Avoiding a Total Loss in Louisiana: How Do Insurance Companies Calculate the Cash Value of My Car?

Editor's note: This post was originally published on December 12, 2017 and has been updated for accuracy and relevance.

Getting into a  car accident is stressful enough. Dealing with your insurance company, finding a good body shop, arranging a rental, and waiting on your repair can all take a toll on your patience. The last thing you need is to be surprised by having your car totaled when you thought you were only in a fender bender. So how exactly is a total loss determined? And why is the insurance company’s value different than what you may find on Kelly Blue Book or other resources?

How is a Total Loss Determined?

A total loss is most commonly determined when:

• The cost to repair the vehicle is equal to or greater than 75% of its retail value according to NADA.
• The cost to repair the vehicle, in addition to the salvage value (amount recouped by your insurance company from an authorized salvage dealer) is equal or greater than its actual cash value.
• The car is too unsafe to repair.

However, it is important to be aware that your insurance company may still total the car even if the cost of the repair does not equal or exceed your perceived cash value. Some states require that a vehicle be deemed a total loss when the cost to repair it exceeds a certain percentage of the actual cash value. In some states where there are no regulations to determine this percentage your insurance company may act by its own guidelines.   

How Do Insurance Companies Determine the Cash Value of My Car?

The cash value of your car can be determined a number of ways. Unfortunately the ways your insurance company uses may not align with your own, independent research using resources like Kelly Blue Book or NADA. Typically consumers use these platforms that account for the make, model, year, mileage, options, and condition of the vehicle. Based on these metrics you’ll receive a price range based on the type of transaction you are seeking (i.e. retail, trade-in, private party, etc.) The private party value is most likely to give you an estimated cash value of your vehicle. 

If the amount of the repair exceeds a certain percentage of your car’s cash value, as determined by your insurance company, it can be considered a total loss. There are several factors that can lead to the insurance company assigning your vehicle a different cash value than the one at which you may have arrived. Insurance companies typically use their own proprietary software to determine the cash value of your vehicle; they also generally only need to meet about 80% of that value in order to declare a loss. This combined with the frequent tendency of owners to overvalue the condition and value of their vehicles often leads to a discrepancy when it comes to the actual cash value and subsequent repair of the vehicles.

What Can I Do to Ensure that My Car is Fairly Valued?

Selecting the right repair shop can go a long way in ensuring that you receive the best repair and representation possible for your claim. The experts at Medines Collision fight for your rights to the best possible repair and reimbursement. The next time that you are in an accident, remember that it is your right to choose your shop, not your insurance company’s.