Parting ways with your automobile after an accident can be a difficult experience. For starters, did you get all of your stuff out of it before it was towed away? Then there’s the mystery of whether it will be “totaled” or not. How do they come to that decision, anyway?
There’s A Formula For That.
The factors determining total loss can vary from state to state, but the gist is that the insurance company decides a car is a total loss when it would cost them too much, in relation to the car’s total value, to make the repairs, or when the damage to the car, regardless of repair cost, renders it irredeemably unsafe. The insurance company then sends you a check for your car’s actual cash value (as they determine it; more on this later), your car gets a salvage title (which means it’s no longer allowed on the roads) and it’s sold to a salvage company.
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Sounds Pretty Final, But Don’t Give Up On Your Ride Yet.
Sometimes it’s worth it to keep your car, even if it’s been deemed a total loss. For instance, say you are rear-ended in your lightly used older car that’s in excellent condition, paid for and has extremely low mileage. It’s reliable, insurance is low and you don’t have a car note. The value of this car is in how much money it saves you every month and is not fully reflected in its “value on paper” or actual cash value. The damage is fixable and has not made the car unsafe, but because the repair costs are more than the insurance company will pay in relation to the car’s value, they dump it on the “total loss” pile. In such a case, you might be able to buy your car back from the insurance company – meaning you keep the damaged car and your insurance payout will be the difference between the actual cash value of the car and its value as salvage. If all goes well, you might be able to get the repairs done for the amount of your payout and end up not only breaking even (give or take a deductible) but also still in the happy position of not having a car note. It’s worth noting, however, that insurance companies typically aren’t thrilled to write a policy for a car that’s been salvaged in the past – so check on that before you make a decision.
Getting The Most Out of Your Car’s “Actual Cash Value”
Whether you’re buying back your total-loss car or taking the full insurance payout and moving on to a new car, the payout you get is calculated based on your car’s actual cash value (ACV). No matter what you paid for the car or what you might still owe on it, the insurance company gets to decide what it’s actually worth based on some accepted factors – but there’s often some wiggle room where your persistence can make a difference. Factors that are considered are the year (the value of a car depreciates each year), the make and model of the car, its mileage and its condition. Some insurance companies subscribe to services such as the CCC Corporation or the National Automobile Dealers Association, which provide the service of determining a vehicle’s value.
Don’t Take The Insurance Company’s Word For It!
Yes, it’s true: insurance companies sometimes generate incorrect information that might lower the ACV they determine for your car. And yes, it’s okay for you to question them. For example, if the insurance company doesn’t have your car’s mileage information handy, they might estimate it based on a standard formula. If your mileage is actually lower than their estimate and you can prove it (say, from maintenance receipts), they probably would have to increase your car’s ACV. Or maybe you just dropped $600 on four brand new tires right before the wreck. Show them the receipt! The attorneys of Morris Bart have decades of experience dealing with the complexities of insurance claims and car accidents. If you think your vehicle is worth more than what your insurance is willing to pay out, give our offices a call. We’re available 24/7, and we’d like to help you get the money you may deserve.
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