It’s the last thing you want to deal with after the shock of a car accident wears off–the insurance company calls to tell you that your car is a total loss. Sure you need to get back on the road, but do you have options if you don’t agree with the offer? Here’s what you need to know about settling a claim for a totaled vehicle.
How do insurance companies determine if your car is a total loss?
Essentially, the insurance company will declare a vehicle a total loss when the cost to repair is close to or exceeds the value of the vehicle. To determine the value of your car, the insurance company may look to similar cars in your area or to other valuation methods like Kelly Blue Book. They will also take into account the wear and mileage on your vehicle.
Next, the insurance company will determine the cost of repairing your vehicle, usually using estimating software. Once these two numbers are available, state law usually will determine at what point the vehicle is considered totaled, otherwise called the Total Loss Threshold. In most states, including Louisiana and Alabama, the threshold is 75%. This means that if it costs $7,500 to repair a vehicle worth $10,000, the car is a total loss. This amount differs from state to state; in Arkansas and Mississippi it is only 70%, while Texas and Colorado require 100%. Other states do not set a specific threshold.
RESOURCE: Total Loss Threshold by State
What happens when insurance totals your car?
Once an insurance company has determined that your vehicle is totaled, you have the option to accept the settlement offer or try to negotiate a higher amount. It is important to remember that an insurance company will only offer to pay for a totaled vehicle if the accident is covered under the policy.
This usually means that your car total loss not at fault and your loss is being paid by the liable driver, or if you were at fault that you had comprehensive coverage on your car. Minimum coverage will not cover collision damage when you are at fault.
What will insurance pay for a totaled car?
While the options vary from state to state, generally the insurance company will pay the actual cash value of the totaled car, which is what it would sell for in an open market. To find the insurance value of totaled car the adjuster may look to the similar cars in your area or a different valuation method.
It is important to remember that if you owe any money on the vehicle’s financing, you will have to pay off that loan out of settlement for the totaled car. This is why total loss insurance, or gap insurance can be very important to purchasers of new vehicles.
Once you accept the car insurance total loss settlement in writing, the insurance company will send you a check and pick up the vehicle to salvage. Usually this process happens within a few days to weeks.
Can I keep my vehicle if the insurance company totals it?
Yes. If you want to keep the car, the insurance company will deduct the salvage value from the total loss payout. It’s a common misconception that insurance companies force you to total your car.
Do I have to accept the insurer’s offer on a totaled vehicle?
No. While an insurance adjuster may seem pushy and you might need a vehicle fast, you should remember that the offer is just that–an offer. So, how much can you negotiate on a totaled car? It depends, and you still have to be reasonable with your requests and occasionally support your position with evidence.
For example, if you can show that you recently made substantial improvements to your vehicle you may be successful in getting the insurance company to reconsider its valuation. You can also contest a particular valuation method by showing that similar vehicles are worth more in your area, or vica versa. You do not always need an attorney for this process, but if you have an attorney for a personal injury claim they will handle this aspect of the claim as well.
Have you been injured in a total loss accident?
If you were injured in an accident, contact us for a free case evaluation. We will work with you on a contingency-fee basis to gather evidence and prove your case. An attorney can determine what types of claims you have so that you can recover what you deserve, even if you are partially at fault for the accident. You may be eligible to file a claim for medical costs, emotional distress and further damages. Fill out our free case evaluation form to see if you are eligible for a claim. An experienced personal injury attorney at Morris Bart will assist you in the evaluation process. Initial consultations are free. We have office locations throughout Louisiana, Mississippi, Alabama, and Arkansas. Call us at 1-800-537-8185 today.