My Car is Totaled and I Only Have Liability Insurance: What to Do

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Written by Heather C. Orr Edited by Nick Versaw

Updated June 15th, 2023

When you only have liability insurance coverage, dealing with a totaled car can be an overwhelmingly stressful experience. If you know the important steps to take and considerations to keep in mind, even a total loss can be less traumatizing because at least you know what to expect afterward.

Here is how to understand your auto insurance coverage limitations, navigate the claim process, and explore other coverage options for the future. 

My Car is Totaled and I Only Have Liability Insurance: First Steps

You’ll need to act swiftly and responsibly when you’re in a bad accident and you only have the most basic coverage: a liability insurance policy. Some essential steps to take right after the accident are:

1. Make sure you and others are safe and immediately call the police.
2. Gather information from all drivers including names, addresses, phone numbers, driver’s license numbers, license plates, and vehicle identification numbers. Get passengers’ and witnesses’ names, addresses, and telephone numbers. 
3. Document the accident and any property damage by taking photos and collecting eyewitness statements.

Afterward, contact your insurance company and let them know the specific details of the accident. Keep any medical reports or police records related to the accident for evidence to support your car insurance claim. 

Familiarize yourself with the claims process so you know what to expect and closely follow your insurance agent’s instructions.

What Liability Insurance Covers and Its Limitations

When you are involved in an accident where you’re at fault, liability insurance helps cover the costs of the person or people in the other vehicle who were not at fault. It covers their medical expenses and any damage done up to a certain dollar amount. 

This type of coverage does not cover your own injuries or damages. This kind of coverage is included in the collision insurance that comes with a full-coverage auto insurance policy. With just liability insurance, you’ll need to pay out-of-pocket to repair or replace your totaled vehicle. You may also need to pay out-of-pocket or with your health insurance for your own injuries.

If you’re in an accident that does not involve another driver, liability insurance unfortunately won’t cover that situation either. It does not cover damages caused by a collision with something other than another vehicle, like a tree or an animal.

By understanding the coverage restrictions of your liability insurance ahead of time, you can ensure you’re not surprised by having to pay yourself to replace your car if you’re at fault for an accident. You may want to evaluate your financial situation and risk tolerance to decide if additional coverage options such as collision insurance or comprehensive insurance would better suit your needs to prepare for the potential cost of your own injuries and car repairs.

How Much Will the Other Driver Pay If They’re at Fault?

If the other driver is at fault, you’ll typically file a claim with their policy rather than your own. Depending on the specific circumstances, the other driver’s car insurance policy may cover a portion or the full value of your vehicle. 

Make sure to involve your own insurance company in the process, especially if the at-fault driver’s insurance can’t cover all the damages. Although your insurance company won’t cover your repairs or injuries, they can help you understand your policy and explore additional coverage options for the future.

How Insurance Companies Value a Totaled Car and the Negotiation Process

Insurance companies use various methods to value your totaled car when you’re not at fault in an accident and the other driver’s insurance is covering repairs. The car’s age, condition, mileage, and local market prices are considered to determine its value. The valuation methods most commonly used are market value comparisons and actual cash value (ACV).

ACV is the fair market value of your car at the time of the accident. It considers the depreciation and pre-existing damage of your car before it was totaled. For market valuations, insurance adjusters compare your car’s value to similar cars for sale in your region. 

An adjuster will also inspect the current damage to your vehicle and assess its value. They’ll weigh the cost of repairs against the car’s value to decide if it’s worth repairing or if it needs replacing. The insurance adjuster will make a settlement offer once the value of your totaled car is determined. This offer can be based on the actual cash value or market comparisons. Sometimes the insurance company may deduct the salvage value of your car, which is the worth of your damaged car for parts or as scrap, from the settlement amount.

You can negotiate with the insurance company if you think the insurance company‘s cash offer for your totaled car is too low. To support a higher payout for the value of your car you’ll need to present evidence, such as recent sales listings, repair estimates, or maintenance records. You have the right to seek an independent appraisal if you disagree with the insurance company’s valuation. You’ll get an unbiased assessment of your car’s value when you hire a professional appraiser who specializes in valuing vehicles to maximize your compensation.

Types of Additional Insurance Coverage to Consider

Although liability insurance meets the minimum requirements of most state’s laws to operate a vehicle, there is additional coverage worth considering that may protect you better if your car is totaled.

Collision Coverage

If your car is damaged in an accident that happens while your car is in motion, collision coverage helps pay for repairs or replacement of your vehicle. This coverage applies no matter who is at fault, but if the other driver is at fault, you’d likely file a claim with their insurance. Collision coverage also applies if you’re in a single-vehicle accident, like running into a tree. 

This type of coverage gives you the peace of mind of knowing that even if your car is a total loss, you have a type of insurance that will cover the cost of a new car and you won’t be left with a substantial financial burden.

With this type of coverage, you file a claim with your own insurance company to cover the damages to your car after the deductible. Although collision coverage is not mandatory, it’s highly recommended if you have a newer or more valuable car. 

Comprehensive Coverage 

Comprehensive coverage protects against events like theft, vandalism, or natural disasters that are non-collision based. Similar to collision, it’s not required by state law but it’s useful if you live in an area with high theft rates, severe weather, or other risks covered by the policy.  

Gap Insurance Coverage (Guaranteed Auto Protection)

Gap insurance coverage stands for Guaranteed Auto Protection. It protects a car owner from not being fully reimbursed for a total loss from their traditional insurance policy. Gap coverage isn’t standalone insurance and only bridges the gap between the actual ACV of your car and the amount you owe on your auto loan or lease. While it’s not mandatory, it can be a useful investment for those who have financed or leased a vehicle.

Personal Injury Protection

Personal injury protection (PIP) or no-fault insurance covers medical expenses, lost wages, and other related costs resulting from injuries during an accident regardless of who’s at fault. It provides immediate financial assistance for medical treatment and other accident-related costs. While it’s mandatory in some states and optional in others, it’s worth considering, especially if you have a health insurance policy with more stingy coverage.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage (UM/UIM) safeguards you in a crash with a driver who has no insurance or insufficient coverage. If they’re at fault and their insurance can’t cover your medical bills or repair costs, you’re left to pay on your own — unless you have this coverage. It acts as a shield against bearing the financial burden of out-of-pocket expenses for a car accident.

Moving Forward After an Accident

While a liability policy may have made sense when you were selecting your coverage, it can feel devastating when you’re dealing with a totaled car. Make sure to lean on the other driver’s insurance policy if they were at fault to have a better chance of getting your expenses covered.

After you review your financial situation, budget, the value of your vehicle, and the level of risk you can manage, consider additional coverage options that may protect you better next time. 

Getting more coverage doesn’t have to mean paying an arm and a leg if you shop around for the most affordable insurance policy at Compare.com. It’s often only a bit more per month for extra peace of mind.

Heather C. Orr Insurance Writer

Heather C. Orr has been a content and copywriter for over a decade. She began her career in corporate marketing departments for companies like Farmers Insurance, Kaiser Permanente, The Seattle Times, and AT&T before becoming a freelancer. She enjoys using her experience writing for the insurance industry to help people save time and money on their auto insurance. When she’s not working from her laptop, Heather is hiking mountain trails, compiling her latest Spotify playlist, or exploring the beaches of SoCal.