Is Your Damaged Car a Total Loss? Answers to Your Questions

When you are involved in an auto accident, you generally have two immediate concerns. The first — and, understandably, the most important—is your health and that of everyone else in the accident. But once that has been dealt with, car owners then turn to their second worry: their vehicle. 

In a world of increasing costs to repair vehicles and shifting car values, more and more owners are told that the insurance company has declared their vehicle a total loss. What determines a total loss? What will you be paid? What choices do you have? To help you get the most from any insurer that owes you for the accident, learn some answers to your questions about total losses.

What Is a Total Loss?

As the term suggests, a total loss occurs when the insurer deems that it would cost more to repair the vehicle than it would to simply write a check and let you replace it. Some owners are surprised when the vehicle seems fixable to a layperson — the damage reasonably manageable — but the insurer declares it a total loss instead. But repairs quickly add up. Even scratch repairs can cost thousands of dollars, after all.

How Does an Insurer Decide?

The decision to fix or total a car or truck is purely a financial one. The insurer does not consider any sentimental attachment, inconvenience, or the length of time you have owned it. Instead, the company uses a set internal formula to determine at what point it no longer makes sense to repair damage. They often do not rely on the most common, publicly available pricing guides. This often leads to undervaluing your vehicle, resulting in a lower total loss payment. 

That point, interestingly, is less than the actual cash value of the car. This is because the formula generally is the cost of repairs + salvage value. If these numbers added together are equal to or greater than the actual cash value (ACV) of the vehicle, it is deemed a total loss. In fact, in many cases, even if this total gets too close to the ACV, the company may find it not worth fixing.

Salvage value can vary in confusing ways. If you have a new, high-end BMW or Mercedes with valuable parts, the insurer may be able to get quite a bit for its parts and scrap. Similarly, vehicles with parts that are high in demand can be worth more on the salvage market. When this happens, even less costly repairs may be deemed too expensive when combined with the higher salvage value.

What If You Disagree?

All these calculations and determinations are made by the insurer—without your input or permission. To an extent, this makes sense since they will foot the bill for repairs or replacement. However, this does not necessarily mean you must just accept whatever they offer in return for your total loss.

You have the right to do your own research and make sure that you receive adequate compensation for your loss. If you research market values for your vehicle, you may feel that the insurance carrier is lowballing you with their own internal calculations. In this case, you can negotiate for more money based on things like differing values, modifications made over time, or customized elements you should receive reimbursement for.

You may also need to confirm that the carrier reimburses you for other costs related to replacing the vehicle. For instance, have you factored in sales tax, tag and title transfers and dealer fees on a replacement vehicle? This adds a significant amount to the total loss pay out, and you will not be able to avoid paying it when replacing your totaled vehicle.

Can You Keep the Car?

What if you want to keep the car? If you can't talk the insurer out of totaling it, you often still have the option of keeping it. Many companies allow the owner to request that they keep the vehicle rather than turn it over to the insurer. However, you retain ownership at the cost of receiving a check for the salvage value. Essentially, you get the salvage value in the form of the car. 

This is a good option for owners who, as mentioned, have a sentimental attachment to the car or truck. It is also favored by those who can perform the needed repairs themselves or at a considerable discount through friends or family. This is a decision that only the owner can make for themselves. But you must also be aware that Florida requires the title to “re-branded” as a salvaged vehicle. This may impact your ability to sell the vehicle in the future. 

Where Can You Get Help?

The only way to be sure you are getting a fair shake from the insurance company is to have good legal representation on your side. Jeeves Law Group PA can help. We have helped many clients receive fair compensation for their total loss and we will put our combined 75 years of legal experience to work fighting for your rights after an accident. Call today to make an appointment or find answers to more of your questions.