claims

You might want to know a little more about how an insurance company handles claims when a vehicle is a total loss.

First, they send an insurance claims adjuster to your location to check out the damage. They look at everything including:

  • the inside
  • the engine
  • under the hood
  • the body damage
  • the functionality of the doors
  • other aspects

Then they decide whether the vehicle is capable of being repaired or not.

If they believe it can be restored to driveable condition, they will ask you to get two estimates from two different repair shops, and they will pay you the lowest of the two.

If they believe the car is a total loss, they will note it as such on your insurance claim and send you a check that will allow you to purchase a car of equal value to the one you lost.

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Something Borrowed, Something New

Keep in mind; you are not going to get a brand new version of the car that you lost.

They will not pay out more than you are allowed as per your policy regarding replacements but they will pay you enough so that you can find a similar make and model for the value of your car before the accident.

They often refer to Kelly Blue Book and other resources for this.

Once they decide what your car is worth at the time of the claim, you will be sent a check for that amount. Then you can buy a new car.

Thinking back to our scenario of the total loss that you have to sell to a junk dealer, which is better? Wouldn’t you rather be able to get a new car and get on with your life than to be without a vehicle?

The difference is insurance.

That’s all there is to it.

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Get Collision and Comprehensive Coverage

When you have car insurance that covers damage, repair, and replacement, you will never have to worry whether or not you will be faced with this situation. With collision coverage and comprehensive, you will be able to file a claim for the total loss to your vehicle.

Then the insurer will send you a check for the market value of your car.

Keep in mind that they will only pay the market value and this is not relevant to the fact that you may have a car loan that you are still paying back.

So, if you still owe on the car, you will still have to pay the difference that you owe them, even if the insurer pays you the value of your car at the time of the accident.

The Perfect Example

When you think about it, a totaled car is the perfect example of the value of insurance. It’s not just there for minor repairs such as a fender-bender or hail damage. It’s there when you need it – when you have a total loss.

It’s not possible to do much without transportation. When you have a total loss with your vehicle, you need a replacement as soon as possible. If you had collision coverage at the time of the accident, you are taken care of.

It’s a good feeling to know that, no matter what happens to your car, you won’t have to suffer the financial setbacks that result, as long as you have insurance.

To get the best deals on car insurance, shop and compare at least three or four different companies and see what they offer. Apply for discounts to get your premiums as low as possible.

But, whatever you do, if you’re worried about how you’d make it financially if your car is totaled, get collision coverage.

It can make the difference between having a car and not having one.

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