Who Gets the Insurance Check When a Car Is Totaled?

April 16, 2024

Despite progressive advancements in technology and safety regulations, the United States is witnessing over 40,000 road traffic fatalities and many more car accidents. Not only can a car accident result in loss of lives, but it can also inflict substantial financial damage, especially if you don’t own the right insurance policy.

Speaking of which, the two big questions for those willing to get the peace of mind behind the wheel are:

  • Who gets the insurance check when a car is totaled?
  • How do adjusters determine if a car is totaled?

We are going to address both right now in our guide.

Who Gets the Car Insurance Claims Check if I Cause the Accident?

The main purpose of auto insurance is to protect the car owner from financial liability in the event of an accident. The terms and conditions of the contract specify the amount of maximum compensation (the limit of your policy) that the company will be obliged to pay in case of an insured event. If the policy does not cover the injured party’s expenses, the responsibility is imposed on the perpetrator of the accident. This is why insurance experts recommend setting higher liability limits for better financial protection.

A road traffic accident can affect the costs of auto insurance. For example, the cost of a policy for a driver at fault in an accident will increase by 34% on average. The amount of the extra charge will depend on age, driving record, insurance company terms, and state policies.


Source: Cost of insurance after an accident

In addition to an increase in the insurance policy rate, another question awaits you: who gets the insurance check when a car is totaled?

Before we delve into the complex system of insurance payouts, let’s define the concept of a “total loss of a vehicle:”

  • A total loss of a car is when the cost of repairing it after an accident exceeds a specific percentage of the car’s cash value before the accident. For different states, the percentage varies, with the average number being around 65% of the car’s fair market value before being damaged.

The extent of material damage, determining when insurance companies total a car, is assessed based on the year of manufacture, car’s make and model, mileage, condition before the loss, how the car was acquired (lease, loan, purchase agreement), and the insurance policy itself.

Heres how to know if the car is totaled:

Consult with your insurance agent to determine the compensation amount and who should receive the insurance check, depending on the type of insurance coverage.

What if I have been found guilty in an accident, my car is totaled, and I only have liability insurance?

If so, the insurance check for the lost car goes to the other driver. But if you have comprehensive insurance, the insurance check will be used to pay for the repair of your car.

Who Gets the Claim Check if My Car Is a Total Loss?

Many car owners are concerned about the price of an insurance policy, but not everyone realizes what kind of insurance allows you to reimburse the value of a wrecked vehicle.

Compensation for a totaled vehicle is available via such policies:

  • Collision Insurance. Collision insurance covers damage to your car or property even when you are not responsible for the accident. This insurance not only covers repairs but also compensates you for the value of the auto, except for the deductible amount.
  • Comprehensive Coverage. What happens if you total a financed car with full coverage? Then the comprehensive coverage policy covers losses to your vehicle in cases of animal collision, theft, vandalism, or weather damage.
  • Liability Insurance. Liability insurance for property damage and loss of the car covers your expenses only if another driver is deemed responsible for the accident.
  • Uninsured/Underinsured Driver. If the at-fault driver does not have an insurance policy, the repair or compensation for the lost car will be covered by the uninsured motorist insurance.
  • New Car Replacement. This policy allows you to receive an insurance check for a new car of the same make and model minus your deductible.
  • Gap Insurance. Suitable for those who bought a car on credit/lease or rented one. This insurance will cover loan/lease expenses, but you will have to compensate the difference (if the debt exceeds the insurance amount) out of pocket.
  • Rental Reimbursement. If this service is included in the policy, you are entitled to reimbursement for rental payments for the lost car for a limited period.

Taking into account the car owner’s current insurance policy, loan/lease status, and other factors, payment of property damage for a ruined car is made:

  • To the vehicle owner. If the car totaled not at fault, the at-fault insurance company is obligated to pay the actual cash value (ACV) of your vehicle, taking into account the deductible. However, if you are deemed at fault/partially at fault or do not have insurance, you will likely be responsible for covering the deductible.
  • To a bank or finance company. What to do when your car is totaled and you still owe money? The insurance company will settle the loan payment to your lender; only then will you receive a check for the balance if there are any funds left after paying off the car. If the insurance payout for the totaled car is less than the amount you owe on the loan, it will be up to the car owner to repay the remaining debt. The exception to this may be if you have gap insurance, where you don’t have to pay money for a car you don’t own.
  • To a leasing company. Who gets the insurance check when a leased car is totaled? If you realize that your car is beyond repair and the insurance company has declared it totaled, then the main payment goes to the leasing company that leased the car. Given the specifics of your insurance contract and the cost of the lease, you may still have a debt to the lessor.

We recommend figuring out these points in advance, based on the specifics of your insurance, so you know how to proceed in the event of an accident.


What Happens When Your Car Is Totaled, and It’s Not Your Fault?

In this case, you have several ways to receive compensation:

  • The at-fault driver’s insurance company fully covers the damage to your property.
  • If the at-fault party lacks adequate property liability coverage, your collision coverage will cover the remaining amount.
  • If the at-fault driver is uninsured or has insufficient insurance, you can file a lawsuit against the uninsured motorist’s insurance company.

Frequently Asked Questions

Do I have to repair my car with an insurance check?

No, you don’t have to. Technically, you can spend the compensation you receive on repairing the damaged car or buying a new one. However, remember that the insurance company will not compensate for new repairs in the event of another accident.

How long does it take to get the insurance check for a totaled car?

The driver of a damaged car can receive an insurance check after the claim has been processed. The time to receive depends on the complexity of the process and state and insurance company policies. On average, it will take up to 15 days to review the claim, up to 40 days to accept/reject the claim, and up to 30 calendar days to mail the check.

What happens when your car is totaled but still drivable?

If the insurance company has deemed your car totaled and provided you with a salvage title, but you can still drive it, you should repair all damages and reinsure it. Otherwise, driving a salvaged vehicle can cost a lot for you.

Can you still drive your car if it was totaled?

Yes, you can keep the car and even repair it. However, once the insurance company designates it as salvage, in legal terms, it means it will be deemed unsafe on the roads. In that case, all responsibility for accidents falls on you.
To avoid issues with a totaled vehicle, and if your state law permits, you should repair it and insure it again.

How soon can I get a new car after a total loss?

It depends on many factors: your state’s policy, the extent of the damage, the type of insurance policy you and the at-fault party have in force, and more.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at Phonexa.com and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.


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