You can buy a new car after a total loss using your payout from the insurance company if the loss was covered. If you purchased new car replacement insurance, your insurer will provide enough money to buy a similar vehicle.
Without new car replacement, most insurance policies will only pay a totaled car’s actual cash value, which is usually not enough to purchase a similar car again. In some states, your insurer is required to pay for the sales tax, title fees, and/or registration costs for a new vehicle, too.
How to Get a New Car After a Total Loss
1. File an insurance claim
If your car is totaled in an accident, you can file a claim with the at-fault driver’s property damage liability insurance or your own collision insurance.
If the car is totaled by something other than an accident, like vandalism or a natural disaster, you can use your comprehensive insurance. You should also file a police report after the accident and give the information to your insurance company.
2. Negotiate your totaled car payout
When calculating your car’s actual cash value, your insurance company takes several factors into account, including previous damage and the value of similar vehicles. If you think the insurer’s estimate is too low, then make sure you have evidence to support what you think your vehicle was worth.
3. Fill out any necessary paperwork
You need to sign the insurer’s final settlement offer and sign over the car’s title if you own the vehicle outright.
4. Receive the check
Once the settlement has been approved, you should receive your claim check within a few days.
5. Work with your lender or lessor
If your car was leased or financed, you need to communicate with your lender or lessor and put your settlement toward any remaining balance. Depending on your car’s ACV, the settlement may not be enough to cover the entire amount. In that case, you would need to file a claim with your gap insurance, if you have that type of coverage.
6. Purchase a new car
Once you’ve paid off your loan or lease, you can put any remaining funds toward purchasing a new car.
To learn more, check out WalletHub’s guide to totaled cars.
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