In STEP FOUR we are going to discuss how to deal with the insurance company if your car is a TOTAL LOSS.
As a general rule, you have to understand that it is always the insurance company's decision whether to total or repair a vehicle. It will total the vehicle for a few reasons
- If the repair is too expensive
- If the damage to the vehicle is so severe that it can't be repaired safely
- If the amount of damage is severe enough that state laws require the vehicle be totaled
- It is just not cost effective for the company to repair the vehicle
I hear it from clients all the time, I would rather have my vehicle fixed instead of totaled because it was worth so much more to me and I can't replace it.
How Does the Insurance Company Decide the Value of YOUR Car?
If you look at your insurance policy it will use the term “fair market” or “actual cash” value. To determine the actual cash value, the insurance company will compare the sales price of similar vehicles in your local area and make adjustments for the condition of the vehicle, mileage, damage not caused by the accident and options. This will be the actual cash value.
If you DO NOT trust the INSURANCE COMPANY, you need to get on the phone and call the dealerships listed on the comparables that are provided by the insurance company. See if the vehicles are at the dealerships listed and if they are for sale for the prices listed on the comps.
In some cases you may be able to keep your total loss vehicle. Under these circumstances, the insurance company will pay the actual cash value minus the fair salvage amount. The salvage amount is the amount they will receive for the vehicle on the secondary market or for scrap.
If there is a lien holder (Bank) on your vehicle, you will not be able to keep the total loss vehicle unless you pay off the loan amount before the deal with the insurance company is completed.
These property damages issues can be sticky. Insurance companies play hardball with these numbers because they know that it is not cost effective for a person to go out and hire a lawyer to deal with these issues.
Again, I know the process of dealing with all this stuff after a car accident can be daunting. Stick with it and you will get through it.