When you’re caught off guard, a quick trip to the store can turn into a disaster in the blink of an eye.  Braking suddenly or someone else can lead to a collision.

When you’re in an accident, it’s what you do after you get to safety that matters the most.

One of your biggest worries is what will happen to your car and how fast it will be repaired. Unfortunately for you, if the damage is bad enough, the insurer might not pay for repairs at all.

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What is a total loss claim?

When you file a claim for damage to your vehicle, there’s a good chance that the claim could go from a simple first-party physical damage claim to a total loss claim after estimates have been calculated.

A car is a total loss when the cost to repair the property is higher than what the insurance company has determined the car is worth.

Why won’t a company pay to repair a car when it’s totaled?

It wouldn’t make sense for an insurer to pay a repair shop to fix the serious damage that was done to your car if it’s been declared a total loss. One of the main reasons is because of how the auto policy contract is written.

It’s the insurer’s responsibility to pay for covered losses, but there are always limits of liability.

The limits of liability for your physical damage coverage on your personal auto policy are clearly defined.

In the contract, the insurer only agrees to pay up to the car’s actual cash value (ACV) when settling a damage claim for your vehicle.

If the insurer finds that the cost to repair the car is higher than what the car is worth, the insurer would be paying more than it is obligated to if it repaired a totaled car.

Can a car be totaled when the damage doesn’t exceed value?

Most claims are settled by total loss specialists when the ACV is lower than the estimated cost of repairs. There are exceptions to every rule. In some cases, a car could be written off because it has

There are exceptions to every rule. In some cases, a car could be written off because it has rust damage or because the frame of the car is bent.

There are states with rules that allow insurers to total out vehicles even when ACV isn’t exceeded.

In these states, there’s a Total Loss Threshold that’s used. The TLT says that only a percentage of the ACV must be exceeded for the carrier to have a right to dictate the car totaled.

In some states, the TLT is as low as 50 percent of the car’s value.

Some Totaled Cars Are Easily Repairable

Cars that don’t retain much value and older vehicles can be totaled easily.

Even a minor dent on the fender is enough to total out a car when the car is only valued at $1000 or so, which is something to consider before you decide to settle the claim and give the insurance company your car.

If you can do the repairs, it might make sense to keep the car.

What is the process of settling a total loss claim?

Typically, the insurance company will offer you a settlement that includes the car’s ACV and some other costs. Your claim may include sales tax, titling fees, and projected taxes. Once you’re offered the settlement and you accept, you’ll sign the paperwork to make it official.

The paperwork includes transfer documents so that the insurer can apply for a salvage title for the car in the company name.

Usually, the carrier will sell the car off at auction as is to recoup some money. Just because it’s standard process to sign a totaled car over to the insurer, does not make it a requirement.

What do you do when you want to keep your car?

If the damage isn’t significant or you have a really strong attachment to your car, you can keep it.

Claimants who make the decision to keep their cars aren’t going to receive the same amount of money that someone who lets go of their car does.

Your claims payout amount won’t be as high. The salvage value of the car will be subtracted from your offer.

What is salvage value and how is it determined?

Salvage value is the total value of property when it’s sold at the end of its useful life.

Since a totaled car must be issued a salvage title, it’s not worth as much after repair as it was before it was ever damaged.

Salvage value is calculated by considering the property’s purchase price and then determining how much the car will depreciate each year that it’s owned.

The depreciation expense is subtracted from the car’s value and then the salvage value is determined. It all depends on how much the car was worth at the beginning of its life.

You Pay for All of the Repairs

You do have to be realistic about what you can repair and what you can’t. If the repairs are cosmetic, it could make a lot of sense to keep the car.

If the damage is mechanical, consider the cost and your skill level for doing car repairs.

If you’re not satisfied with the decision made by your insurer, you don’t have to stay with the company.

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If you need to file a car insurance claim or have filed a car insurance claim, you may be wondering if your auto insurance provider can drop you. The short answer is that it depends on many factors.

While your car insurance company can cancel your policy, they are more likely to increase your rates rather than drop you.

If you are expressly worried about the status of your current insurance policy, you can use a comparison tool to shop for a new policy and potentially better premiums.

This will help you determine if you need a new policy and help prepare you in case your car insurance company does cancel you.

Compare car insurance quotes today to see how much you could save. Enter your zip code above to get started for FREE!

Know When to File a Claim

Insurance companies do not like it when drivers file frequent car accident claims. Knowing when to file can help you avoid being canceled for becoming too high of a risk to insure.

• You are the only car or person involved and you only damaged your property – You do not have to file a claim if only your property and your vehicle were damaged.
• The damage is less than your deductible – Your insurance company won’t give you any money for the repairs if the damage is less than your deductible, so it is pointless to file a claim unless it involved someone else’s property.
• Your car was parked when it was damaged – If you weren’t driving your car and lightening struck it or something fell on it or it was hit by another vehicle, go ahead and file a claim. The damage wasn’t your fault.
• You were involved in an accident with another vehicle – You are obligated to notify your insurance company and file a claim.

Reasons Car Insurance Companies Drop Drivers

In general, car insurance companies can opt to cancel an insurance policy if you’ve committed any of the following infractions.

• You’ve filed too many claims over a certain period of time – Car insurance companies tend to have a threshold for accidents and incidents. If you get into more accidents than your car insurance company allows, they may determine that you are not worth the future risk.
• Your car accident pushed you into the high-risk category – If you’ve gotten numerous speeding tickets or driving infractions over the last couple years then get into a car accident, you may be deemed a high-risk driver and your insurance company may not be able to write high-risk policies.
• You were impaired at the time of the accident – If you were drinking and driving or under the influence of drugs at the time of the accident, your insurance company may cancel your coverage.

What happens when a car insurance company decides to cancel your policy?

If a car insurance company wants to cancel your insurance policy, they must follow certain steps. Otherwise, you may have a reason to report them to your state’s insurance department.

Your car insurance company must send you a letter explaining that they have made the decision to cancel your insurance policy, and they must provide one or more reasons. The letter must also state the cancellation date.

If your car insurance company cancels your policy without notifying you or they do not provide a reason, they could be required by law to reinstate your policy. However, it depends on why your policy was canceled.

If you failed to pay the premiums or were convicted of a crime while driving, you may not have any recourse of action.

If you cannot get your policy reinstated, you can use a comparison tool to quickly find and purchase a new auto insurance policy and avoid a gap in your car insurance coverage.

Avoiding a Gap in Car Insurance Coverage After Receiving a Cancellation Notice

If your car insurance company sent you a cancellation notice, look for the cancellation date. You will want to have a new insurance policy before that date.

The quickest way to obtain a new policy is by using a comparison tool. Car insurance comparison tools take your information and your car insurance needs and compare them to all the available policies in your local area.

The tool then returns the best results, which will include:

• the insurance carrier
• the type of policy
• the price

You can also read the details of the policy before you make a decision. Once you have determined which policy would best meet your needs and your budget, you can purchase it directly online.

What are you waiting for? Enter your zip code below and start comparing affordable car insurance qutoes today!