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How Do I Pay For a Car That Is Totaled?


If you are a typical driver, it is bound to happen to you at some point… a car accident.

According to the Property Casualty Insurers Association of America which is a trade association that analyzes insurance data, an average driver can expect to be in an auto accident that requires you to make a claim once every 17.9 years. Over your entire driving career, you can expect to be in 3 or 4 accidents.

What Happens If I Am Involved In An Accident?

If you have had a major car accident, your insurance company will determine how much they owe you for repairs. If your vehicle damaged enough, your insurance company may consider your car “totaled.” In that case, your insurance company will issue you a check for the fair market value of your car.

For most insurance companies, a car is determined to be “totaled” when the cost to repair all of the damages exceeds in the area of 80% of its fair market value prior to the accident. However, this number may vary from company to company. If your expenses to repair the damages total below their limit, the insurance company will pay you for the damages and you will pay to repair your car.

What is Fair Market Value?

The fair market value of a vehicle is calculated by using a combination of the year, make, model, mileage and condition of a particular car. Other factors such as accident history and surface damage can also affect the value.

When your car is considered totaled by your insurance company, they issue you a check in the amount of the fair market value. However, if you owe more money on the car than you receive in payment, you are still responsible to pay the remainder.

How to Pay If You Still Owe Money On Your Car

If you owe more money than you receive as a fair market value payment, you have several options to cover the difference. If you had purchased gap insurance, that insurance would cover this difference for you.

You should carefully review the fair market value amount the insurance company offers you to ensure it is correct. This settlement amount is negotiable with most insurance companies and you may be able to get them amount increased enough to cover what you owe.

If your vehicle was damaged by another driver, you have another possible way to cover the difference on what they owe. You may file a third-party claim against the other driver’s insurance company and recover the difference through their insurance.

Finally, to help you evaluate your options and determine the best course of action, you can hire an experienced auto accident attorney to guide you and handle the details of the process to help you receive the proper compensation.


Automobile accidents are likely to happen to most drivers at some point during their lifetime. When this happens, your insurance will most likely cover most of the expenses. However, if you end up owing money on a totaled vehicle, you have a variety of options to potentially cover this difference for you. You can contact a car accident attorney to help guide you through your options if you are not sure what you should do.


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