Question:

How does total loss auto work?

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Does the insurance company (mine is State Farm, btw) send you a check with the amount of how much i still owed on the car? Like, i still owe 8k on it...if it's considered a total loss, then i receive a check from state farm in a 8k value so i can purchase another car?

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  1. You Only Get what the car is worth,Not what you still owe on the car.


  2. When an insurance company totals a car it is worth what the market value is for that vehicle 1 second prior to the collision that totalled it.

    It has absolutely nothing to do with Blue Book values.  

    If the amount paid for the total loss of the vehicle is less than what you owe then there is what is called a deficiency balance.  In essence you are now paying for a dead horse.

    You could take the check and buy another car but you would still owe the 8K.

    If your car was totaled then you are probably going after a personal injury claim as well.  Use the property damage portion and pay off the car and use the settlement from your PI case to buy another one.

  3. No, they send the check, made payable to you and the lender, to you.  You can't cash it, until/unless the lender signs off on it.  

    You sign the check, then mail it to the lender, the lender signs  & deposits it.  If you still owe $8K, the lender takes the $8K, which pays off your loan, and mails a check to you, for the rest of whatever the insurance paid you.

    If the ACV of the car is $10K, that would be, $2K, minus your deductible.    Then you can use that $1500 as a down payment for the next car, if you want a loan, or just buy a junker, if you don't.

  4. They will pay the ACV.

  5. Total Loss payment is usually the Blue Book value of the car, not what you owe on it or think it's worth.

    That means you'll only get what the insurance company thinks your car would sell for at it's current age and mileage.

    Sorry

  6. I am a licensed insurance agent & I work for State Farm.  If your vehicle is determined a total loss than State Farm will pay you whatever the actual cash value (ACV) of your vehicle is at the time of the loss.  There are several factors used in determining this value.  If you have loan balance coverage on your policy then State Farm will pay off the loan as oppose to the actual cash value, if it's more.  However, this coverage may not be available in all states.  This is a coverage that is only available for brand new vehicles.  The dealerships & lienholders also offer GAP coverage.  You might want to look over your paperwork to see if you purchased the GAP coverage when you purchased the vehicle.  But as far as the amount that you will receive if your vehicle is totalled, it will be the ACV of the vehicle.  Hope this helps you out.

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