If you’re reading this, you’re wondering who gets the insurance check when a car is totaled.
You may expect the insurance payout to come directly to you as the vehicle owner, but that’s not always the case.
If you still owe money on your car loan or lease when it’s totaled, the insurer will first pay the lender or lease company before paying you anything, if there’s any money left over.
Relevant Articles To Read:
- What Happens If You Crash A Financed Car With Insurance
- What Happens If You Total A Leased Car
- How to Sell a Total Loss Car
Table of Contents
Who Gets the Insurance Check When a Car is Totaled?
Who gets the check depends mainly on if you have an outstanding loan or lease on the car:
If You Own Your Car
- The insurance check is paid directly to you if no liens exist
- Use the funds to replace your totaled vehicle as desired
If There’s a Loan
|Loan balance is less than insurance settlement
|– Insurer pays lender first – Any leftover amount is sent to vehicle owner
|Settlement is less than loan balance
|– Insurer pays lender – You pay the lender the deficit unless gap insured
If You Have a Leased Car
- Insurance pays lease company directly as owner
- You continue lease payments as agreed
- Gap insurance helps cover extra balances
Gap insurance is valuable protection that pays the difference if you owe more on your loan or lease than your settlement amount.
What Happens When a Car is Deemed a Total Loss
An auto insurance company declares a car totaled or a “total loss” when the estimated repair cost exceeds approximately 70% to 100% of the car’s pre-crash value. This threshold varies by state.
They determine the pre-crash actual cash value (ACV) of your car by comparing it to similar models in your area. The car’s age, condition, mileage and installed equipment are factored in.
Once totaled, the insurer pays the ACV minus your deductible (if you were at-fault or uninsured) to replace your totaled car.
Disputing a Low Settlement Offer
If you think your car was worth more than the insurer’s settlement offer, take these steps:
- Get records to show value – maintenance, upgrades, unique features
- Research car prices – Checking sites like KBB and NADA can help justify higher values
- Negotiate firmly but politely with reasonable justifications
- Get professional help – Appraisers and attorneys may be needed
Other Key Factors in Insurance Payouts
|Premiums and claims
|Rates may rise after claims; shopping around helps savings
|Apply unless another insured driver was fully at-fault
|Regulations affect settlements, total loss thresholds
|Coverage limits, loss payees direct payments
|Rules payout sources between insurers
|Special coverage may protect from losses
|Extra insurance like gap is important
Ready to Shop Insurance Plans?
Whether you just totaled your car or want to save money on premiums, SoFi’s free online quote tool makes finding the right auto insurance smooth and simple. Just enter your ZIP code to start comparing top insurers instantly.