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You have been in an accident. Fortunately, everyone in the car is safe, but the car is a wreck. On the plus is that the car did its job – it helped to save your life in an accident. However, dealing with a wrecked car can be a real pain in the backside. Well, here is a quick guide on what you can do when this happens to you. Don’t wait until it’s too late, know what you can do to deal with a wrecked car.

Did you know that nearly 14% of all cars are ‘totaled’ following an accident? Don’t take my word for it, these figures come from CCC Information Services. This is an organization which keeps tabs on auto insurance claims.

By the way, the trend shows that the number of cars which are totaled is increasing. While there are several reasons for this, it also means that you now more than ever a car accident will leave you with a pile of junk on your hands.

Know Your Policy

Ok, reading your insurance policy is a lot like reading the iTunes User Agreement – and we all know how many people read that. But the truth is that you should know what is in your insurance policy. If you don’t then you want to call your insurance agent to find out.

It’s ok if you don’t have the time, just remember to call your agent as soon as you have been in an accident. This way you can find out the details of how you are covered given the specifics of your case.

Now if you do have the time, then try to find out the gaps in your policy. For example, will your insurance company cover towing and car rental, or are you on your own? In addition, if your car is totaled then what comes next. Do they give cash for cars, or is it some other form of credit?

Once you know these ‘gaps’ then you can get what industry insiders call Gap Insurance. Think of it as supplemental auto insurance, like AFLAC for your car. One way to know whether you need Gap Insurance is to look at how much time is left on your car loan. If you more than half of the time is remaining, then you should consider Gap Insurance.

Know Your Rights

Auto insurance is covered on a state-by-state basis. As such, the specifics of your policy and how your will get paid will depend on what your state requires. One way to know for sure is to check with the Department of Insurance in your state.

You don’t need to go to their office. Instead, you can check their website to find out the specifics of claims in your state and what insurance companies are responsible for.

Getting Paid

In most cases, an insurance settlement will be paid based on the car’s market value. This is important as market value is not the same as replacement value, hence the need for Gap Insurance.

To make matters worse, each insurance company has its own formula for determining the market value of a wrecked car. This makes it harder to know the exact amount you will get paid.

However, a good rule of thumb is to check what similar vehicles (i.e. year, make, model, mileage) with similar damage, and then subtract the costs disposing for the cars. This will only give you a rough estimate of how much the insurance company will pay you.

To square the circle, you will want to check with your insurance company to get a detailed report on how they determined our settlement. In addition, check out the process to appeal the settlement if you think the insurance company is not offering enough.

One caveat is that the insurance company may either raise your rates or drop you – so even when you get a settlement it can be a double-edged sword.

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Fixing the Car

If you feel the car is not too badly damaged and you don’t want to collect on your insurance, then there is another option – fix the car. However, you shouldn’t expect too much help from your insurance company. After all, they wanted to total it.

Granted, your insurance company will welcome the opportunity not to pay a claim. However, they might increase your premiums or drop you if they think the car is not road worthy. In addition, you will need to follow up your local Department of Motor Vehicles as totaling a car also affects the car’s title.

As you can see dealing with a wrecked car means understanding how your insurance works. Don’t wait until it is too late. Find out how your coverage works before it is too late.

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