Can My Insurance Cover My Car Loan If It’s Totaled?
If you were in a serious accident and your motor vehicle sustained severe damage, there is a high possibility that your insurance company will decide to total your car. While this can happen to anyone, most people don’t have their car loan paid off before an accident.
Insurance companies are only obligated to pay for the current market value of your car—meaning that the insurance company will pay the actual value of the car at the time of the accident. If your car loan is larger than what your car is worth at the time of the accident, you could be left still paying for your totaled car.
However, if you were involved in an accident because of someone else’s negligence and carelessness, you may be entitled to liability compensation. To ensure that you receive the proper amount of coverage and that your rights are respected, seek guidance from an experienced personal injury attorney.
When Is a Car Considered Totaled in Colorado?
A motor vehicle is totaled when an insurance company deems that the cost to repair the car to drivable conditions is higher than the current value. For each state, there is a threshold to which a vehicle is considered a total loss. In Colorado, the state requires that the damage reach 100% of the car’s current value for it to be totaled.
The actual cash value (ACV) of the vehicle depends on the following factors:
- The age of the car
- The market value of the year, make, and model
- Condition of the car before the accident
- Mileage on the car
- The resale value of similar cars in the area
When the insurance company calculates the car’s value, they will run the numbers and decide if it’s worth saving the vehicle. If not, then sadly, your car is totaled.
Owing on Your Auto Loan After Your Vehicle Is Totaled
In many cases, the current value of your car is less than when it was purchased. Along with interest rate and other factors, the amount that an insurance company will give you for the totaled car might not pay off the current auto loan. There are a few options for those who still have money left on their auto loan:
Confirm Your ACV
When you still owe on your vehicle loan, checking your actual cash value is incredibly important. The insurance company will send an adjuster to determine the value, but double-checking through sites like Kelly Blue Book and finding out the dealer trade-in amount can give you a relatively accurate estimate of your actual cash value.
Continue Your Car Loan Payments
While going through the insurance claim process, you should continue to pay your car loan payments. The balance on your loan not paid off by the ACV or other claims like gap insurance will be your responsibility to pay for or finance the purchase of a new one.
Contact a Personal Injury Lawyer
When faced with complex legal decisions and negotiations with insurance settlements, a personal injury lawyer can assist with collecting evidence, advocating for your rights, and working so you’re properly represented. If you’re in an accident resulting from someone else’s carelessness, a personal injury lawyer may assist with making sure you are correctly receiving just and fair compensation.
Discover Experienced Personal Injury Lawyers at Kim Welch Law
A lot goes into car accidents, and sustaining damage on your motor vehicle because of another individual’s negligence is stressful and frustrating. At Kim Welch Law, we provide our clients with knowledge gained from years of combined experience to guide them through their personal injury cases.
To learn more about our practice areas or schedule a free consultation with one of our personal injury lawyers, fill out our online contact form or call (888) 590-5510.