Who gets the check for my car?
People are attached to their cars. Some are sentimental about their first old 67' Mustang while others just drive the car until it literally falls apart in the street. Eventually, every driver is involved in an accident. When you have a wreck, there are two scenarios you can face either the vehicle is a total loss or repairable according to state guidelines. If the vehicle is repairable, the check goes to the repair company and sometimes requires your endorsement also minus deductible if it applies. If the vehicle is a total loss, the insurance will usually pay for the actual cash value of the vehicle. States define actual cash value (ACV) differently. Some states require book values, some require actual vehicle prices obtained from local vehicle registrations and some states look for comparable vehicles in the local market. Actual cash value is not retail because you don't have to buy a car at a dealer. Please be aware if you have a classic car you should have a classic insurance policy. If you have customizations on your souped up '95 Corvette, make sure your policy allows for customizations. Otherwise you might end up eating the amount of those customizations. If there is a lien/loan on the vehicle, the lienholder is paid up to the ACV, but not more than the amount of the lien left on the vehicle. For instance, if you owed Ford $3000 and your ACV was $5000, Ford would get their $3000 and you would get the $2000 minus a deductible if applicable. What if you were upside down in the loan? What happens then? Well, say you owed Ford $8000 and the ACV was still $5000. In this instance, Ford would still get $5000 minus deductible if applicable and you would still owe Ford $3000. A way to prevent this is by purchasing GAAP insurance. This is something that generally adds about $10-20 to your monthly payment and will cover the difference of $3000. Most GAAP insurance will cover up to 110% of the ACV, so you can still be left holding the bag if you go overboard buying a vehicle. Some GAAP insurance policies may also cover the down payment for a new vehicle. One often overlooked refund is car warranties. If you bought a car warranty and the vehicle is totaled, you can usually get a pro-rated refund from the warranty company too. It is the insurance company's job to pay whomever is on the title. First, the lienholder aka bank is paid and then any remainder is issued to the registered owners and if they are your insurance company also the primary policyholder. A primary policyholder is the first name listed on your auto policy. My best advice is to be proactive in your claim and always research before buying any vehicle.