In the wake of an auto accident, there’s a number of things to consider when it comes to guessing how long it may take for you to recover—the severity of your injuries, the costs of paying them, and when you’re going to be able to get back to work. One major item may not be at the forefront of your mind, but it’s also an important factor—your car. Did it sustain significant or minor damage? How has it been damaged and what can you do about it? In some cases, the car is damaged beyond the point where it would make financial sense to fix it. When this happens, the insurance company will say the car is totaled.
This decision has advantages and disadvantages for you. You may have been hoping for the car to be totaled. This way, you don’t have to get the car repaired and then drive a car that’s underwent major work. However, sometimes you may not want the car to be totaled for a number of reasons. Buying a new car may not be a viable option for you. There’s also the possibility that you just don’t want to get a new car and would rather repair your vehicle.
Before getting into your options, you should understand how the process works. Let’s break down what total loss is and how it’s determined.
When Does an Insurance Company Determine a Car Is Totaled?
Before breaking down how an insurance company calculates if your car is a total loss, there are a few terms you should be familiar with along with their abbreviations. Knowing these will help you understand the process and what you can do about the decision.
- Actual Cash Value=ACV
- Total Loss Formula=TLF
- Cost of Repairs
- Salvage Value
- Salvage Title
- Rebuilt Title
When your car is totaled, it means the insurance company has found it to be a total loss. It will cost more money to repair the vehicle than the vehicle’s worth, which is also called the ACV. It doesn’t make sense for the insurance company to give you funds to fix the car. Instead, it’s declared a total loss and you get money for the vehicle.
Keep in mind that your car doesn’t mean to look damaged beyond repair for it to be a total loss. A car can have considerable internal damages even when the outside may look relatively normal. Consider issues with the engine, steering and braking systems, or other mechanical failures that could be expensive to fix.
Total loss is found by calculating a formula or TLF. It’s the cost of repairs plus the salvage value/ACV. If the cost of repairs plus the salvage value is greater than or equal to the ACV, then it will most likely be totaled. Typically, there is a percentage that the state follows to determine if the car should be found at a total loss or not. Kentucky total loss has the threshold at 75%. If the cost of repairs is around 75% of the vehicle’s value, it will likely be called a total loss. They stop there because it’s typical for cars to need more repairs than the usual estimate and as the costs of repair get closer to 100% of the car’s value, then the insurance company will likely lose money. Their goal is to do what makes financial sense.
When deciding if the car is a total loss, the insurer will also take the salvage value into account. The amount that the insurer could sell the vehicle is the salvage value. It’s common for these values to not be high. There’s also the possibility that the salvage value is set because all the vehicle is good for is scrap metal. On a less expensive car, people may not want its scraps or parts. However, if an expensive luxury vehicle is totaled, the scraps or parts will probably be sold to someone looking to fix up a car or is looking for parts from a specific make and model.
What Are Your Options After Total Loss?
If the insurance company says your car is totaled, then you will receive the actual cash value for it. An appraiser will determine the value.
However, you can buy your car back from the insurers. In this situation, they’ll pay ACV minus your deductible and what your car could have made from a salvage yard. Once it’s back in your possession, you’re going to have to pay for repairs and getting it back to being road ready. You should know that this may be difficult because the car now has a salvage title. Finding insurance for this vehicle may not be as easy because of all the car has been through.
If you do fix the car up, it will also have a rebuilt title in addition to a salvage title. Depending on the quality of rebuilding the car, you may have trouble finding potential buyers if you ever wish to sell it. They may be wary of the car’s quality and its value will be significantly less than what you paid for it.
But what happens when the insurance company says your car is totaled but you think it’s an unfair assessment? You can contest this. You’re going to want legal professionals on your side who will help you fight this. It’s possible that you were below the 75% threshold but the insurance company still said your car was a total loss.
It’s important to know that repairing your vehicle can take a lot of financial effort after it’s been called a total loss, but if you think that your car shouldn’t have been totaled, then you can fight their decision. Your lawyer will need a lot of evidence to show that your car was worth more than the insurance company said. This may happen if you gave the car significant upgrades and kept it in pristine condition.
From there, another appraiser will look at your car and determine its value. They may have a different number than what the insurance company found. Then, your lawyer can start fighting for your rights.
The Law Office of Todd W. Burris Can Help
If you feel like your insurance company gave you an unfair deal, you don’t have to accept it. Insurance companies always care most about their bottom line and this may mean you’re getting less than you deserve. We won’t let that happen.
The Law Office of Todd W. Burris has helped countless people get the justice they deserve. We’ll stand up to insurance companies that are merely trying to save as much of their money as possible at the expense of your property. Give us a call today and we can get started on your case.