Posted July 4, 2011
Fiona Beckett, Researcher
What Happens When My Vehicle is A Total Loss?
How Much Will I Get for My Car?
An insurer may determine that your car is a total loss if the cost to repair the damage (excluding cosmetic damage) approaches or exceeds the vehicle’s actual cash value (ACV). An insurer will determine what your vehicle’s actual cash value was by establishing its actual cash value immediately before the accident occurred.
If your insurer has determined that your vehicle is a total loss, your insurer generally has ten (10) business days to make you a settlement offer. If your vehicle was stolen and is not recovered within thirty (30) days after the theft, your insurer will make you a settlement offer for your vehicle thirty (30) days after receiving notification of the claim.
If you are not the insured, but are making a claim under someone else's insurance policy (i.e., you were not at fault), the insurer for the other driver generally has ten (10) days to make you a cash settlement offer for your vehicle after it has completed its investigation, determined their driver was at fault for the accident and determined your vehicle is a total loss.
The offer from the insurer must be in an amount that reflects the retail value less applicable deductions for a substantially similar motor vehicle. They must use a nationally recognized valuation manual or a computerized data bank containing values for substantially similar motor vehicles. Generally, insurers refer to the National Auto Dealers Association (NADA) Official Used Car Guide, Kelley Blue Book or the CCC Database to determine your vehicle’s ACV. Alternatively, the insurer may determine the actual cash value of your vehicle by obtaining a quote for a substantially similar vehicle from a qualified dealer at a location reasonably convenient to you. If you decide to keep the damaged vehicle for salvage, there will be a deduction for the amount of the vehicle’s salvage value.
You may request that the insurer put its settlement offer in writing to you and have them advise you of the method used to arrive at the offer. If you make the request for a written settlement offer, the insurer will send it to you within seven (7) business days of your request. Upon receipt of the insurer’s written settlement offer, you may either accept the offer or reject the offer, in writing, and make a counter-offer based on quotes you have gotten from dealers for a substantially similar motor vehicle, using advertisements you found for a similar car, or using any valuation source for a substantially similar motor vehicle. If you make a counter-offer, the insurer has five (5) business days within which to accept your proposal or to provide you with a written explanation as to why your counter-offer does not provide a more accurate valuation of the vehicle than the one used by the insurer.
Once you and your insurer have agreed upon a settlement offer, you will be asked to forward a copy of the vehicle’s title to the insurer. After the insurer receives the title, it will issue a check in the amount of the settlement offer. if there is a lienholder on the vehicle, the lien will either be paid directly or a check will be issued to you and the lienholder.
If a vehicle has been damaged by collision, fire, flood, accident, trespass or other occurrence to the extent that the cost to repair (excluding cosmetic damage) the vehicle for legal operation on a highway exceeds 75% of the fair market value of the vehicle prior to sustaining damage, by law, the vehicle is considered a “salvage.” If you elected to retain the damaged vehicle, the insurer will request that you send your title to them before it will send you a check for the ACV, less the salvage amount. the insurer is obligated to notify your state's DMV that the vehicle has been declared salvage and that the owner is retaining possession of the vehicle. Your state's DMV will then issue a salvage certificate to the owner.
What if I disagree with my insurer’s decision to total my vehicle?
it is important to remember that when you purchase insurance, you enter into a contract and are bound by its terms. However, you have options available if you do not agree with the decision to declare your vehicle a total loss. You should obtain documentation to establish that the cost of repairs will not exceed the actual cash value of the vehicle. You would do this by obtaining an estimate for the costs of repairs (please be sure that the estimate addresses any hidden damage that may be involved) and documentation to establish the ACV of the vehicle exceeds the repair estimate as well as any potential hidden damages.
If all attempts to resolve the issue of whether your vehicle is a total loss are unsuccessful, many policies provide the option of a third-party appraisal. In accordance with the terms of the policy, you would hire an independent adjuster to evaluate your loss, and your independent appraiser, along with the insurer’s designee, would then select a person to referee the dispute. Agreement by any two parties (e.g., the referee and your appraiser or the referee and the adjuster) establishes the amount of the loss. Because you must pay the independent adjuster’s fee, this last option may be more costly.