A totaled car feels like the final blow after an accident. Suddenly, you’re without transportation and facing a confusing insurance process. A car accident lawyer can help you understand your rights, negotiate with the insurer, and pursue the compensation you need for a replacement vehicle.
Learn below about the total loss settlement process and how to handle the insurance company after your car is declared a total loss.
Understanding the Total Loss Declaration
An insurance company declares a car a total loss when the cost to repair it plus its potential scrap value meets or exceeds its value before the accident. This pre-accident value is called the Actual Cash Value (ACV).
Each state and insurance company has a specific threshold, often a percentage of the ACV, to determine if a car is totaled. The insurance adjuster inspects the damage to estimate repair costs.
They compare this estimate to the car’s ACV. If repairs are too expensive according to their formula, they label the vehicle a total loss.
This total loss declaration starts a specific claim process, which is different from just getting repairs done. It involves valuing your totaled car and arranging a settlement.
What Is Actual Cash Value (ACV)?
Actual Cash Value, or ACV, is the amount your vehicle was worth just before the accident, not the cost of a brand-new car or what you paid for it originally.
ACV considers your car’s make, model, year, mileage, overall condition, and recent sale prices for similar vehicles in your local market.
Insurance companies use valuation guides and market research to calculate ACV, which becomes the starting point for your total loss settlement offer. You don’t have to accept the first ACV figure; a car accident lawyer can guide you on your car’s ACV and how to respond to insurers.
6 Steps To Take After Your Car Is Declared a Total Loss
Dealing with a total loss car involves several steps, and staying organized helps make the process smoother.
Here’s what usually happens:
- Review the Insurance Company’s Assessment: Carefully read the adjuster’s report and the valuation documents to learn how they calculated the repair costs and the ACV for your totaled vehicle. Note any discrepancies or items you disagree with, and contact a car crash attorney for guidance.
- Gather Your Own Documentation: Collect all records related to your car, including the bill of sale, maintenance records, receipts for recent repairs or upgrades (like new tires or a sound system), and the original window sticker if you have it. This information supports your car’s condition and value before the accident.
- Settlement Offer: The insurer will present a settlement offer based on the ACV, minus any deductible you owe (if the claim is through your own collision or comprehensive coverage). Review the offer details carefully. It should list the ACV, sales tax, and title/registration fees they might include.
- Remove Personal Belongings: If you accept the ACV offer, remove everything that belongs to you, including items in the glove box and trunk, and any aftermarket equipment you installed that isn’t permanently attached. Check under seats and in all compartments.
- Handle the Title Transfer: If you accept the settlement, you’ll need to sign the vehicle title over to the insurance company. They typically guide you through this paperwork. Without the title, they can’t finalize the total loss settlement.
- Cancel Insurance and Return Plates: Once the settlement is complete and the insurer takes possession of the totaled car, contact your insurance agent to remove the vehicle from your policy. You must also follow your state’s DMV rules for returning or transferring the license plates.
This process handles the aftermath of having your car declared a total loss, and each step requires careful attention. Don’t feel rushed by the insurance adjuster. Contact a car accident lawyer if you feel the ACV is unfair.
Calculating Your Total Loss Settlement
The settlement amount is the core of a total loss claim. The insurer should provide a report showing how it reached the ACV figure, often using third-party valuation services like CCC Information Services or Mitchell.
Factors that influence the final settlement amount include:
- Actual Cash Value (ACV): The baseline value of your car pre-accident.
- Sales Tax: Many states require insurers to include sales tax in the settlement, allowing you to buy a replacement vehicle without paying tax out of pocket.
- Title and Registration Fees: Some states also require insurers to cover the costs of titling and registering a replacement vehicle.
- Deductible: If you’re using your own insurance (collision or comprehensive), your deductible amount is subtracted from the settlement. You don’t pay a deductible if the claim is paid entirely by the at-fault driver’s insurance.
The insurance company’s first offer isn’t always final. You have the right to question their valuation if you believe your totaled car was worth more. Preparing your own evidence is key to negotiating a better total loss settlement.
Negotiating the Settlement Offer
You don’t have to accept the insurance company’s initial settlement offer for your totaled car. If you think the ACV is too low, you can negotiate, or let your lawyer do it. Successful negotiation requires preparation and evidence.
An attorney independently investigates your car’s value using pricing guides like Kelley Blue Book (KBB), NADA Guides, and Edmunds. They look for private party sale values in your local area, not just trade-in values. Experienced lawyers present your findings clearly to the adjuster.
If direct negotiation fails, some insurance policies include an appraisal clause. This allows you and the insurer to each hire an independent appraiser. The appraisers then try to agree on a value or select a neutral third umpire to make a final decision.
Dealing With a Loan or Lease on a Totaled Car
Having an outstanding loan or lease complicates a total loss situation. The insurance settlement check goes towards paying off the lender first. Usually, the insurer pays the lienholder directly after you provide the loan account information.
What happens next depends on whether the settlement covers the full loan balance. If the ACV settlement is more than what you owe, the lender receives their payoff, and the remaining money comes to you. You can use this equity to purchase a replacement vehicle.
However, you might owe more on the loan than the car’s ACV, known as “negative equity.” The insurance payout satisfies part of the loan, but you’re still responsible for the remaining balance owed to the lender.
What Is GAP Insurance?
This shortfall is where GAP (Guaranteed Asset Protection) insurance helps. GAP is coverage you might purchase from the dealership, your lender, or sometimes your auto insurer when you first buy or lease your car.
It covers the difference—the gap—between the ACV settlement and the amount you still owe on your loan or lease.
