Having an insurance adjuster declare your car a total loss after an accident can raise numerous questions. One of the most common is whether you must accept the value presented by your insurance company in a settlement offer. Before you accept an offer that will not allow you to replace your damaged car or truck, you should know that many drivers are able to negotiate the value of a totaled vehicle with their insurance companies.
Why Insurance Companies Declare Vehicles a Total Loss
Insurance companies declare a car a total loss because the cost to repair it is too high in relation to the vehicle’s value. An insurance adjuster may use either the actual cash value of a car before the accident or the estimated replacement value in this calculation.
Total loss and salvage vehicle rules vary between states. In New York, an insurance company will declare your vehicle a total loss if the cost of repairs exceeds 75% of its actual cash value. This rule typically applies to cars that are eight years old or newer.
Another reason that insurance companies may declare a car a total loss is if it would be unsafe to drive after repairs. This usually includes damage to its frame that might not be as strong once repaired.
How Insurance Companies Calculate Total Loss Values
Insurers loosely base total car values on the retail value of a vehicle. New York laws require insurers to offer a minimum settlement amount based on one of the following three valuation methods:
- An estimate from an approved computerized valuation system that meets established state criteria
- A quote for a comparable replacement vehicle located within 25 miles of the garage location of the insured vehicle
- An average of the retail values for a substantially similar vehicle as listed in state-approved manuals, which include National Market Reports Inc.’s The Redbook and The N.A.D.A. Official Used Car Guide
There are some exceptions to established valuation methods. For example, if one of these valuation methods produces a settlement greater than the retail value of the vehicle plus the cost of repairs or if an established valuation method is not available for a specific vehicle. In these situations, an insurance company may use the best available method to determine a fair settlement offer.
It is important to remember that the actual cash value of a car includes depreciation. Therefore, even if your car is relatively new, the value assigned by the insurance company will likely be much less than what you paid for it.
Factors That Can Impact Actual Cash Value
Factors that impact the actual cash value of a car include its age, mileage and condition. The availability of replacement parts can play a role in valuing some vehicles. Aftermarket modifications can also significantly alter the value of a car or truck. They may also affect the repair prices necessary to bring the vehicle back to its pre-accident condition, which may impact how much you accept in a settlement.
Insurance Coverage That Pays for Total Loss Claims
You may need to rely on multiple portions of your auto insurance policy for a total loss payout. Depending on your coverage and the circumstances surrounding the accident, the following coverages may pay your claim.
Collision
This pays for damages to your personal vehicle in an accident, regardless of who is at fault. it typically pays up to the actual cash value of the car immediately before the accident minus your deductible.
Comprehensive
Comprehensive coverage pays for damages related to weather, fire, theft, vandalism, and animals. If your insurance company declares your car a total loss because of one of these factors, the collision policy will pay up to the value minus your deductible.
Uninsured/Underinsured Motorists
In accidents where the at-fault driver has insufficient insurance to pay for damages, the uninsured/underinsured motorist portion of your policy may help cover repairs or a total loss payout. However, New York is a no-fault state, so it is unlikely you will use this to cover physical damages after a Manhattan car accident.
Other Factors That Influence Your Insurance Settlement
Aside from the value of your car, the biggest factor that will affect your payout for a total loss vehicle in Manhattan is your personal insurance policy. You must have collision, and possibly comprehensive, coverage to receive a settlement from your insurance company.
The deductible on your policy will also come into play because the insurance adjuster will subtract it from any potential payout. Gap insurance covers the difference between the actual cash value and what you owe on the car. This is common on newly purchased vehicles where you are leasing a car, have a long loan period or use a small down payment on the loan.
A few additional factors may influence your insurance payout beyond the value of the totaled car, such as injuries and property damage.
How an Accident Attorney Helps Negotiate a Fair Value
You may feel obligated to accept the insurance company’s offer for a totaled vehicle. However, that is not the case and, in many situations, accepting a first offer is not in your best interest. Our attorneys understand how insurance adjusters determine car values and can help you negotiate a fair value for your totaled car.
Handling Negotiations
An experienced car accident attorney has excellent negotiation skills and will use them to help negotiate a favorable settlement. This includes negotiating with your insurance company and those representing other drivers involved in the accident. With one of our accident attorneys managing negotiations, you can rest assured that your best interests are well represented in all communications.
Estimating Claim Value
There is some variability in how insurance companies value claims involving a total loss vehicle. This allows you some room to negotiate a higher settlement amount. Car accident attorneys see many different claims and have the experience and knowledge to help you arrive at a realistic value for your vehicle. They also help ensure that adjusters include all extras, including taxes and tags for a replacement car, in your amount.
Filing Legal Claims
Although New York is a no-fault state, you may be able to seek damages from the responsible driver and his insurance provider. To do so, you must prove he caused the accident and that it resulted in serious injuries. New York defines serious injuries in Section 5102(d) as those that result in death, disfigurement, fractures, loss of a fetus, or permanent loss of a body part or function.
Managing Communication
In addition to negotiating on your behalf, your attorney will also manage all communication with insurance companies and any other attorneys involved. This ensures that nothing gets lost or miscommunicated throughout the process. It also gives you a chance to recover emotionally and physically after an accident without worrying about juggling calls, letters, and emails.
Get Personalized Recommendations
If you are in an accident that results in a total loss of your car, you will receive a settlement offer from the insurance company. You have the right to negotiate this settlement amount so that it covers your actual loss. Our team of personal injury attorneys at Cellino Law specializes in helping individuals affected by accidents recover the damages they are entitled to. Contact us to schedule a free, no-obligation consultation and explore your legal options.