If your car got totaled but it has a lien, you probably have a lot of questions. Whether you caused the accident or someone else did, the insurance company handling the total loss claim will pay off the lienholder.

Based on how your car got totaled, the at-fault driver’s liability or full coverage insurance would only settle for the actual cash value of your vehicle. Usually, that amount is enough to pay the lienholder off in full. However, if the determined value seems unfair, you can dispute it with the claims adjuster and the paying insurance company. If you feel the amount is fair, the insurer sends a settlement check directly to the lienholder with any money left over going to you.

Once the lien on your vehicle gets released, the insurance company takes possession of the car and sells it for parts or scrap. The challenge is that if you owe more on your vehicle than what the insurance company settles for, you are responsible for the balance.

Remember, the amount settled with the lienholder is for the current fair market value of the now-totaled car, not what you owe. Typically, the lienholder would allow you to continue paying your regular monthly payment until the outstanding balance gets paid, although you might negotiate them down.

If the driver who caused the accident does not have insurance, things get more challenging. Statistics show that in the US, one in eight drivers do not even have basic liability insurance. While the at-fault driver may get ticketed or arrested, your only financial recourse is to file a lawsuit against that person.

As for the car, your insurance company would likely settle with the lienholder, but that puts you at risk for paying a higher premium or getting your policy canceled. Regarding the other driver’s financial responsibility, you should speak with an attorney who specializes in this area of the law.

For $5,000 or less, you could take the other driver to small claims court, but when dealing with a more significant financial loss, you would have to file a lawsuit to try to recover the money required to get the lien paid off in full. Depending on your state, insurance works in one of two ways: “at fault” and “tort.”

In no-fault states, each driver’s insurance company covers the damage, no matter who is at fault. For tort states, the at-fault driver’s insurance provider settles with the lienholder. Now, if you live in a “tort” state and someone caused an accident that totals your vehicle, you can file a tort lawsuit for the damages. The problem is that most people driving around without insurance cannot afford it, making recovering financial loss difficult.

Seeking Legal Advice

With a reputable attorney in your corner, you have the best chance of recouping money to pay off the lienholder and get the title released. Regardless of the scenario, you should seriously consider reaching out to an attorney so that you understand your legal options. An attorney can even help you file a claim against the insurance company if you’re offered an unfair settlement amount.