How to buy a new car after a total write-off

If you have comprehensive motor vehicle insurance, your insurance company will reimburse you for a new vehicle after an accident with a total loss.

Most insurance companies consider a vehicle a total loss if the cost of repairs exceeds the value of the vehicle. A car can also be totaled if it cannot be safely repaired.

After submitting the application, it can take several weeks or months for your insurance company to issue a payout, depending on whether you have a loan.

Once you get the bill, you can go ahead and buy a new car. Here’s what you need to know about buying a new car after a total write-off.

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How is the value of the car determined?

One of the first steps an insurance company takes after a serious accident is to determine the value of your car. Typically, an appraiser will look at the vehicle, determine if repairs can be made, and provide an estimate. During the inspection process, your surveyor looks for the following:

The mileage on your odometer. The extent of the damage. The condition of the vehicle’s bodywork.

If repairs can be made, you will be reimbursed for the estimated cost of the repair minus your excess. If the appraiser concludes that the car is a total loss, your payout will be calculated based on the present value (ACV) of your car. This number corresponds to the replacement value of your vehicle minus depreciation.

Will the insurance company buy you a new car?

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If your car is totaled in an insured accident, you get money to buy a new one. However, how much money you get depends on the type of insurance you have.

For example, if you added new vehicle replacement insurance as an add-on to your policy, you can buy a new vehicle that is similar to your old one. Some companies also offer replacement cost coverage for an additional fee, which offers a higher payout in the event of a total loss.

If you don’t have these optional coverages but do have collision insurance, your insurance company will still give you some money to replace your vehicle.

However, you will only be compensated based on your car’s ACV at the time of the accident, minus your comprehensive insurance deductible.

If you have a loan for the car, the insurance company does not have to pay it back. They only give you the value of your car, which you might owe if you owe more than the vehicle’s value on the loan.

In this situation, gap insurance is beneficial. If your car is totaled, Gap insurance will pay the difference between what you owe and the value of your vehicle. Gap insurance is an optional policy sold by most auto insurance companies and some lenders.

What happens if you have liability-only insurance?

Auto insurance companies only pay compensation after a total loss accident if you have comprehensive insurance, which is an optional coverage. If you have minimum insurance with only liability insurance, you are not covered if you cause an accident and your car is totaled.

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In this case, you would be responsible for buying a new car entirely out of your own pocket. While no one imagines their car being totaled, having comprehensive insurance is valuable for this reason.

However, the situation is different if you are not responsible for the crash. If you have minimum insurance policy and get hit by another driver, their property damage insurance will provide some money to replace your car.

How quickly will you receive your total loss check?

If you have a car loan, your insurance company will likely pay your lender directly. Remember, your lender technically owns the vehicle until you pay it back.

When your lender receives the check, the process can take up to a few months, depending on the insurance company’s and lender’s procedures. After the lender is paid, the balance comes to you.

If you own the vehicle, the insurance check will be mailed to you. This process usually takes a few weeks. However, the exact time depends on how your insurance company processes paperwork and payments. If payment is made electronically, it may take less time.

Buying a new car after a total loss

The process of buying a new car after a total loss depends on whether you have a loan. If you pay off another loan when the car is total, your lender gets the money and you get to keep the rest.

Depending on how much you get, you might be able to invest that money in a new car and pay for the rest with your savings.

If you own the vehicle, you can spend your entire settlement check on a new car. Once the money is in your account, you can go to the dealership, choose a new vehicle and pick up the keys. Be sure to add the new car to your car insurance and keep the insurance certificate in your vehicle.

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Can you keep the car and fix it yourself?

Once a vehicle is declared a total loss, the insurance company will auction the vehicle or sell it to a junkyard and keep the proceeds from the sale. In some states, you can keep your totaled vehicle.

However, you must obtain an estimate of the fair market value of the salvage, which will then be deducted from the final statement you receive from the insurance company.

It’s important to note that in many states, if you choose this option, your vehicle will have a salvage title. You may not register the car until all repairs have been made and a new title has been applied for. In addition, you may not be able to purchase collision damage waiver or collision damage waiver insurance.

Finance and Insurance Editor

Elizabeth Rivelli is a freelance writer with over three years of personal finance and insurance experience. She has extensive knowledge of various lines of insurance, including motor and property insurance. Her byline has appeared in dozens of online financial publications including The Balance, Investopedia,, Forbes and Bankrate.