Ask the Car Insurance Expert
My neighbor hit my car while it was parked.
Unfortunately, you must now buy or lease a new car with the payout you received from the two insurance companies. An insurance company considers a car a "total loss" when the cost of repairing it exceeds a certain percentage of the vehicle's value.
Thanks to your gap insurance, which pays the difference between the amount your neighbor's insurer gave you and the amount you owe on the vehicle, you're not stuck with making loan or lease payments for a wrecked car.
When a car is totaled, your options are limited if you want to keep the car. Typically an insurance company tows away a totaled car and keeps the amount it gets from selling the vehicle for salvage at an auction. If a customer insists on keeping the car, the insurance company pays for the value, minus what it would have gotten for it at the salvage yard. The customer then has to cover the cost of repairs.
Once the car goes to auction, you have very little chance of getting it back. In many places, you can't attend the auction unless you have a license for auto dealers or salvagers.
Customers who keep their cars after they've been totaled face repair bills that exceed insurance proceeds. Getting insurance on a totaled vehicle can be challenging, too. The car must get repaired enough to pass inspection by the DMV for an insurer to cover it.
Some states require car insurance companies to reimburse you for the sales tax, title and registration costs on a new vehicle after your car is totaled. Ask the insurance company to do this for you, even if your state doesn't have this requirement.
Read more about what to do when your auto insurer totals your car.