Navigating Car Insurance: Turning a Total Loss into a Total Win

On July 7, 2019, a texting driver hit and totaled my car. This article serves as a guide on how to navigate car insurance issues when they deem your vehicle a Total Loss

Season One

On December 27, 2013, I went to a Nissan dealership and purchased a used 2012 Nissan Altima with 36,846 miles on it. I purchased it for $12,543 cash. I believe purchasing a car outright and driving safely is the best way to maximize your vehicle investment. You should never take a loan out for a depreciating asset, so I recommend saving up and buying a cheaper car outright. I’d also like to add that this is just my opinion, there are many smart people who would say otherwise, but I seriously doubt they came out as financially “on top” as I did.

I drive very defensively and maintain my car to the best of my ability. This includes changing my oil regularly, rotating my tires, and keeping the interior as clean as possible. Since I owned the car (no loan) and have a cash emergency fund that can cover an identical replacement, I don’t purchase collision or comprehensive insurance, saving me $1,000s over the lifetime of the car. This is indeed a risk, but since I drive defensively, I am willing to bet on myself. However, I pay for the most expensive liability insurance. This is because if I hurt someone or their livelihood, it is paramount that they are financially taken care of. If I wreck my own car, I will take care of the consequences and so far, this bet has paid off.

State Farm Liability insurance is about $50 a month. I have no wrecks and only traffic violations on my record, so in the eyes of the insurer, I’m very low risk. To them, it is basically free money. You should know if you take a loan out and buy a new or expensive car, your insurance premium will show it. The bank will force you to have insurance just in case you wreck it. This shows the compounding impact buying a car can have on your finances. You spend more on a car when you buy it, you pay interest on the money you don’t have yet, and you have to insure the car so that if you wreck their car, someone will still pay for it.

Season Two: The Wreck

One second I’m about to buy some juice and the next I’m between a median and a Honda Civic. I was hit on the passenger side where the door and the right wheel meet. Seconds after the collision, I honked and gave an empathetic “are you ok?” look to the other guy. He looked up, rather flustered, and returned the favor. I was not able to drive my car, but he drove down the street to get out of the way. I took note of his license plate, but I wasn’t under the impression he was fleeing the scene.

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About five people saw the wreck and before I stepped out of the car, the police and a tow truck were called by random bystanders. The incident was so obviously his fault, that even he instantly admitted fault to the police. The officer asked us a series of questions separately to determine what happened and who was at fault. The officer then printed out a long, receipt looking, piece of paper that had all of our information on it. This included name, address, and insurance information for both of us. I took some items out of my car and they towed it to a yard.

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Season Two, Episode Two: Calling in the Wreck

Once the car was towed, I called State Farm and gave them the rundown. Note - State Farm was both of our insurance providers, but when you call, make sure you let them know which insurance is supposed to be impacted by the accident. They asked for a “case number” that was printed on the top right of the receipt the cop gave me. They asked if I was alright and if I needed anything. I told them my car was not steerable and that, in all honesty, I was not ready to say if my health was 100% or not. I was disorientated and limping a bit. I can’t stress this enough, if you do not go to the hospital, you should not tell anyone that you are 100%. There is no way to know that and whiplash and other onset injuries can arise in the coming days.

They also said I would need to sign a release to allow State Farm to pick up the car from the yard and take it to an authorized body shop. Shortly after the tow, they will call with some options. They said it may take up to 5-7 business days. The agent said she believed, from what I said, that the car would be totaled and that I should go to the yard and get everything out of my car, including the license plates.

Season Two, Episode Three: Three Options

About three days after the wreck, State Farm called me with some options. They said they totaled the car and I had three options:

  1. You can take $7,750 and never see that car again

  2. You can take $6,750 and we will give you the car back and you can salvage it

  3. The body-shop will fix it for $4,750 (out of insurance) and you can be back to normal, noting that if there is more damage than originally thought, it may not be covered by insurance.

They also offered a rental car for a few days. I told him I would assess the situation and call them back. I went online and found some comparable cars for under $10,000 and decided to take the $8,750 to try and get into a similar car. I called them back merely thirty minutes later and started the process of receiving the funds. I added my routing number to an app and they said it would be in my account in 2-3 business days.

Concerning the rental, I told them I was going to be using the bus and Ubering around town, so I didn’t want a rental car. I asked if they would pay out a lump sum instead to cover the costs. I always recommend asking for a lump sum because there is usually an amount they are authorized to give you. You can save yourself from compiling receipts and having to submit them. He said he could send me $300 instead of reimbursing me for a rental and I said that was fine.

The next day, I received another phone call where they asked me about my comments about my health. They said I could go see doctors and submit receipts if I would like. I decided to check out my knee, which included two specialist visits, an X-ray, and an MRI. However, I again asked for a lump sum. They said I could waive my right to sue them for health if I took $1,500 instead. I said yes and she said it would be in my account in a few days. By the Friday after my wreck, I had $9,550 in my account.

Season Two Finale

The following Saturday, I took the bus down to a Nissan dealership and bought a 2014 Nissan Altima with 107,000 miles for $8,774.50. I believe this situation was the perfect use of insurance. Someone wrecked my car and life, and within a week, I was in a similar situation as I was before. Props to State Farm for being reasonable and timely.

Season Three Preview

The process of negotiating a used car.