Whether a vehicle owner will need to continue paying for automobile coverage after their automobile has been declared a total loss is dependent on a number of factors. Such factors include the type of payment plan the insured is currently on, the length of the settlement process, the state in which the owner resides and the procedures that are required by the state if a resident's vehicle is totaled.
A policyholder may disagree with the fact that they must continue to pay for coverage for an automobile that has been declared a total, but generally this is not a requirement of the auto insurance company but rather a requirement of the state. A large number of states require that vehicle owners keep their cars insured until certain procedures are followed that legally allows them to drop the automobile coverage.
There are typically two types of total losses, which are often referred to as either a Constructive Total Loss or an Unrecovered Total Loss. A constructive total loss is when a vehicle has been damaged to a point where either the owner or insurer views the automobile as uneconomical to repair. An unrecovered total loss is when a vehicle is stolen and has not been recovered within a certain timeframe after it was reported to police, usually 60 days.
Whichever type of total loss is experienced by a policyholder, the chances are that simply dropping coverage could result in fees or hassles that a person would not be in need of after such an incident. For example, the ">Massachusetts car insurance laws require that a motorist surrender their vehicle license plates to the Registry of Motor Vehicles if an automobile is totaled, and if the license plates are destroyed or stolen, the owner must obtain a receipt from the Registry of Motor Vehicles and present it to the insurer in order to properly cancel the policy. Most states will require that the vehicle owner turn in license plates to the appropriate department.
Aside from state requirements, there are other circumstances to consider that may determine whether or not premiums would need to be paid. If a policyholder has paid for their annual premium in full then they will likely not need to make any further payments and may even be entitled to a refund of any unused premiums once a settlement is reached. However, policyholders who make monthly car insurance payments may need to continue to make a payment until the claim is settled; this will likely be the case if other cars are included on the policy.
In any event, suffering a total loss can be unpleasant, but insureds should make sure to keep in contact with their insurer and the state department to ensure that all appropriate steps are taken to avoid a lapse in coverage, penalties from the state or any additional complications that are unneeded after their vehicle has been totaled.