subject: What Happens When Your Car Is a Total Loss [print this page] Author: anum22 Author: anum22
There is nothing more frustrating after an accident than having to deal with the insurance company to have your vehicle repaired. If the insurance company finds your vehicle a total loss, then you may be in for even more difficult times as you haggle over the final price. In many cases, the insurance company will make its offer appear to be a take-it-or-leave-it proposition, but this is not always true.
Below you will find information on what happens when your vehicle is declared a total loss by your insurer, and what you can do to fight an offer you believe is unfair. Insurance companies are required by law to handle your claim in good faith and fair dealing. If your insurance company breaches these important fiduciary duties, you may be entitled to bring a bad faith claim against it. For more information, contact an experienced attorney.
What Is a "Total Loss"?
Your vehicle will be declared a total loss by your insurance company if the cost to repair the vehicle exceeds the actual total value of the vehicle right before the accident. Generally this means that if it costs at least 80% of the vehicle's worth to repair it, then the insurer is not going to pay for the repairs, but instead is going to give you a check for what it believes the vehicle is worth. You do not have any say whether or not the insurance company declares your car a total loss.
How Does the Insurance Company Make This Determination?
More often than not, what you believe to be the actual total value of your car will not match the insurance company's offer. The insurance company does not use the Kelley Blue Book to determine the value of your vehicle. Instead, the insurer uses another third-party company to complete the valuation of the car.
After the insurance adjuster makes a visual inspection of your vehicle, he or she generally then will input data about your vehicle into a computer system developed by the third party (one of the most commonly used third parties is CCC Information Services Group). This information includes basic data, like the color, make, model and year of your vehicle and available equipment and options. But it also includes subjective information, like the condition of your car. Simply imputing that your car is in one category poorer condition than it is (such as "fair" instead of "good") can make a big difference in the overall value of your car.
The third-party valuation of your vehicle is based on comparable vehicles in your local market. This may be calculated by collecting information from local used car dealerships and online and/or newspaper advertisements.
Can I Challenge a Total Loss?
You can always challenge the insurance adjuster's determination of the actual value of your vehicle. It is just a matter of how much time and money it is worth it to you to do so - a factor that the insurance company is counting on to dissuade you from challenging its determination of the value of your vehicle.
If you want to challenge the amount the insurance company is willing to pay for your totaled vehicle, you may follow these steps:
- Do not cash the check. First, it is important that you do not cash any check the insurance company sends you for the total loss of your vehicle if you want to challenge the amount. By depositing or cashing the check, you are accepting the settlement offer by the insurance company and may not be able to seek any additional compensation.
- Get a copy of the market evaluation. Second, once you receive the actual total value determination from the insurance adjuster, ask the adjuster for a copy of the valuation report. This report should have specific information about the comparable (or "comp") vehicles they used in valuing your car. Check to see how far away these vehicles are located. Remember, the valuation is supposed to be based on your local market. If the comps are located more than 50 miles away from your home, you have a good argument that they are not in your local market and should not be used in the valuation.
- Read the report carefully. Additionally, when you are looking at the valuation report, make sure that the information provided about your vehicle is accurate and complete. For example, does the report list all of the available features and optional equipment your vehicle has? Does it note the mileage of your car? What does it list as the condition of your car? You also can ask to see the claims adjuster's initial report and check to see if it has any inaccuracies about your vehicle.
- Seek an appraisal. If the insurance company still is not willing to budge on its offer (which is not uncommon) and you think the value is absurdly low, you can seek an independent appraisal of your vehicle's worth. In your insurance contract, you should have the "right of appraisal." But if you want to choose your own appraiser, then you will have to pay for it out of pocket, which can cost between $300 and $500. If you still want the appraisal but are willing to let the insurance company choose the appraiser, then your insurer will have to pay the appraisal costs. Beware, however, that the insurance company's own appraiser may not be any more impartial than the third party that handled your original valuation.
- Contact an attorney. If you still are not getting anywhere with the insurance company, you should contact an experienced attorney. You may be able to go through negotiation or arbitration to settle the dispute or, as a last recourse, litigation.
All of these options will increase the amount of time you are without a car or a settlement check, which for some people simply is not realistic, especially if the difference between the insurance company's offer and what you believe your car is worth is only a few hundred dollars. Even so, the system for valuing a total loss is weighted against the policyholder, in favor of saving the insurance company money. The insurance company, however, still owes contractual and state legal obligations to you to settle your claim fairly and in a reasonable amount of time. Legal action can be taken against the insurer for failing to fulfill these duties. Source=http://www.rate-insure.com/2009/11/what-happens-when-your-car-is-total.htmlAbout the Author:
