Total Loss Vehicle
What is Total Loss
Damage so extensive that the cost of repair exceeds the value of the property or in another word:
If the cost of repairing a vehicle plus projected supplements plus projected diminished resale value plus rental reimbursement expense exceeds the cost of buying the damaged car at its pre-accident value, minus the proceeds of selling the damaged motor vehicle for salvage then it is considrered a total loss.
And when an insurance company pays the vehicle owner to replace the wrecked or damaged vehicle with one of like kind and quality or when an insurance company pays the owner upon the theft of the motor vehicle.
How is total loss determined?
A vehicle that is considered a total loss is more often referred to as simply “totaled”.Cars or trucks that are totaled are vehicles that have been damaged beyond the point where it is worth repairing, either by collision, fire, flood or other misfortune. Insurance companies determine if a car is a total loss by doing the following:
- Determining the cost of repairs
- Determining the value of the parts that are still good
- Estimating the cost of a rental vehicle for the customer while the car is being repaired
Once all of these factors are established then the insurance company will be able to figure out if the car is worth repairing, or if it would be more cost effective to just replace the vehicle (total loss), or compensate the driver for the price of replacing it. If the car or truck is deemed not worth repairing then it is a total loss, and at that point it can be sold to an auto recycler.
Is total loss a good thing or a bad thing?
Keep in mind that in many cases it is beneficial to the customer to have the car considered to be totaled. A vehicle that has been in an accident, especially an extensive one, will not be considered worth as much as one of the same make, model and year which has not been in any kind of crash or collision. Therefore, even if it was repaired, the resale value would drop significantly and that cannot be repaid later by insurance companies. Sometimes an insurance company will repay this loss of market value, which is sometimes called accelerated depreciation, at the time of the accident but that needs to be determined with the adjuster then.
What happens next?
After all the paperwork for is completed, and the vehicle is determined a total loss, the car and truck can be sold to be recycled. Just because the vehicle is not worth repairing by the insurance company and is labeled a total loss, it does not mean that it is completely worthless. It is still worth money to someone who can sell the parts individually. Often times, large portions of the car are still salvageable and useful to repairing other similar vehicles. In most cases of a car or truck that is this badly damaged cannot run in its present condition. Car recyclers are well equipped to come and pick up the broken down automobile and bring it to a place where it can be dealt with. The insurance company or the owner does not have to deal with trying to get it towed themselves.
Once the damaged vehicle is picked up it can be broken down in to individual pieces for resale. Then any parts that are not reusable can be further broken down, separated, and crushed in to scrap if need be. This process is safe and can save a lot of money for consumers looking for parts or scrap metal. Everyone benefits from the auto recycling process, even when the vehicle is totaled.
Automobile Total Loss Definition
• If your vehicle is damaged, the insurance company may declare it a total loss. Usually,
this is because the cost of repair is impractical. The insurance company must give you a written notice that explains total loss, including how vehicle values are determined and what to do if you disagree with an insurer's offer.
• If you submit a claim and think your car is worth more
than you are offered.
• Insurance companies generally use evaluation services to come up with a value
for your vehicle. You are owed what you would have been able to sell your
vehicle for prior to the accident.
• Insurance companies must give you the valuation or appraisal reports they use to determine your vehicle's value.
If you believe your vehicle is worth more, you must prove a higher value. To do so:
1. Review the reports the insurance company used to determine the value of your vehicle and make sure all the options on your vehicle are listed.
• Correct any differences, such as year, make, miles, equipment, and condition.
• Make sure the comparable vehicles listed are in your area.
• See what your vehicle is worth after the company makes any corrections.
2. Check your local newspaper or the Internet for private-party and dealership sales. Web sites include: www.autotrader.com and www.edmunds.com.
• Make sure the vehicles are comparable (make, model, mileage, options).
• Call to find out the cash price of the comparable vehicle. The company will not pay the advertised price.
• Document who you called, the date, and the response. Attach this to the ad.
• Send copies to the company and ask it to review what you found.
If you don't believe the other company is offering you enough, you can submit the claim to your own company as long as you have collision coverage on that vehicle.
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