What Happens When Your Car Is Totaled in Texas?
Insurance coverage, next steps, and how to protect yourself financially after an accident.
How Do Insurance Companies Determine If a Car Is Totaled?
In Texas, a car is typically considered a total loss if the cost to repair it exceeds a certain percentage of its actual cash value. Insurance companies assess the damage, factoring in the vehicle’s condition, structural integrity, and market value before officially declaring it totaled.
What Happens If the Accident Was Your Fault?
If you have the appropriate coverage, your insurance company will pay you the actual cash value of your vehicle, minus any deductible. The key coverages that apply in a total loss situation include:
- Collision Coverage: Covers damage to your car from collisions, regardless of fault.
- Comprehensive Coverage: Protects against non-collision events such as theft, fire, or weather-related damage.
- Uninsured Motorist Property Damage (UMPD): Helps cover your car if an uninsured or underinsured driver is at fault.
What If Another Driver Was at Fault?
If another driver caused the accident, their insurance should pay for the value of your totaled vehicle through their property damage liability coverage.
You can file a claim with their insurer or, if they lack sufficient coverage, use your own policy’s uninsured/underinsured motorist protection if you have it.
What If You Still Owe Money on Your Car?
If your car is financed, your insurance payout goes to your lender first. If the settlement doesn’t cover the full loan balance, you’re still responsible for the remaining amount.
This is where gap insurance can be invaluable, it covers the difference between what you owe and what your insurer pays for the totaled vehicle.
What’s Next After Your Car Is Totaled?
- Confirm Your Settlement Amount: Your insurer will offer a payout based on the car’s market value. Research your car’s value to ensure you receive a fair settlement.
- Resolve Any Loan Balance: If you still owe money after the insurance payout, work with your lender on your options.
- Find a Replacement Vehicle: Once your claim is settled, you can shop for a new or used vehicle. If you had rental reimbursement coverage, your insurance may cover a rental car while you search.
- Update Your Insurance Policy: Notify your insurer of your new vehicle to ensure continuous coverage.
