When an insurance company pays the estimated value of a totaled car, should the owner maintain possession of the car?

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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 9, 2012

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Insurance Question from Lakeland, FL

Asked on 06/09/2012

When an insurance company pays the estimated value of a totaled car, should the owner maintain possession of the car? My mothers insurance company says they keep the car after paying the estimated value. This was not the case when I totaled a car a few years ago. I think they are trying to cheat my 89 year old mother. She paid cash for the car new and their has never been a loan on the car.

Answer given on June 12, 2012

If a car is considered a total loss due to an accident, and the insurance company pays you for the current actual cash value of the car, then the insurance company is entitled to take the car. Some insurance companies will allow you to buy the car back for its salvage value. The company will not keep the car, but sell it to a company which buys cars for salvage. You could also purchase the car from the company. Before doing this, make sure you will be able to insure the car again, since it was a total loss. There are some insurance companies that will not insure salvaged cars. If they do, be aware the value of the car is reduced, so if you are in another accident, you will not get the full actual cash value of the car, but rather a reduced amount. It is also possible the insurance company will not provide physical damage coverage on a salvaged car. Talk to your agent.

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