“Your vehicle is a total loss.”
These are words you probably never want to hear from your insurance company. But what does “total loss” really mean?
A total loss is calculated when the damages to your vehicle are equal to a certain percentage or greater than of the Actual Cash Value (ACV) of your vehicle (this percentage varies by state). From my experience, this is one of the most stressful and unknown aspects of personal insurance claims. While no one wants to lose their vehicle, there are two things you can do now to be better prepared should you find yourself dealing with a total loss claim.
Another thing to keep in mind…when a loan is paid off, a lien release – a document that states the financial institution no longer has an insurable interest in your vehicle – is provided to the owner of the vehicle. When you receive the lien release, it is important to provide a copy to your agency so your insurance company can remove the lienholder from your auto policy (indicating they no longer have a financial interest). I have seen many examples of a vehicle being paid off previously, but still noting a lienholder on the policy. By law, if a lienholder is noted on the policy, your insurance company must name them on the settlement check unless you can provide documentation supporting that they no longer hold a financial interest in the vehicle. Having this documentation organized and available could help the total loss process move as quickly and smoothly as possible.
Keeping good records and documentation on everything related to your vehicle is a smart idea. Maintaining a folder dedicated to each vehicle you own with all of the title documents, lienholder documents, repair records, and insurance records can help you in the event a vehicle you own has been declared a total loss as a result of an accident.
© 2017 Ownby Insurance Service, Inc