Whether you’ll be responsible for a deductible if your car is totaled in an accident depends on whose fault the accident was. If the accident was your fault, the insurance company will pay the retail market value of your totaled car minus the deductible. If it’s the other driver’s fault, you won’t ultimately be responsible for the deductible.
When a Car is Totaled
Insurance companies declare a car totaled based on how expensive the repairs and associated costs are compared to its value. A car with major damage might be deemed repairable if the retail value is big enough to make the repairs worthwhile. On the other hand, an older car with little value might be considered totaled even if it suffers only minor cosmetic damage.
Who Gets Paid
Higher deductibles usually lower the cost of your premiums because the insurance company won’t have to pay claims for minor damage. When your car is totaled, you’ll be compensated for your loss if you have sufficient coverage on your vehicle. In most policies, you’ll receive an amount based on the value of your existing vehicle rather than how much it would cost to buy a new one. If you’re still paying off the loan, the lender is paid first. You’ll either get what’s left or be responsible for the balance.
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