Do I need to retain title to car when filing an auto claim or can I sell the car?

I sold my car after my insurance company determined it was a “total loss” due to mechanical reasons. After it was sold, the private party’s mechanic determined that the loss was likely due to vandalism. After I reopened the case with the insurance company, the claim was denied on the basis that the sold car was no longer an insurable interest as I no longer retained the title. Should current title holder matter? I had comprehensive coverage at the time the claim was originally opened but unfortunately these details about vandalism did not come to light while I retained title.

Asked on July 20, 2012 under Insurance Law, Hawaii


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

The problem that you have is that when your insurance carrier determined that the car you had was a total loss and would be paying you the fair market value to it, you should have waited until you received the insurance check so that you could have transferred title to your carrier.

When a carrier determines that a car is a total loss, the carrier in exchange for payment for the vehicle receives registered title to it. By selling the car to a third party, you essentially created an issue where your insurance carrier could not pay you for the vehicle.

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