10 November, 2023
Written by The Barnes Firm, reviewed by Richard Barnes
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Rich Barnes
President
If your car was involved in an accident and declared totaled, you may face an uphill battle. For minor repairs, it is easier to cover some repairs out-of-pocket when necessary if the insurance payout comes up short. This is not the case for a totaled vehicle.
When a vehicle is declared totaled, a vehicle owner hopes to get the maximum settlement amount from insurance to enable them to buy a new vehicle. Unfortunately, the insurance company might table a low offer based on the prevailing market price.
The typical move for an insurance company is to offer a settlement amount that preserves their interests and profits. You can try to negotiate for a higher value to secure the funds for buying a new vehicle, but this may be a difficult task.
An insurance company may use the fair market or replacement value to set their preferred settlement amount. However, there’s a high chance your car is worth more than their offer.
While an insurance company will take much convincing to improve their offer, you can change their position by tabling documented evidence that supports your argument, including highlighting aftermarket accessories to your vehicle, including an improved infotainment system, a new paint job, new tires, and a remote starter. Submitting photos and receipts of these improvements can help maximize your payment.
A vehicle owner is typically entitled to much more than what an insurance adjuster offers. It is also ill-advised to accept the first offer from the insurance company. Unfortunately, the insurance company will not improve their proposal because you think you deserve more.
Here are a few strategies for maximizing payout for a totaled car:
Get an independent valuation of your vehicle before accepting any offer from the insurer. You can obtain the car’s value based on many factors, including make, model, year of manufacture, condition, and features.
You can also take the vehicle to different used car yards and evaluate how much they may be willing to offer you. Alternatively, check the value of your car from reputable sites like NADA guides or Kelley Blue Book.
Despite your efforts to perform independent pricing research, the insurance company may refuse to make a better offer. You can improve your chances by providing documents that support a higher value. Provide all the relevant documents, including accident reports, insurance policies, and maintenance records.
Providing the above documents helps establish your car’s pre-condition and supports your claim.
Although negotiations with an insurance company are complex and frustrating, it is an essential step for getting the most from insurance for a totaled car.
Here are a few tips for effective negotiations:
If negotiations fail, request an appraisal for a neutral third party on the vehicle’s market value. An impartial appraiser can establish a fair market value and prove that the insurance company undervalued the total loss.
The insurance company may improve the offer to avoid expenses and added time associated with a neutral appraisal.
If you’re involved in a collision, your car could be considered a total loss when its repair cost exceeds its actual cash value. In addition, it is not always practical to repair the car even when the total repair cost is less than its actual cash value.
Your insurance provider can determine whether to repair the vehicle or consider it a total loss.
An insurer uses the following factors when determining a total loss vehicle:
The insurer calculates the total loss ratio, which you can obtain using the following formula:
Cost of repairs divided by the actual cash value
Subsequently, the insurer compares the ratio to an industry-set standard of 70-80%. These calculations are also known as total loss triggers, where the insurer begins to view your vehicle as a potential total loss.
The insurance will label your vehicle as an obvious total loss when the cost of repairs is more than the actual cash value. If the cost of repairs is less than 100% of the actual cash value but greater than 70% of the vehicle’s actual cash value, then salvage value plays a part in determining whether the vehicle requires repairs.
There are also questions regarding the value of a vehicle in a total loss situation. Different insurance providers calculate the vehicle value in various ways, including:
The insurer also considers the vehicle’s value based on the market conditions in the area where the policyholder lives.
Before making a payment, the insurance considers several factors, including whether it is a lease car, financed, or wholly owned.
Then, the insurer makes the payment as follows:
In most states, the insurance company for the responsible driver or the at-fault party is liable for accident-related losses. Similarly, your insurance will pay for damages to other people if you’re at fault for an accident.
The collision coverage caters to damages to your vehicle. There are options if the at-fault party doesn’t have insurance or is underinsured. If your policy has collision or uninsured motorist coverage, you can file a claim.
Your options might be limited if you didn’t have an insurance policy when the accident occurred. Lastly, if the responsible driver refuses to admit fault, the insurance company will investigate to determine the liable party.
Disclaimer: The information provided in this article is intended for informational purposes only. It is not meant to be a substitute for professional advice or guidance.
“As President of The Barnes Firm, I have dedicated my career to achieving justice in hundreds of cases for the victims of injuries caused through the fault of others. Additionally, I have been honored to have been elected by my peers to serve as president of the WNY Trial Lawyers Association.”
Years of Experience: 30+ years
The Barnes Firm is here to help you. Our personal injury firm helps individuals and their families who
have suffered an injury in an accident.
Whether your car crash was minor or serious, any injuries sustained in an accident can be painful and costly.
All motorcycle accidents are different, the compensation you receive will depend on the circumstances surrounding your accident.
A truck accident can be catastrophic, even in low-impact crashes, if you or your family are involved, you may be entitled to significant financial compensation.
There are dozens of accidents involving school buses each year, most commonly, involving children outside a school bus.
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