June 16, 2013

Buying A Car After A Total Loss Accident

When an automobile insurance company decides to declare a claim a total loss, the driver receives a large payout, dependent on the car insurance deductible, limits and other factors. For most drivers, the next logical step is to purchase a new vehicle. However, there are a few important things to keep in mind when buying a vehicle after a major car insurance claim.

Before buying a new vehicle, drivers should wait for an insurance payout. Sometimes, payouts can take 14 days or so, but most car insurance companies work very quickly. The payout for a total loss claim will be the value of the vehicle minus the car insurance deductible, up to the policy's insurance limits. For instance, if a driver has $10,000 in collision coverage, a $500 deductible and the vehicle's value is $15,000, the automobile insurance company will pay out only $9,500. Many drivers fail to understand this and get an unfortunate surprise after receiving their total loss payments, which can turn into a major hassle if they immediately go out an purchase new vehicles before receiving their payouts. Note that state insurance laws prevent providers from waiting too long to issue payouts, so if an insurance provider takes more than 14 days after deciding a claim, drivers can usually file a complaint with a state insurance commissioner.

A total loss claim will cause a driver's automobile insurance premiums to rise under most circumstances, so when purchasing a new vehicle, drivers should keep an eye on their new vehicle's insurance costs. The easiest way to do this is to use online tools to compare rates for different vehicle models while shopping. Vehicles with good safety ratings and lower values are generally best for drivers who have recently made total loss claims, because these vehicles have relatively low insurance costs on average. However, if the total loss claim came from a comprehensive claim or if the driver was not found at fault in the accident, his or her insurance premiums might not rise significantly depending on the state laws where the accident occurred. States with at-fault insurance laws generally do not penalize drivers who are not at fault in accidents.

Even if a driver was found at fault in an accident, he or she can often reduce insurance rates by shopping online and by taking defensive driver courses, which many states offer specifically to help high-risk drivers improve their habits to get lower insurance rates. By researching rates and understanding their policies, any drivers can keep their insurance premiums low when purchasing new vehicles, even after a total loss accident has increased the driver's base insurance rates substantially.