What Happens When Your Car is Totaled?
A careful driver can go a long time without a crash, but weather conditions or another driver's wrongdoing can put you in the wrong place at the wrong time regardless of how diligent you are. If an accident happened and your car was totaled you may not know what to expect. The following article reviews how insurance companies determine when a car is beyond repairing and the typical process following an accident that results in total loss.
What is a Total Loss?
After your car accident, a claim is filed with the appropriate insurance company. In addition to the usual investigations into cause and fault, an insurer also makes a determination regarding the amount of damage to the vehicle. Insurers use a formula, called a Total Loss Formula (TLF), to determine whether the car should be repaired or written off as a total loss.
Although TLFs may differ greatly, they all compare the cost of repairing the vehicle, reduction in resale value, projected rental costs, and other expenses against the "Actual Cash Value" (ACV) of the vehicle before the crash. A percentage of loss is then determined by comparing the ACV to the projected expenses. A total loss is declared when a threshold percentage is met.
States have the authority to set standards for Total Loss Formulas. Where a TLF regulation exists, the insurance company may still have its own standards, but the percentage of loss required to declare a total loss cannot be less than the state-set percentage.
After a Total Loss Determination
Your insurer they will typically take possession of the vehicle once a total loss has been declared. It may be sold to a scrap yard or sent for repairs and put back on the market as a salvage titled vehicle. Your responsibility and claim to the vehicle is generally eliminated when you accept the insurer's payment for the calculated value of the car.
One issue that can arise when a car is declared a total loss involves outstanding loans for the vehicle. All cars depreciate over time and, in some circumstances, the current value of your car may exceed the amount that you owe. In most circumstances you are still liable to pay the loan, regardless of the vehicle's destruction.
In this circumstance there are few options for recourse. The best argument likely involves the insurer's calculation of the vehicle's current value. If you have reason to believe that your insurer has incorrectly calculated the value of your vehicle, you can rebut the insurer's determinations in writing. You should submit any evidence that supports your estimated value of the vehicle. If the response fails to convince the company to alter their estimate, you may need to go to court to resolve the issue.
Get a Free Initial Case Review
After a serious accident there are a lot of delicate transactions. Whether you are dealing with insurers, the other driver, or find yourself in court following a crash you may find the assistance of an experienced lawyer helpful. Contact a local attorney for a free initial case review to learn how they can help protect your interests.