Car Totaled Financial Advice
From Adviceopedia
The best car totaled financial advice is to not make any sudden decisions without first thinking the decisions through. This is not the time to run out and buy a new car, even if that is your first impulse.
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The Best Car Totaled Financial Advice
What Does “Totaled” Mean?
When your car is totaled it means that the cost of repairing the car actually exceeds the amount of money the car is worth. You might find that your insurance company deems your car totaled after you are involved in an accident, a natural disaster severely damages your car, or any other instance which makes your vehicle inoperable.
Of course, if you do not have adequate insurance coverage (or any insurance coverage at all) then your definition of totaled might change. If you simply cannot afford to repair your car you might decide to consider it totaled, even if the car can be be repaired back to complete operating order.
Will Insurance Cover My Loss?
Whether insurance will cover the replacement cost of your car depends on a few factors:
- Do you have adequate coverage? You will truly understand the importance of adequate insurance coverage when your car is totaled. If you have enough coverage to cover the cost of replacement then you should not have a problem as long as you have a quality insurance company.
- Is there other insurance? If another person was involved in the accident that led to your car getting totaled then you may find yourself dealing with that person’s insurance company more than you deal with your own.
- Does your policy have a huge deductible? You may have excellent insurance coverage, but if you have a huge deductible you probably won’t receive the full monetary value for your car.
Contact your insurance company for car totaled financial advice specific to your policy.
Should I Buy a New Car?
One of the worst financial moves you can make is to indulge in large purchases either on impulse or out of panic. Your initial inclination after having your car totaled might be to rush out and purchase a new car to replace the old one, but you need to take a step back and examine the bigger picture. If you choose to replace your totaled vehicle, you should find a comparable car to the totaled car in value. Exceptions to this rule might occur when you decide you can handle a larger car payment with no problems, or if you have the money in the bank to purchase a car outright.
Whether the funds for your replacement car come from your own insurance company or from the insurance company of the person involved in totaling your car, you will quickly find that these things happen at a snail’s pace. You may be ready to go out and get a new car today, but there are certain procedures that insurance companies follow and this can really slow down the process of getting your money to you.
What If My Car Wasn’t Paid Off?
You can find yourself in a very difficult situation if your totaled car’s value was less than the amount of money you owed on it. Insurance companies base replacement costs on the value of the car, not the amount owed. Unless you had GAP (Guaranteed Asset Protection) insurance on the car you may wind up paying some money out of pocket in order to pay off the car loan.
Be sure to check the value of your car yourself before accepting the insurance company’s claim of how much the car is worth. Cars depreciate in value rapidly, but this does not mean that you need to accept less money than what the car was actually worth. Another great piece of car totaled financial advice is this: insurance companies aren’t always right.
