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Total Loss Insurance Claims: Do I Need to Sign a Power of Attorney?

Created by FindLaw's team of legal writers and editors.

Last updated 10/18/2019

Many drivers only have a single vehicle and they depend on that vehicle to get to and from work, to run essential errands, and to facilitate their lifestyles. If their vehicle is completely ruined in a car accident, they will have to work with their insurance company to get their total loss claim processed.

The process of getting compensated by an insurance company for a wrecked vehicle often involves the driver giving the insurance company some form of power of attorney.

What Is a Power of Attorney?

When it comes to legal, financial, and health matters, individuals are generally the only ones who can make important decisions on their own behalf. When an individual legally gives another person or entity the ability to make binding decisions for them, they are giving that entity or person power of attorney.

Power of Attorney for Insurance Claims

Many people are slightly unnerved when they see an insurance company requesting power of attorney, so it is helpful to know when an insurance company would want it.

When an insured vehicle is totaled, the insurance company is basically forced to "buy" the vehicle from the owner. The amount they pay is the amount of compensation the driver receives, minus any fees, taxes, etc. 

Insurance companies ask for power of attorney in order to legally move the vehicle's title without having to get the owner's explicit permission each time the company needs to fill out a form, or so the company can sell the totaled vehicle to a salvage yard to compensate the driver.

Reassurance for Policy Holders

Fortunately for vehicle owners, most states' departments of motor vehicle (DMVs) are very strict about title transfers for insurance claims. Additionally, the power of attorney granted to insurance companies is generally limited and covers only the necessary activities for fulfilling a car insurance claim.

Understanding powers of attorney and the general claims process can be difficult. If you have been in a car accident, consider speaking to an experienced legal professional for guidance throughout the process.

Next Steps

Contact a qualified personal injury attorney to make sure your rights are protected.

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