What is the status of my Auto Insurance if I settle with a third party’s insurance on a “totaled” car and get to keep it?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 5, 2012

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Insurance Question from Flower Mound, TX

Asked on 06/05/2012

What is the status of my Auto Insurance if I settle with a third party’s insurance on a “totaled” car and get to keep it? My car was damaged by a large national vendor in doing work on it. The damage appears to be cosmetic to the body (i.e. no structural damage) and is quite drivable without issue. Third party is self insured, but is using a contracted insurance adjuster. Per their request, I provided estimate for repairs from a local body shop. They claim the vehicle is a "total loss", and offered an amount to settle, and I get to keep the car.Assuming we settle, and I don't repair it, should I be concerned that my Insurance will continue to cover that car, in case of future accident?

Answer given on June 16, 2012

If your car was damaged in an accident that was not your fault and the other insurance company considered it a total but allowed you to keep the car, then you may have to work something out with your insurance company.If you repair your car, then your insurance company will likely be willing to continue collision coverage. However, the value of the car is reduced since it was a total loss. If there is another accident, then you should not expect to get the average actual cash value of the car.If you do not repair the car, and your insurance company is aware of the car being totaled, they will most likely remove physical damage coverage from the car until it is repaired. If the insurance company does not know it was a total, and you are in another accident, they will probably be able to determine there is pre-existing damage and would refuse the claim.


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