Generally, as long as you own your car outright, you can sell it whenever you want. But it’s important to know what part of the claims process you’re in before you sell your vehicle to avoid complicating your claims investigation. If you're financing your vehicle, though, you'll still be responsible for paying the remaining balance on your loan.
Since the damage to your vehicle is usually an essential part of the claims investigation process, selling your car before your insurance company determines who was liable for the accident may affect your claim. For this reason, it may be a good idea to wait to sell your car if you have an unsettled auto insurance claim.
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Selling a car with an unsettled claim
You can sell your car with an unsettled claim, but that doesn't mean you should. If there is an ongoing investigation into your claim, it’s probably smarter to hold onto your car until the investigation is wrapped-up, the at-fault party is determined, and the settlement is finalized.
When you file a car insurance claim, an insurance company typically has around 30 to 45 days to settle your claim, depending on the circumstances of the damage. For example, roadside assistance claims tend to settle faster than liability claims where there are multiple drivers involved and potentially conflicting accounts to sort out.
If you sell your car before your insurer looks at the damages, they won’t know how much the repairs cost. The same goes if you’re filing a third-party claim against an at-fault driver — the insurer needs to assess the damage to your car in order for insurance companies to determine how much you should be reimbursed.
Whether or not you’ve filed a claim, selling your car before it's repaired will likely diminish the value. And even if it has been repaired, a past accident may still diminish your car’s value. But if you sell your car after you file a claim, it will likely sell for more than what it would have if it wasn't repaired first.
How to sell a wrecked car
If you decide you don't want to file a claim and it's too expensive to repair your damaged car, you might decide to sell or donate it for a tax deduction. If you decide to sell it, there are a couple of ways that you could find buyers for wrecked cars.
List the car online and ask buyers for bids. This is a good starting point because it allows you to get a sense of the range that nearby buyers are willing to pay for your damaged car. If you feel that any bids you get are too low or you don't get any bids, then you can start a more targeted search for a buyer of your wrecked car.
Reach out to dealers that specialize in buying wrecked cars. Some buyers in your area may seek out damaged cars to buy, repair, and resell. If your initial online search for an interested buyer didn't produce the results you wanted, check your area for dealers that trade in wrecked vehicles and collect offers.
Sell the car to a scrapyard. If your car is too damaged or there's no interest in your area from a buyer, you might have to settle for selling the car to a scrap dealer. In this situation, you would receive the value of your car's scrap value and its undamaged parts.
What are diminished value claims?
If you want to sell your car and you realize it's worth less than it was before an accident, you may be able to file a diminished value claim — depending on your insurance company. You'll have to prove to your insurance company the value your car has lost. That means before selling your car, you should have it professionally appraised to learn how much its value has dropped.
To make your case to your insurer, look up your vehicle’s pre-accident value using a resource like Kelley Blue Book or a professional appraiser, then compare the pre-accident value to your appraiser's new cost estimation of your car.
However, auto insurance companies may have their own way of calculating your car's value, so filing a diminished value claim might not always result in getting paid what you think you’re owed. You can still sell your car while you have an unsettled diminished value claim, but you’ll want to be sure you took all of the necessary steps to determine how much value it lost before you sell it.
How long does it take for a claim to settle?
How long your car insurance claim takes to settle depends on a variety of factors, including:
What state you live in
How the damage occurred
Who was involved in the accident, including passengers
How severe the damage is
If there were any injuries
Who was at fault for the accident
You should contact your insurance company to learn how long the claims process generally takes, or check out resources like J.D. Power to learn how efficient different insurance companies are when it comes to claims.