How Will You Get Around if Your Car Is Totaled?

Auto insurance provides important protection in case something goes wrong. In some cases, an accident or other incident will result in a car being so damaged it cannot be fixed. In these circumstances, the car could be declared a total loss or totaled and the insurer would pay out the fair market value of the car. The insurance ensures the car owner doesn't have to cover the loss out of their own bank account.

However, when a car is totaled, it can take time for the insurer to process the claim, make a decision, and send out a check. In the meantime, a policyholder can be left without a vehicle to drive. But since most people need their car to get around, what will happen in these circumstances?

Will a car accident leave you stranded?

When a car is totaled, auto insurance should cover at least some of the costs. The coverage could come from the car owner's insurer under collision or comprehensive coverage or it could come from the insurer for another driver if the other motorist was to blame for the crash.

When an insurer is responsible for covering the costs, it can take a while for the company to process a claim. Some states have limits on how long an insurance company can take to do so. These limits could range from 15 to 40 days to decide on the claim and then issue payment. In other states, the only requirement is that the claim be paid out within a reasonable time.

If an insurance company takes weeks or even months to pay a claim, most people can't just go get another car in the meantime. They need the money from the insurance check to repay their old car loan so they can qualify for a new one, or to provide them with the funds needed to buy the new vehicle. During this time, though, most people often still need a car to get around for work and family reasons.

Make sure to have rental car reimbursement coverage

Paying to rent a car is the obvious solution while waiting for an insurer to pay out. But that's not cheap. Rental cars can cost an average of $50 to $80 daily with prices varying depending on factors like geographic location and vehicle type.

If a policyholder is without a car for 40 days while waiting for their insurer to provide them a check, they could be looking at a minimum of $2,000 in rental car costs. That's a lot of unnecessary spending, especially for someone who will soon have to pay for a new car.

The good news is auto insurance can pay for rental cars for those whose vehicles are being repaired or whose cars are declared a total loss and who must wait for their new car. A policyholder can get a rental through their insurer after a covered loss if they have rental car reimbursement coverage.

Rental car reimbursement coverage is an add-on that usually comes at a pretty low price -- usually, just a few extra dollars. But it can help save thousands by paying for a rental car when one is needed.

Drivers should check their insurance policy to make sure they have rental car coverage (or call their insurance company and ask if that's easier). Doing this before an accident could ensure that a crash doesn't leave them stranded or out thousands of dollars for a rental they have to pay for.