Does the Insurance Company Have to Have the Title to My Car Before It Issues Me a Check?
- Most of the time, customers do not want to retain ownership of a totaled vehicle after an accident. The damage is frequently severe, and the cost to repair it is large enough that the insurer would prefer the car be junked. The insurer literally buys the vehicle from the customer with the settlement payment. Even in cases where the damage is minimal and cosmetic but the vehicle is totaled because of its low retail value, each state has repair and inspection requirements that customers must follow, at their own expense, before they can legally drive the totaled vehicle again.
- Sometimes customers prefer to keep their cars. If you simply cannot part with your vehicle and you're willing to absorb the repair and inspection costs, you have the right to retain ownership of your car. The insurer will establish a salvage value, equal to the amount the car is worth in its damaged condition. The insurer will deduct this salvage value from your cash settlement, since the vehicle is considered to be worth that amount in its current state. You then receive the balance of the settlement and keep your car.
- A vehicle's title represents its current owner. When you sell your damaged car to your insurer in exchange for a full cash settlement, you must provide the insurer with the title, just as you would provide it to any buyer you sold the car to. This is a mandatory step in the settlement process, and the insurer must have the title before it releases payment. If you retain ownership of your totaled vehicle, you might have to surrender the title to your state's motor vehicles department in exchange for a salvage-branded title as a record that it has been declared a total loss in the past.
- If you choose to keep your car, you receive less money from the insurer than if you were to release your vehicle to it. The insurer cannot pay you until it receives your title because it may pay you more money then you deserve if you choose instead to keep your car. It must confirm you will not keep the car by receiving its title from you, before it pays you the full cash value.