What it means when you total your car is that the insurance company’s adjuster has determined that it will cost more to repair your car that it is worth. To the insurance company, it makes no sense to pay for repairs in this situation. It would rather just send you a check for the value of your car.
Is There a Formula for Calculating What Is a Total Loss?
Yes. According to TotalLossAppraisals, some states, such as California, use a “total loss formula” to figure out when a vehicle is a total loss, while other states, such as New York, go by a percentage threshold — in New York it is 75 percent.
For example, in New York, if it would cost 75 percent or more of what the car is worth to fix it, the car is a total loss. Under that rule, if the auto body shop gives a repair estimate of $8,000 or more on a $10,000 vehicle, the insurance company will cut you a check rather than invest the money in the wrecked car.
Will Your Insurance Company Pay for A New Car If Yours Is Totaled?
That depends on what kind of coverage you have. Collision coverage and comprehensive coverage can help you get a replacement vehicle, but these types of insurance are usually not mandatory after you have paid off your auto loan. If you canceled these optional coverages, you might have to take out a new loan to buy another car.
Even if you do have collision or comprehensive coverage, you are not likely to get enough money from the insurance company to go out and buy a shiny new model of your crashed vehicle. Due to depreciation, decreased value over time, and wear and tear, the car you have been driving is not worth as much as when it was before you drove it off the lot, or as much as the newest model.
Unless you carry a special option, the company will only pay you the actual cash value of your car after depreciation and other reductions in value. New car replacement coverage can put you behind the wheel of a sweet new ride rather than what you can afford after depreciation.
Gap insurance will pay the difference between what your car is worth and how much you still owe on your loan. This coverage saves you from the situation of still owing money on a car you no longer have. You can include the amount of your deductible in the coverage.
After determining the actual cash value of your wrecked car, the company will subtract the amount of your deductible and send you a check for what remains. For example, your crashed vehicle is a 2016 model that you bought for $25,000. It has 35,000 miles on it and is in good condition. Its current value is $16,500, and you have a $1,000 deductible on your collision and comprehensive coverage. The company will send you $15,500 for your totaled car.
What Should You Do If You Total Your Car?
Talk to A Lawyer
The insurance company stays in business by paying its policyholders as little money as possible. Your lawyer can negotiate with the claims adjuster to get you fair compensation for your totaled car. Also, an attorney can read your policy to look for ways to maximize your coverage.
Read Your Policy
Find out what your company will pay for a rental car and for how long. Learn what the procedures are if you disagree with the settlement the company offers.
Learn Your Rights
Your lawyer can make sure the insurance adjuster follows the law when handling your claim. Every state has an insurance commissioner and a department of insurance. Go to their websites to learn your rights and what the insurance company has to do.
Be Proactive
Do not just accept the amount of money the company says your car is worth. Check out the value online through Kelly Blue Book or other reputable sites to make sure the company is using the fair and correct worth of your vehicle.
Make Sure You Recover Your Personal Items
If the insurance company declares your car totaled, it will usually just sell it for the salvage value. You will not see your car again after that, so you should remove all of your personal property if you have not done so already.
The Lawyers at Gacovino Lake Are Here to Help
Call the personal injury lawyers at Gacovino, Lake and Associates, P.C. to get help on your motor vehicle accident injury claim. We are standing by at 631-600-0000 to give you your free consultation.
