What to do if your car needs serious repairs or gets totaled

Crawford Frazer

The worst part about car accidents is the element of surprise. One moment you’re taking a right turn, and the next, another car is heading straight for you. But as long as everyone is OK, the worst surprise can be finding out how much repairs will cost — and how much your insurance company is willing to pay.

Your rights as a car owner

As a baseline, the amount you’re entitled to depends on your car’s market value, according to the Insurance Information Institute. That payment could be for the proper repairs to return the car to its pre-accident condition. Or you could get a check for its entire value if the repairs are more than the car’s worth (in other words, if the car is “totaled”). Most insurers, according to the Insurance Information Institute, will use the National Association of Automobile Dealers book or Kelley Blue Book as a guide for the car’s value.

After a serious accident, the claims adjuster for your auto insurance company will determine what the company is willing to pay to repair your car. You should have your own mechanic evaluate the damage to see whether the adjuster’s amount is fair. If you believe the company should compensate you for a higher amount, say so.

To protect your rights as a car owner, take these steps suggested by Edmunds.com:

• Know what your policy covers. It’s better if you know this before a serious accident, but you still can discuss the fine points with your insurer after that accident.
• Check your state’s laws. Each state has its own list of rights for auto insurance policyholders.
• Determine actual cash value. Do your own research to determine the car’s value. Provide mileage, service history records and testimony of mechanics to show it’s worth more than the adjuster’s evaluation indicates.
• Check for an “appraisal provision.” If you and the adjuster disagree about the repair estimate, check your policy for a provision that covers an independent appraisal.

When your car is totaled

If the necessary repairs are just too expensive to justify, your insurer effectively will take possession of the car and compensate you accordingly. According to GEICO, the insurer will pay you directly if you’re the owner. If you lease the car, the insurer will pay the leasing company. If you finance, the insurer will pay the financing company. Depending on how much you’ve paid on the loan, you may receive some money back if the actual cash value is higher than what you still owe — or you may owe the financing company some money in the reverse situation.

You could, instead, decide to keep the car and try to make a little extra by selling its parts. Keep in mind that your auto insurance company still will cut you a check if you decide to keep it, according to GEICO, but it will deduct a “fair salvage” amount.