My Car Was Totaled, But I Still Owe Money On It
If your car was totaled, but you still owe money on it, you'll need to closely examine your insurer's settlement offer. Insurers are obligated to compensate you for the value of the vehicle you lost but they do not have to pay enough to purchase a replacement, nor do they have to pay you enough to cover the amount of the loan outstanding on your wreck.
Many of us have heard stories about someone being "upside down" on their house, meaning they owe more on their loan than the value of the house if they sold it. Did you know that the same thing can happen with a car? The following article provides some insight into how to deal with car accident settlements with an outstanding car loan.
Valuing Crashed Cars
The value placed on your car is central to the problem of a totaled car you still owe money on. An insurance adjuster will set a value on the crashed vehicle following the accident. This value is based on the condition of the vehicle just prior to the accident.
All cars depreciate in value over time and through use. Both the age and the mileage on a vehicle affect its value. The car's history of maintenance, repair, and parts replacement can all affect the car's value as well. New tires, for example, increase the value of a vehicle. A prior accident, on the other hand, may reduce its value. The insurance adjuster produces a figure based on the information available and sends you a settlement offer for the calculated value of the car.
Offers and Counteroffers
When you receive an offer from the insurer, you should remember that your car loan obligations are not impacted by the vehicle's destruction. You should also look carefully at the vehicle's valuation. If the valuation is fair you are unlikely to receive a better offer. Accepting the offer bars you from suing later.
On the other hand, if you have information that would support a larger value on the vehicle you can submit a counteroffer along with any evidence you have to support your position.
Many of these exchanges may take place before reaching a final settlement. If you and the insurer cannot agree, you will need to sue them in civil court. One important consideration in negotiations involves your state's "statute of limitations" on civil suits. Each state sets a deadline by which a lawsuit must be filed or the right to sue is lost. You should be aware of your state's statute of limitations because negotiating a settlement is nearly impossible once the right to sue has been lost.
Is it a Total Loss?
One interesting aspect of valuation is that it impacts whether or not a vehicle is considered a total loss. Each insurer sets a percentage of the total value, beyond which a car is considered a total loss. Many states set the minimum percentage permitted, often around 70 percent, though individual insurers may have total loss percentages higher than the state minimum.
If you are able to argue for a higher value for your vehicle and the cost of repair does not change, then it is possible that you may be able to reduce the percentage such that the insurer is required to repair your car.
Get a Free Initial Claim Assessment
There are a lot of important considerations when your car is totaled and you still owe money on it. Professional assistance can help clarify your rights and help you determine the best way to proceed. Contact a qualified local attorney for a free initial claim review to learn more about how they can help protect your interests after an accident.