You’re stopped at a light when you are suddenly hit from behind by a distracted driver. You get out to assess the damage and begin the process of dealing with the aftermath of an auto accident. You exchange insurance information with the other driver, give a statement to police, and select a collision center where your vehicle will be taken for an estimate and repair.
It’s a lot to handle at once, and it’s a process that comes with more than a few frustrations. But, what happens when your vehicle cannot be repaired? What if the insurance company informs you that your car has been deemed a total loss and that they will be sending you a settlement offer? This is a scenario that arises more frequently than you may think, even in the case of a seemingly minor accident. So, how exactly did your car end up totaled? The following will provide some insight:
How is Total Loss Calculated?
It is sometimes believed that once a car is “totaled” it cannot be repaired. This is not often true. While that may sometimes be the case, it is not the loss of mechanical integrity or functionality, but rather the cost to repair the damage compared to the value of the vehicle that determines a total loss. Therefore, the first factor is to determine the car’s value.
In Louisiana, the law states that insurers must use the National Automobile Dealer’s Association (NADA) Handbook to establish value. If the cost to repair the vehicle is 75% or more of this total value, it must be declared a total loss, otherwise known as the Total Loss Threshold (TLT). So, even a small accident can result in a totaled vehicle depending on the value of the car.
Even in the case of vehicles with a high NADA value, reaching the TLT is easier than you may think. For instance, if a car has underlying frame damage, the cost to repair will increase significantly. Furthermore, this damage is not visible until technicians have begun stripping down the vehicle, so learning the extent and cost of such damages often takes owners by surprise.
Options after a Vehicle has been Totaled
In most cases, when an insurer totals out a vehicle, the owner will receive a settlement offer for the car’s actual cash value. This amount, however, will not be the same as the NADA value. Instead it is determined by the insurance company’s own proprietary software. Unsurprisingly, this means that you will typically be offered less than you believe the vehicle is worth.
Fortunately, you can negotiate the value of your totaled vehicle and do not have to accept the initial settlement. And, while this process may be somewhat tedious or frustrating, it is almost always necessary to maximize the payment amount.
What if you want to keep your car? If you wish to do this for sentimental reasons, or simply because you want to arrange the repairs on your own, it is an available option. In this scenario, your insurance company will obtain bids to determine your car’s value were it sold to a salvage yard. This amount plus any deductible you owe will then be deducted from your settlement offer, and you will be given a check for the remaining amount.
At Medines Collision Center, we frequently see the aftermath of having a vehicle declared a total loss. We have witnessed the frustration of clients countless times, and this is exactly why we serve as advocates in such situations whenever possible. From tips to negotiate a settlement to helping our clients understand the law and their rights as the insured, it’s a cause we are passionate about. We hope your car isn’t totaled, but just in case it could be, choose Medines, where you’ll get expert repair and skilled guidance when repair isn’t an option.