What happens if you total your car with no insurance?

Nobody wants to cause an accident, but you can’t always avoid it. Whether something distracted you for a second or weather created dangerous driving conditions, accidents always happen. But what happens if you total a car without insurance?

If you cause an accident, your collision insurance will pay for repairs to your car. It’ll also pay for your car’s actual cash value if it is declared a total loss. Read more to find out exactly what collision insurance is and what it covers.

However, what happens if you don’t have insurance for accidents? Without collision insurance, you’ll have to pay for car repairs by yourself, and you may have to completely replace your vehicle with no help.

Read on to explore why collision insurance is almost always a good idea, then compare rates to find the right coverage.

What do you do if you total your car but don’t have collision insurance?

Unfortunately, your car insurance will not pay for damage to your vehicle after an accident if you don’t have collision coverage.

Collision insurance pays for repairs to your car after you’ve been in an accident, no matter who was at fault. It also covers you if you hit a stationary object, like a tree. If you don’t have collision coverage, you’ll have to pay for car repairs after an at-fault accident by yourself.

However, if you get into an accident for which you are not at fault, your car repairs should be handled by the responsible driver’s liability insurance. If you’re hit by someone without insurance or you’re the victim of a hit-and-run, your car repairs will be covered by uninsured motorist insurance if you have it.

Since collision insurance isn’t required in any state, many drivers who don’t have a car loan or lease skip buying it. However, collision insurance offers valuable protection in case you’re ever in an accident. Adding collision insurance to your policy is a good idea if you can’t afford to replace your car.

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How do insurance companies decide when a car is totaled?

After an accident, your insurance appraiser will evaluate the damage done before the insurance company decides to total the car involved. Insurance companies consider a car totaled when it costs more to repair than its actual cash value (ACV). Companies use different thresholds, but most will total a car when the damage reaches 75% to 90% of its ACV.

Your insurance company must also work with state laws before totaling a car. 

Totaled cars lose their clean title and are issued a salvage title. But,  what is a salvage title? Vehicles with a salvage title can’t be legally driven on a public road until it’s repaired and passes a state inspection. If you choose to repair a totaled car, it will be issued a rebuilt title once the state deems it safe to drive.

How does GAP insurance work if your car is totaled?

Totaling the car you drive is never fun, but it’s especially painful when it’s a new vehicle. Not only do you lose your new car, but you might have to keep paying for a vehicle you no longer own.

When you have a loan on your car, your car’s ACV will likely be less than what you owe for the first few years. Owing more on your loan than your vehicle is worth is called an underwater or upside-down loan. If you total your car while your loan is upside down, your insurance won’t pay enough to pay it off.

What is GAP insurance? GAP Insurance protects against this situation by paying the difference between your car’s ACV and what you owe on your loan. For example, if you have $30,000 left to pay on your loan but your car is only worth $25,000, GAP insurance pays the $5,000 difference.

You’ll only need GAP insurance for a limited time — once you pay your loan down and it matches your car’s ACV, you can cancel your coverage. If you’re interested in GAP insurance, you might need to search for it — not every company offers it.

Will GAP cover your car if you don’t have collision insurance?

Unfortunately, GAP insurance does not work if you don’t have collision and comprehensive auto insurance coverage in your policy. In fact, you probably won’t be able to buy GAP coverage unless you have collision and comprehensive auto insurance.

This is because GAP insurance pays the difference between your car’s value and your remaining loan balance. Nothing will pay you for your car’s ACV if you don't have a collision or comprehensive insurance, so there can’t be a difference between your car’s value and your loan.

The good news is that most insurance companies won’t sell you GAP insurance that you can’t use. Additionally, if you need GAP insurance because you have a car loan, your lender will likely require you to carry full coverage.

What should you do with a totaled car?

You have a few options when deciding what to do with a totaled car. The easiest is to surrender the vehicle to your car insurance company after they pay you for it. The insurance company will likely sell it to recoup some of its losses.

Most insurance companies will let you keep your car, though you’ll have to subtract your car’s scrap metal value from your payout. If you keep it, you can sell it to a junkyard for scrap, but you probably won’t get much for it.

Alternatively, you might find someone to purchase your totaled car as is, especially if it has collectible value. You might also find a mechanic to buy a totaled vehicle to use for spare parts. However, finding someone to buy a totaled vehicle can take a long time, and you probably won’t get too much more than if you sold it for scrap.

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Find the Best Collision Insurance Quotes Today

Whether you just bought a car or can’t afford to replace your vehicle, collision insurance offers important protection against accidents. Without collision insurance, you’ll have to pay for your own car repairs after an accident or risk losing your vehicle.

Collision insurance usually isn’t too expensive, but some companies offer more affordable rates than others. If you decide to protect your car from collisions, compare as many companies as possible before you sign up for a policy.

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