If you have GAP coverage, submit a claim with your GAP provider after the primary insurance settlement is finalized. They typically require copies of the total loss determination, the ACV settlement, and the loan payoff statement.
The GAP payment goes directly to your lender to clear the remaining loan balance. Without GAP insurance, you must pay the difference between the total loss insurance settlement and your loan balance out of your own pocket.
You still have to pay off the loan even though you no longer have the car.
Keeping Your Totaled Car
Sometimes, you might want to keep your car even after the insurance company declares it a total loss. You may consider this if the damage is mostly cosmetic, if you want to repair it yourself, or if you want to sell it for parts.
If you choose to keep the car, the insurance company still pays you the ACV settlement. However, they subtract the car’s salvage value from the payment, which is the amount the insurer estimates they could get by selling the wrecked car at auction.
Keeping a totaled car means getting a salvage title, which permanently marks the car’s record, indicating it was previously declared a total loss. A salvage title significantly reduces the vehicle’s resale value and makes it harder to insure.
Before you can legally drive the car again, you must repair it to meet state safety standards. It then needs to pass a specific salvage vehicle inspection.
Only after passing inspection can you apply for a rebuilt title, which allows you to register and insure the car, although potentially with limitations or higher premiums.
How a Lawyer Helps With Your Total Loss Claim
While some total loss claims are handled directly between the owner and the insurer, legal help is beneficial. A car accident lawyer understands insurance tactics and protects your rights. They work to get you a fair settlement for your totaled vehicle.
Evaluating the Settlement Offer
Lawyers know how insurers calculate ACV, and they review the company’s valuation report for accuracy and fairness. They identify if the comparable vehicles used are appropriate or if the condition assessment is biased.
A car accident attorney accesses independent valuation resources to determine your totaled car’s true market value. This ensures the initial offer reflects what your vehicle was actually worth before the accident damaged it beyond repair.
Gathering Supporting Evidence
Building a strong case for a higher ACV requires proof. A lawyer helps gather crucial documentation you might overlook.
This includes finding proof of recent upgrades, demonstrating exceptional maintenance history, or locating comparable vehicle sales data that supports a higher value for your totaled vehicle.
Negotiating With the Insurance Company
Insurance adjusters handle claims daily, but you don’t. An attorney levels the playing field. They handle all communication and negotiations with the adjuster, presenting your counter-evidence professionally and persuasively.
Their experience in negotiation tactics often leads to a better total loss settlement than you might achieve alone. They fight against lowball offers.
Explaining Your Rights and Options
The total loss process involves choices, like deciding whether to keep the salvage or invoke an appraisal clause. A lawyer explains the pros and cons of each option based on your specific situation and state laws.
They clarify confusing policy language and protect your rights throughout the total loss claim.
Addressing Loan Payoff Issues
If you owe money on your totaled car, a lawyer helps manage communication with the lender. They verify the correct payoff amount and assist with the GAP insurance claim process if applicable.
Handling Disputes and Bad Faith Claims
If the insurance company unreasonably delays your claim, makes an unfairly low offer, or refuses to negotiate in good faith, a lawyer can identify these bad faith practices and push back. They protect you from unfair treatment during the total loss insurance process.
FAQ for What To Do If Your Car Is Declared a “Total Loss” After an Accident?
How Do Insurance Companies Determine if a Car Is a Total Loss?
Insurance companies declare a car a total loss if the estimated cost of repairs plus the car’s potential scrap (salvage) value is close to or more than the car’s Actual Cash Value (ACV) before the accident.
Each state has rules, and insurers use a specific percentage threshold (Total Loss Threshold or TLT) of the ACV. If repair costs exceed this threshold, they deem the vehicle totaled because fixing it isn’t economically practical.
What Steps Should I Follow Regarding What To Do if My Car Is Declared a Total Loss After an Accident?
First, review the insurer’s valuation report for your totaled car or have an attorney examine it. Gather your own records (maintenance, upgrades) to support its value. Examine the settlement offer, including ACV, taxes, fees, and deductible.
Remove all personal items from the vehicle. If you accept the settlement, sign over the title, return license plates per state rules, and cancel insurance on the totaled vehicle.
Can I Disagree With the Insurance Company’s Valuation of My Totaled Car?
Yes, you can disagree with the insurer’s ACV calculation for your totaled car. If you believe their offer is too low, gather evidence supporting a higher value, such as online pricing guides, local comparable vehicle sales listings, and receipts for recent upgrades or maintenance.
Present this evidence to the adjuster and negotiate for a fairer settlement amount. If negotiation fails, check your policy for an appraisal clause option.
What Happens if I Still Owe Money on My Car Loan When It’s Totaled?
The insurance settlement check for your totaled car goes first to pay off your auto loan lender. If the settlement amount (ACV minus deductible) is less than your loan balance, you’re responsible for paying the difference unless you have GAP insurance.
If the settlement is more than the loan balance, the lender is paid off, and you receive the remaining amount.
How Long Does a Total Loss Insurance Claim Usually Take?
The time frame for a total loss claim varies but often takes several weeks. Factors influencing the timeline include the complexity of the accident, the insurer’s workload, how quickly you provide necessary documents (like the title), negotiations over the ACV, and your state’s specific regulations.
Delays might occur if there are disputes about the settlement amount or issues with the title or loan payoff.
Don’t Settle for Less Than Your Car Was Worth
Dealing with a totaled car adds financial stress to an already difficult time. You need fair compensation to replace your vehicle and move forward. Don’t let the insurance company dictate the value of your loss without question. A personal injury attorney can help protect your rights and fight for the settlement you deserve.
Call the Law Offices of Mickey Fine today at (661) 333-3333 to discuss your total loss claim.