Getting into a serious car accident is stressful enough, but the situation becomes even more complicated when the vehicle is financed and declared a total loss.
Many South Carolina drivers are surprised to learn that they may still owe money on a car they can no longer drive.
Questions quickly arise: Who gets the insurance payout? What happens to the auto loan? Do you still have to make payments?
In South Carolina, the answers depend on several factors, including your insurance coverage, the terms of your loan, and whether you have protections like gap insurance.
This blog post breaks down everything you need to know if you’ve totaled a financed car in the Palmetto State, from the initial insurance steps to how to handle leftover loan debt.
What Does It Mean to “Total” a Car in South Carolina?
In South Carolina, a vehicle is considered a total loss or “totaled” if the cost to repair the damage exceeds 75% of the car’s fair market value (FMV) immediately before the accident.
This rule is established by state law to help insurers and vehicle owners make economically reasonable decisions about whether to repair or replace a damaged vehicle.
Insurance companies use trained adjusters to inspect the damage and calculate the estimated repair cost.
If the cost exceeds the legal threshold, the car will be declared totaled, and the insurance claim will be processed as a total loss settlement.
Notify Your Insurance Company and Lender
If your car is totaled in an accident, the first thing you should do is notify your auto insurance company. Provide them with details of the incident and begin the claims process.
If the vehicle is financed, you also need to contact your lender, usually a bank or dealership, since they have a financial stake in the car.
You should act quickly, as delays in notifying these parties may lead to complications in the claims and loan payoff process. In most cases, your insurer will also communicate directly with your lender during the settlement process.
Insurance Determines Actual Cash Value (ACV)
Once your insurer confirms that the car is a total loss, they will determine the vehicle’s actual cash value (ACV). This is the market value of the car just before the accident, not the price you paid for it or what you still owe.
The ACV is based on:
- The vehicle’s age, make, and model
- Mileage at the time of the accident
- Pre-existing damage or wear and tear
- Comparable sales in your geographic area
If you disagree with the ACV, you may request documentation of how the insurer calculated it or provide your evidence of a higher market value.
Insurance Payout Goes to the Lienholder First
In the case of a financed vehicle, the insurer does not pay you directly first. Instead, the insurance company sends the ACV settlement amount directly to the lienholder (your lender) to satisfy the outstanding loan.
Three outcomes are possible:
- ACV is more than your loan balance: The lender gets paid off, and any remaining balance is sent to you.
- ACV matches the loan balance: The lender receives the full amount, and the matter is closed.
- ACV is less than the loan balance: The insurer pays the lender, but you’re responsible for paying the remaining balance, called the deficiency.
If you were injured in the accident or believe another driver was at fault, it’s important to speak with a personal injury lawyer. A qualified attorney can help you pursue compensation for medical bills, lost wages, and vehicle damage.
What Happens If You Still Owe Money on the Loan?
If your vehicle’s ACV doesn’t fully cover your remaining loan, you’re still responsible for paying the balance.
For example, if you owe $18,000 and the insurer only pays $15,000, you must pay the remaining $3,000 out-of-pocket.
This situation is common with newer vehicles, as cars can depreciate rapidly. If you don’t have gap insurance (see next section), you’ll need to arrange payment for the deficiency, either through a lump sum or a repayment plan with your lender.
Can You Keep the Car If It’s Totaled?
Sometimes, policyholders may want to keep their totaled vehicle, for sentimental reasons or to attempt repairs.
In South Carolina, this is possible, but the vehicle will be issued a salvage title, which reflects that it has been declared a total loss.
Here’s what happens:
- Your insurer deducts the salvage value from the ACV payout.
- You must then repair the car to meet state inspection requirements.
- The car’s resale value will be significantly diminished.
- It may be harder (and more expensive) to insure in the future.
This option may be worth considering only if the repairs are minor and cost-effective.
What If the Accident Wasn’t Your Fault?
If another driver caused the accident, you may be able to file a claim against their liability insurance. Their insurer should pay for your totaled vehicle’s ACV.
However, if they deny the claim or their limits are insufficient, your collision coverage may step in.
After paying your claim, your insurer can pursue the other party’s insurer through subrogation to recover the money, including what was paid to your lender.
During this process, you may still be responsible for any loan balance the payout does not cover.
Legal and Financial Considerations
When totaling a financed car, legal and financial issues can quickly arise, including:
- Disputes over fault or ACV
- Unclear loan payoff terms
- Issues recovering from the at-fault party’s insurer
- Struggles to afford the remaining balance without gap coverage
If any of these apply to your situation, it’s wise to consult an attorney. Legal guidance can help you protect your credit, challenge an unfair ACV calculation, or determine whether your lender’s actions comply with state and federal loan laws.
Final Thoughts: Protecting Yourself After a Total Loss
Totalling a financed vehicle in South Carolina can leave you with a financial burden if you’re not properly protected. The key takeaways include:
- Understanding how ACV works and how insurance prioritizes payouts
- Knowing your responsibility to repay the loan even after a total loss
- Having gap insurance to prevent owing a deficiency balance
- Reviewing your loan and insurance contracts before buying a vehicle
Planning can save you thousands in the long run and give you peace of mind in the unfortunate event of a serious accident.
How Our Lawyers Can Help You?
If your financed car has been totaled in a South Carolina accident, you may find yourself overwhelmed by insurance claims, loan obligations, and unclear responsibilities.
At Max Hyde Law Firm, our experienced attorneys are here to guide you through every step of the process and protect your financial interests.
We Help You Understand Your Rights
Our lawyers explain your rights and obligations under South Carolina law, your loan agreement, and your insurance policy. We break down the process clearly so you know what to expect, whether your car is insured through your own provider or you’re pursuing a claim against another driver.
We Assist With Insurance Disputes
Insurance companies don’t always offer fair settlements. If you disagree with your vehicle’s actual cash value (ACV) or your insurer is slow to act, we can step in to negotiate a better outcome.
We can also help challenge lowball offers and ensure the insurance company handles your claim in good faith.
We Work to Resolve Loan Balance Issues
If the insurance payout doesn’t cover your full auto loan, you could be left owing thousands of dollars on a car you no longer own.
We can help you understand your legal options for resolving any remaining debt and explore solutions, especially if you don’t have gap insurance.
We Represent You in Personal Injury Claims
If you were injured in the crash or another driver was at fault, our attorneys can pursue a personal injury claim on your behalf.
This claim includes seeking compensation for medical bills, lost income, pain and suffering, and property damage.
We Fight for Your Best Interests
Whether dealing with a lender, insurer, or at-fault party, our focus is always on protecting your rights and getting the best possible outcome. We understand the financial pressure a totaled car can create, and we work quickly and strategically to relieve that burden.
Don’t face this challenging time alone. Contact the Max Hyde law firm today and call us at (864) 804-6330 to schedule a free consultation. Our experienced lawyers are here to assist you after your car accident and ensure you receive the justice you deserve.
