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In the event you get into an accident serious enough for the car to be classified as totaled, the insurance company will reimburse you for the actual cash value of the car. Actual cash value refers to replacement value minus depreciation. The purpose of the coverage is to leave you in roughly the same financial position you were in before totaling the vehicle.

If you were upside-down on the loan, where your car is worth less than the loan, then you will still have to pay off the remainder of the loan. If you also had gap insurance, which is specifically for situations like these, then the difference would be covered.

If you suspect your car was totaled in the accident, start researching your car's market value before the accident. Insurance companies use a variety of sources including dealer surveys, value guide books, online pricing sites and private party sales to determine the actual cash value of your car. Things like sales tax, registration and title costs of a replacement vehicle are also factored in. It is unwise to leave the determining of the actual cash value entirely to the insurance company. The higher actual cash value, the larger your check will be, so you should take an active hand in assessing your car's pre-accident value.

When a car is deemed totaled and the insurance company writes you a check, they are essentially purchasing the pile of scrap metal off your hands. If you decide you want your totaled car back for whatever reason, you can always ask for it back. However, if your sentimentality goads you onto this path, keep in mind that the check the insurance companies hand you will be smaller. They will deduct whatever they would have gotten from the salvage yard from the original reimbursement amount. This can be a fairly substantial amount as your car's individual parts are worth more separately. And car parts are precisely what salvage yards look for.

The settlement should also make clear all the deductions taken on account of salvage if you decide to keep the totaled car.

It also is not generally recommended to repair a totaled car. Repairs will be costly, and no matter how stellar the repair job was, it will never be as good as new. It will also lose a considerable amount of resale value because it has been in a major accident. You might also have to file a salvage title with the DMV.

There is such a thing known as a diminished value claim. Some insurance companies will deny its existence, and it's quite possible they don't offer coverage like this. However, if you repair a totaled car, the repaired car has significantly diminished value; therefore you are not where you were financially before the accident. Some people have been known to successfully file a diminished value claim and get additional funds from the insurance company.

Taxes, title and license fees for your replacement car should be included in the settlement if you decide to move on.

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