If I bought a car recently and crashed it before transferring ownership, will my auto insurance cover the damage?
I have the title in hand and the car is insured under my policy.
If you recently bought a car and crashed it before transferring ownership, your auto insurance policy may cover the damage, but only if you are listed as the policyholder or have explicit permission to drive the vehicle.
The insurance company will pay out the actual cash value (ACV) of the totaled car, which is the car's market value just before the accident, minus your deductible.
Liability insurance typically does not cover damage to your own vehicle; it only covers damage to other vehicles or property in an accident where you are at fault.
If you still owe money on the car, the insurer will pay the lien holder first, and you'll receive any remaining amount, which might not be enough to cover the loan.
The insurance company will take possession of the title and the car after the settlement, unless you go through the process of obtaining a salvage or rebuilt title to keep the car.
In most cases, it's not advisable to keep a totaled car due to the difficulties in finding insurance coverage, repair costs, and safety concerns.
A car is typically considered totaled when the cost to repair the damage exceeds the vehicle's book value at the time of the crash.
This is determined by basic math and state regulations.
Some states have specific thresholds, such as 75%, for determining when a car is totaled.
If the cost to repair the car exceeds this percentage of its pre-accident value, it's considered totaled.
After totalling a car, the insurance company will offer you a check for the pre-accident actual cash value of the car.
However, you have options: you can take the check, sell the car for parts, or keep the car after it's been deemed a total loss.
If you choose to keep the car, you'll need to find an insurance company that will cover a vehicle with a salvage or rebuilt title.
If the car is still being financed after it's totaled, you'll need to examine your insurer's settlement offer closely, as insurers have an obligation to compensate you for the value of the vehicle you lost.
If your car has sentimental value, you have experience working on cars, or you plan to resell parts, you might choose to keep the car even if it's totaled.
In these cases, the expected salvage reduces your settlement amount.