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 a person in the wrong place at the wrong time regardless of how diligent they 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 repair 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 different formulas, to determine whether the car should be repaired or written off as a total loss. These include Total Loss Formula (TLF) and percent of Fair Market Value (FMV).
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.
The percentage of FMV is set by the state and is indicated as a ratio of the cost of repair to the fair market value of the vehicle. In most states, there is a 3/4 total loss ratio, or where the cost of repair is at least 75% of the value of the vehicle.
States have the authority to set standards for Total Loss Formulas or preempt them altogether. Unless a total loss percentage is established by law, insurers will use TLF.
After a Total Loss Determination
Your insurer typically takes possession of the vehicle once a total loss has been declared. However, you may be able to negotiate with insurance to allow you to keep your car but you have to have it towed to a repair shop. They'll pay the repair costs and let you drive it after it's repaired, assuming salvage title has been designated in accordance with applicable state law.
It may be sold to a scrap yard or sent for repairs and put back on the market as a salvage titled vehicle, unless you keep it and repair it yourself. Your responsibility and claim to the vehicle is generally eliminated when you accept the insurer's payment for the calculated value of the car, unless the insurer lets you keep your 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 event, 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 and request an independent appraisal. You should submit any evidence that supports your estimated value of the vehicle. If the response fails to convince the company to alter the estimate, you may need to go to court to resolve the issue.
If Your Car was Totaled, An Attorney can Help
After a serious accident, there are a lot of delicate transactions. Whether you're 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 to learn how they can help protect your interests.
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Contact a qualified auto accident attorney to make sure your rights are protected.