1. When is a Vehicle Considered a Total Loss?
After an accident, your car might be so banged up and beat down that it is beyond repair. Basically, it’s totaled.
A car is a deemed a “total loss” if:
- Damage to the car is so great that it can’t be repaired safely;
- Repair costs exceed the value of the car itself; or
- The damage is bad enough that state regulations require the car to be declared a total loss.
Your car insurance company will arrange inspection and inform you if the car is a total loss. Once you get the information, your insurance adjuster will ask you to:
- Remove personal items from the car
- Leave a key with the car or arrange to give a key to your adjuster.
- Provide your account number and contact information for your finance or leasing company.
- Complete necessary forms
According to the California Department of Insurance an insurance company is required to:
“Offer a fair settlement. If you suffered a total loss, settlement must include taxes, license and transfer fees. The settlement must reflect the value of a comparable vehicle of like kind and quality. If you retain the salvage, deductions from the settlement for salvage must be fair, measurable, and discernible.”
2. What Does the Insurance Company Pay for a Total Loss?
Having your car totaled is inconvenient and for some, it can be heartbreaking. But if your policy covers a total loss, the insurance company will:
- Pay the actual cash value (ACV), or Kelley Blue Book, of the vehicle (plus state fees and taxes) less any deductible.
- Take ownership of the vehicle then sell the vehicle to a salvage buyer (or you may keep the vehicle yourself)
3. How is the Value of the Car Determined?
Your car may hold enormous sentimental value and you may have already paid it off so that you have no monthly car payment. Your car may seem priceless to you. However, its value depends on the sale prices of similar cars nearby. In addition, they consider the pre-accident condition of your car, including:
- Mileage
- Vehicle options
- Any damage not caused by the accident
While you can’t get more than what the car is worth, it’s reasonable to try and negotiate with the insurance for a little bit more. Insurance companies are in the business of paying you as little as possible.
4. How to Get the Most For Your Total Loss Vehicle Settlement
If you disagree with the insurance company’s valuation, you can dispute it. Here are some key steps you can take to challenge it and improve the value of your settlement:
Request the Valuation Report from the Insurance Company
The first step in challenging a vehicle’s valuation after an accident is to obtain the official valuation report. This document explains how the insurance company figured out the value of your car. They considered factors like make, model, year, mileage, and condition.
Reviewing this report is essential to understand the insurance company’s reasons. It also helps us find any mistakes or unclear deductions.
Analyze the Comparable Vehicles Used in the Report
With this report in hand, you can take a closer look at the comparable vehicles the insurer used in their assessment. These are often similar cars in the area that help determine the market value of your vehicle. Make sure the comparables are truly comparable — similar in age, condition, mileage, and location. If they aren’t, you may have grounds for dispute.
Challenge Unfair Condition Adjustments
If the insurance company makes significant deductions based on your vehicle’s condition, it’s important to contest any that seem unjustified. For example, minor wear and tear may have been exaggerated. Provide photos, maintenance records, or any other evidence that shows your car was in better condition than the report suggests.
Provide Your Own Set of Comparables
If you find discrepancies in the insurance company’s assessment, don’t hesitate to gather your own comparables. Research vehicles that closely match your car’s specifications, ideally from the same local market. Share these with the adjuster to argue for a more accurate valuation.
Consider Hiring a Professional Appraiser
If negotiations stall or the insurance company refuses to budge, hiring an independent appraiser might be the next step. A professional appraisal can provide a fair, unbiased valuation of your vehicle, which could serve as a powerful tool in negotiations or even in court. Appraisers typically charge a fee, but their expertise can often lead to a higher payout that justifies the cost.
By taking these proactive steps, you can improve your chances of securing a fair settlement for your vehicle.
Recommended Reading: Benefits of Hiring an Attorney
5. Can you Dispute a Total Loss Vehicle Settlement Value?
Yes, most insurance policies provide an appraisal provision. An appraisal provision is a clause in most insurance policies that allows either party to request an appraisal if there is a dispute over a total loss settlement.
Each side selects an appraiser, and if they can’t agree, a neutral umpire is chosen. The decision agreed upon by any two of the three is binding. Each party pays for their own appraiser, and the umpire’s fee is shared.
6. If You Want to Keep Your Total Loss Car…
No matter what your reasons for hanging onto it, you may be able to keep your total loss vehicle, rather than turning it over to the insurance company.
If that’s the case, the insurance company will pay the actual cash value of the vehicle LESS your deductible and less a fair salvage amount.
In California, you are required to obtain a salvage certificate which brands the vehicle as a total loss. This makes the vehicle hard to sell later. It also prevents you from making another total loss claim should the car get in another collision again.
7. Who Gets Paid for the Total Loss?
Who gets payment for a total loss depends on whether you own, lease or finance the vehicle.
- If you own the vehicle, you get paid.
- If the total loss is on a leased vehicle, the leasing company gets paid.
- If the vehicle is financed (and the finance company is listed on your policy or on your title):
- The financing company gets paid and if the settlement amount exceeds what you owe the financing company, you will receive the balance.
- If the settlement amount is less than what you owe, you’ll be responsible for paying the rest of the loan balance. (Make sure to always purchase “gap coverage” to cover your unpaid balances in these situations.)
Check with your finance company to see if you have gap insurance, or if it is available to you.
8. What do I Drive During the Total Loss Process?
If you have rental coverage, then ask your insurance company to pay for a rental vehicle after your accident. You may ask your insurance adjuster for as much time as necessary until you can get a new car. Typically, they will offer only 4-7 days.
Schedule a Free Consultation with a Car Accident Lawyer
If you are not at fault for the accident and need help filing a claim, consider speaking with a skilled car accident attorney. Reach out to El Dabe Ritter Trial Lawyers for immediate legal assistance. Our car accident lawyer can help you with the claims process. We will make sure the insurance companies give you full and fair compensation for your losses.
For a no-commitment, free consultation chat us or call (213) 985-1120. We’re here for you 24/7.
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Learn more about the car accident claim process in our local car accident pages: