How to Transfer the Title of a Totaled Car

One of the most important documents you should have is a car title if you’re a car owner. Car titles are essential and come in handy when you want to buy or sell a car.

Car titles serve as proof that you own your car legally and that you can sell it. That said, car titles are usually transferred when you either buy or sell your vehicle.

However, there are also situations when the transfer of car titles will make sense. For example, when your name changes due to marriage or when you divorce your partner. 

Transfer of car titles shouldn’t be a daunting task, but very important. This post will walk you through how you can transfer your car title and everything you need to know about the transfer of car titles.

When Does Your Car Title Have Your Name?

Sometimes buying a car won’t mean you’ll receive the car title. It will depend on whether you buy your vehicle outright or get financing options.

In case you arrange financing options when purchasing your car, the lender will always hold the title of your car as a lienholder. This means that the lender will only transfer the car title to you once you have cleared the debt.

When you pay the debt in full, your lender will release the car title to you, and the name of your lender will be removed as the lien holder.

What Does a Totaled Car Mean?

A totaled car is when your insurance provider declares your vehicle as a total loss. In other words, it means that your car cannot be fixed or would be way too expensive to repair than its value.

Most auto car insurance companies will not pay to fix your car if declared a totaled vehicle. In some states, though, an insurance provider can declare your vehicle a total loss if the amount required for the repair is beyond an agreed percentage.

If your car is totaled, your insurance provider will only owe you the car cash value, depending on your auto car insurance policy. Your auto car insurance provider will determine the value of your totaled car using the following metrics:

  • The model and make of your car
  • Age of your car
  • Mileage covered by your car
  • Condition of your car
  • The value of the resale parts of your car
  • Unseen damage possibilities
  • The demand for your car in the local market

The actual cash value is the amount your car could have fetched before it crashed. However, it is essential to understand that the actual cash value is different from the replacement cost value. The replacement cost value is what it costs to get a brand new car like the totaled car.

Not many auto insurance companies will go for the replacement cost value, and even if they do, you will have to pay higher premiums.

Will My Insurance Company Cover My Totaled Car?

If an insurer declares your car totaled, the chances are that your policy will cover your loss in two parts: collision and comprehensive coverage. These two types of coverage are essential if you have a car loan.

While these aren’t legal necessities on a fully paid car, it’s up to you to decide whether or not you should opt for collision or comprehensive coverage. You’ll often incur out-of-pocket expenses to renew your totaled car if you do not have liability coverage. This is especially true when you’re at fault for the crash. 

That said, comprehensive insurance provides coverage for damages not related to a collision. Meanwhile, collision insurance covers your damaged car in the event of a crash with an object, property, or another vehicle.

In some instances, an insurer might not provide coverage for a totaled car. Reason?

  • You do not have the proper coverage, such as collision or comprehensive.
  • You failed to maintain the premium payments.
  • You were not sober while driving.
  • You didn’t report the damage to your insurance company on time.
  • Your claim wasn’t genuine.

It’s worth noting that each insurance company incorporates different criteria to leverage a totaled car. Therefore, a vehicle declared a total loss by one insurer would be proclaimed a total loss.

Below are three things to bear in mind while filing a claim for a totaled car:

  • You will have to clear your deductible before the insurer confirms your claim.
  • You can negotiate a higher compensation if your car is worth more than the insurance company’s estimation.
  • The insurer acquires ownership of the totaled car once the company affirms your claim. Usually, the car is sold as parts or scrap metal. However, the insurance company will deduct your salvage value from the overall payout if you decide to keep the vehicle.

How to Transfer a Car Title

Before you do anything, you will need to agree on your totaled car’s fair market value with your auto insurance provider. Once that has been agreed, the process for the car title transfer begins.

Ensure that you possess a physical copy of your car title. Also, you need to ensure that the car title is on your name by the time you are initiating a car title transfer, especially if you purchased your car through financing options. Once all these have been done, you and the auto insurance company will fill the following:

  • Date of sale
  • Transaction cost
  • Odometer reading

When signing the documents, you will sign the car title as the seller, and the insurance company will sign as the buyer.

If you are buying from a dealership, the dealership will have to locate the car title on your behalf. On the contrary, the dealer will give you the title and handle the rest if you pay for the car. Finally, if you are going with car financing options, the dealership will transfer the car title to your lender.

You will undergo a much complex process if you are purchasing your car from a private seller. However, the steps will be more straightforward if the seller has full ownership of the vehicle.

Talk to Your Lawyer

Once you have transferred the car title to your insurance company, you will no longer own the car. In case you feel the insurance company ripped you off, don’t accept their offer.

Involve your lawyer and ensure that the fair market value of your car takes into account the make and model of your car, the mileage covered by your car, and the current state of your car.

If your auto insurance company offers you a settlement that doesn’t reflect your car’s fair market value, ask your lawyer to continue the negotiations and get a better deal.

What to Verify During the Car Title Transfer

Before you complete the car title transfer process, please verify the following information to make sure that they are correct:

  • Check your Vehicle Identification Number and ensure that it is the same car you purchased. Compare the VIN on the paper and that on your vehicle to ensure that they match.
  • Most modern cars have the VINs located in two places – on the frame or the driver’s dashboard, so confirm that, too.
  • Confirm that the current owner of the car doesn’t owe any lender any money. In other words, confirm if there is a lien on the car.
  • Verify that the car has no additional owners after you have verified that the vehicle has no lien on it.
  • Confirm and verify the car’s mileage document so that you can complete and submit your odometer disclosure.

Do You Still Make Loan Payments for a Totaled Car?

Most insurance companies will advise you to continue paying a totaled car loan until the company pays your lender the claim payment.

Once the loan is paid off, it’s your responsibility to cover the difference between the loan balance and the claim payout. For example, if the insurance company paid out the lender cash value of $40,000, but you owe $15,000 on the lease financing the car, you’re accountable for the remaining $25,000. 

Additional FAQs

1. Where do you sign a title for a totaled car?

Usually, where you will need to sign should be indicated on the title. In case your car is still under financing, the lender will be required to take part in the transaction, too.

2. Can a salvage title be transferred?

The legal requirements on salvage and rebuilt cars will vary from state to state, so you need to confirm with your state. In some states, a totaled vehicle should never be seen on the roads. However, you can still be back on the road if it passes the inspection.

3. What are my options if my car is totaled?

In case your auto insurance company totals your car, the insurance company will compensate you for the car’s actual value, less the deductible. Once this is done, your vehicle will be taken to the salvage yard and auctioned to the highest bidder.

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