I TOTALED MY CAR! Here's The Financial Lessons I Learned

I was in a car accident, and although I walked away untouched, my car...my car was totaled. So here's the financial lessons you can take away from how I totaled my car and the financial decisions I had to make:

Losing a car in an accident is a serious burden (not just financial), especially if it's your only mode of transportation. What's worse is that it introduces a significant amount of stress to your life. How you navigate the whole ordeal, will determine how well you're financially positioned when it's all said and done.

To make a long story short, I was veered off the road after a flat-bed trailer merged into my lane. After hitting a lamp post, my car suffered enough damage to deem it totaled based on my state's guidelines. The insurance estimate was nearly $10,000 in repair costs (materials and labor included). This exceeded 75% of my car's book value, and was therefore a total loss. Because it was a total loss, insurance was prepared to pay me the full fair market value of my vehicle. For reference it was a 2015 Hyundai Sonata Hybrid with less than 45,000 total miles on it. The total payout came out to roughly $13,000.

So I was faced with two options. I could either accept the payout of $13,000, release ownership of my vehicle, and purchase a new one; or I could reject the settlement, retain my vehicle, receive a payment of $10,000 (just enough to cover the estimated repair costs), and fix my vehicle. Here's why I was even considering the second option:

My vehicle was amazing relative to the current car market. The truth is that I'm not finding a comparable vehicle for $13,000. I was attached to the utility I was extracting from it. It had very few miles on it, the fuel economy was fantastic (35-40 MPG and 400 plus miles on a full tank, and most importantly, it was paid off. I had no car payment!

But here's why I decided to release the vehicle and accept the $13,000: When diving deeper into the insurance's inspection and audited the estimate, I learned that the inspection was physical inspection of the exterior ONLY. They did not inspect the internal structure of the vehicle. So, that means two things: the estimated damages were on the basis of the exterior alone, and if I were to retain the vehicle, I would be responsible for the extra repair costs should the internal structure be damaged. After a car is involved in an accident like that, there's a good chance they'll never drive the same. I'd be on the hook for any long-term repairs that were directly tied to the accident's effects. In other words, it could very easily become a money pit. Also, when a car is involved in a total loss accident, the resale value is destroyed. If I ever found myself wanting to sell the car after repairing it, I'd be getting pennies on the dollar.

Now that I'm in the market for a car, I can tell you it's a horrible time to purchase a car. Car affordability is still near historical lows, as a function of both car prices and higher interest rates on auto loans. But I need a vehicle, and it looks like I'm breaking my belief that you should pay cash for your cars. Remember that financing a depreciating asset using high interest debt isn't the smartest financial move. But like I said, finding a comparable car for $13,000 that is reliable and will last me two decades (in this market) isn't realistic. So I'll likely put a little over 50% down, and hopefully finance the rest on decent terms. Used-car prices seem to be trending downward, so fingers crossed I can find a good deal.

The personal finance lessons...

Insurance: Insurance is a necessary form of financial protection that will save you from those unexpected events that can financially hurt you. Insurance will keep you from having to drain your savings and having to rely on debt to finance whatever unexpected costs you face. Insurance is about protecting your future self from the worst, should it occur.

Emergency Fund: Even with insurance, it's important to have an emergency fund (3 to 9 months of expenses). Your emergency fund is your secondary safety net. It doesn't just protect you from job loss, but any unexpected event that has financial implications (like a car accident). I may have been insured, but my emergency fund would have provided any money I needed to pay for legal representation had I decided to challenge the settlement.

Personal Finance: A lot of the time, personal finance isn't about investing. It's about the difficult financial decisions we have to make when faced with complex and stressful situations. We tend to be horrible decision makers prone to biases and an addiction to instant gratification. Mastering personal finance is about developing the emotional fortitude and learning financial concepts so that you can become a better, more optimal, decision maker. Investing is the easy part. Dealing with financial emergencies, is not.

Disclaimer:

This is not financial advice. The opinions in this video are for entertainment only.

[stephaniesharp]

Thank you for this kind of encouragement. I am grieving the total loss of my car today from a hit and run accident that I was involved in a couple of weeks ago. I got the news today that it is totaled. 😭 Thankfully I did get the plate but the girl c!aims she hit a deer and not my car..
This video put a lot into perspective for me so thank you again.

[kenn-orwv]

Great video dude! also Thanks for sharing your knowledge! More videos to come :)

[YBGuy]

Yep! As much as people harp on insurance and its cost, it really pulls through in situations like these! Make sure its full coverage though like you have to get the full benefits. Nice vid!

[Jeo-fqzw]

I paid cash for my 2001 miata, 8k. 5 years later it was " totaled".. i was paid 10k.

[seventwoseven]

the more i look into insurance
the more it just seems like a scam.

[redcraze]

Im in the same boat. Hit a deer, and while its a no-fault accident, its appearing my equinox will be a total loss. The cost to repair is sitting at 80% of the value, according to the insurance company (which doesnt seem accurate, value wise but thats for another story). I had to take it back to the body shop so they could submit more photos to the insurance company. This isnt my first rodeo with this but its no less stressful.

Always research what similar years/models/mileage in your area are being sold for. That is the true fair market value. You CAN negotiate with the insurance company and request documentation showing how they determined that. My sister had a total loss, and her company was looking at a market 200 miles away instead of her local market. She challenged their evaluation and got another $3000 from them, no litigation needed.

[taichiroward]

In the same boat now. Was involved in an accident due to someone else & their insurance company is the same one I have but yes, unfortunately car prices are trash currently especially the current price of the newest version of my Lexus CT 200h costing $40K new plus shipping.

[tfkrqpi]

You did the wrong thing. Their first offer is the lowest I got hit insurance claimed it totaled offered me 16, 500. I used the appraisal clause hired a appraiser for 500 dollars and walked away with a 22k check

Never take their first offer

[Ishowquickness]

It gets more complicated if youre still making payments on the car

[mistah_nahamsha]

My grandmother purchased her 2015 Honda CR-V for a little over $19, 000 back in 2016, put 17k miles on it (38k total) and now the same vehicle is still worth about as much as she paid. Crazy!

[DanielGarcia-zzeg]

cars are a waste of money but if you keep the car double the loan term, youll get your money back and plus more.
i purchased my RAM in 2009.
its 2023 and I'm at 220, 000 miles. that's 10yrs of no payments. I have so much earn over double what I spent on my truck.
I'm the first owner and not buying someone's problem.
keep your vehicles longer ppl. when you trade, you just passing on the saving to the next owner when you could of been enjoying payment free

[chellodise]

What insurance company do you have? They seemed like they helped out a lot.

[Produced.by.nobody]

I totaled my Tesla y I’m scared to see what the insurance is going to payout

[chellodise]

Love the video! What car did you end up getting brother, and how much was it? Sorry this happned to you!

[austronosian]

I got into an accident that was not my fault, so four weeks ago I took my car to a bodyshop, and after a week they declared my car totaled but had no price value yet. But I keep calling and messaging the insurance for 3 weeks until they answer my call and they tell me my car is worth 10k, which is a good deal, but the insurance tells me I need to pay the bodyshop with that 10k. The problem is that my car is sitting on the bodyshop property for almost 1 month, so the bill for the bodyshop gets bigger. So it looks like I will get only 4k, which is really a total loss for me.

[KevinP]

Why didn’t you sue the trucking company and have your lawyer get you everything you’re entitled too 😮did you have any bodily injuries 😳

[lorenzojennings]

This is why you get a lawyer and play like you are hurt . Because of the other stupid driver . He has to pay for taking me through all of this bull shit. End of story. This guy is not to smart.