Total Loss

A total loss is where an insurance company would rather buy your vehicle, than repair it. This is a bit of an over-simplification, but in large part, terribly accurate. I was prompted by a conversation with one of our clients the other day, to try and put down the various points of interest with regard to a vehicle being considered a total loss by an insurance company. Here’s the bottom line: A vehicle is considered a total loss when it’s financially more advantageous for the carrier to buy the vehicle rather than repair it – period. I can’t remember the last time a vehicle was deemed a total loss due to a structural concern, one that would make it unsafe to repair. I suspect they exist, I just haven’t personally seen one in a very long time. It’s virtually always about the money. It might help to know that a general rule of thumb that many insurance companies run with is that if a repair breaches 70% (or 80% in some cases) it becomes a likely candidate for being considered un-repairable.    

“My vehicle’s frame is bent, so it must be a total”. Current collision repair technology, in tandem with modern vehicular design, have made it where damaged frames are either repaired or replaced* on a regular basis. So frame damage will not, in and of itself, create a total loss.

*Full frame replacement applies to conventionally framed vehicles (these are the heavy steel, black ladder-like frames found under pickup trucks and most SUV’s). Uni-body designed frame replacement, on the other hand, is almost universally done in sections or pieces, almost like replacing parts of a jigsaw puzzle. Uni-body vehicles (virtually every car on the road) have their frame woven through and welded directly to the sheet steel understructure, making the body and frame inseparable; conventionally framed vehicles, conversely, can have their bodies lifted right off the frame, following removal of the necessary bolts and hardware, of course.

“They’re going to give me half of what my car’s worth”. Total loss compensation is characteristically based upon actual recent market sales of similar vehicles, as well as averaged prices of similar automobiles currently up for sale. This data is typically tracked by an outside, third party source, and then supplied (for a fee) upon request to the carrier for claims loss resolution.

The key phrase here is “made whole”. When being paid for your car, you should be provided the financial ability to buy a vehicle of the same age, mileage, wear and options, etc. as the one being totaled. The underlying insurance processing model is to restore you back (again, to make you whole) to where you were … just prior to the accident or loss. So, ideally the insurance company supplies the funds to do just that. Now we all know that that can be rather tough to do sometimes. There are no guarantees that a perfect match for your car (in its ever changing condition) is patiently waiting on standby for you, should you need an identical replacement at a moment’s notice. And of course none of this addresses the valid concern that you know your vehicle, and won’t have the same intimate knowledge of how another used car’s been treated by its past owner. However true this last statement may be, the legal system unfortunately has no way to accurately address this thorny issue and has consequently left it up to the old “buyer beware” system when replacing your car, should it be a total.

When trying to arrive at a fair market price for your automobile, I’d suggest doing some online research, as well as checking out the local pulp auto sales magazines. One important thing to remember (as I’d mentioned above) an insurance company often averages actual sales figures, along with local asking prices. As a result, the vehicle you actually find and its asking price may not always match the lower market figures the insurance company might be running with. This can be due to the ubiquitous negotiating that takes place during the sale of a car that frequently lowers actual sales prices, thereby affecting the carrier’s blended data. 

My car’s worth $10,000 so they have to spend that to fix it, right? Unfortunately that’s incorrect. Whenever I hear someone mention their car’s value, with the expectation that that’s what should be spent to repair it, I explain that that rarely, if ever, happens. Here’s why: the wrecked vehicle in its damaged state, still has value. As a result, using the $10K number above, an insurance company might recover $2K from the sale of the salvaged car, then reach into their pocket for the remaining $8K and make the individual whole for the $10K owed. Using this illustration, the insurance company was able to handle the claim with a net loss of $8K rather than $10K, a $2K savings. Why would they spend $10K on a claim that could’ve been resolved for $8K? The answer is they typically don’t. 

Supply a list of all of the various options on your vehicle while working with the adjuster. This is an extremely common problem. The best carriers dig deep to make sure that all of the options are taken into consideration while assessing a vehicle’s worth. But even the best can overlook something that will make a difference in what you’re paid. Double check what they’ve listed on their end, it might pay off. 

I’ve just spent $2,500 in repairs, so that should add $2,500 to my car’s overall value, right? The answer is – sometimes. Many times maintenance parts and labor (fan belts, brakes, transmission services, etc.) will be viewed as simple upkeep and not add to a settlement price. On the other hand, if you’ve just put a rebuilt transmission in for $2500, and have the receipts, that could have a tremendous impact on the insurance company’s view of your vehicle’s worth.           

Can I keep my car and pay to fix it myself? Absolutely! You’re normally welcome to “buy” the car back out of a total loss settlement. Keep in mind though, that if there’s a lien holder, they’ll have to be paid off, potentially leaving less money for you to work with on a repair. Okay, remember that salvage value I mentioned earlier? Using that same $10K example, you could keep or buy back the wrecked car for $2K and receive the remaining $8K (less any lien holder dollars) to work with toward a repair. I have to say, that I always recommend against retaining salvage, or keeping the wrecked vehicle and fixing it yourself. To begin with, I tell people that we’re like the home remodeling business, to the extent that we, more times than not, discover hidden damage that will add to the repair costs. When you retain the salvaged vehicle, these hidden damage costs will now be shouldered by you alone. This can potentially add up to a ton of money. In addition, here in California, to put the car back on the road you’ll have the added expense of paying for a smog check, as well as a certified brake and light inspection. Lastly, your automobile will forever be worth less as a rebuilt salvage. So you could spend a bunch of money on a car that’s potentially worth half as much when you’re all done. 

My car’s a classic and they’ve offered me too little. Here in San Diego, I’ve seen a 1955 Chevy used as a daily driver. I mention this because cars here can last a very long time and become more valuable as the years click by. That said, whenever there’s a price impasse between what the vehicle owner thinks and the insurance company’s position, even on a later model, the claims adjuster may opt to hire an outside, independent appraiser to arrive at an auto’s value. Be advised, these professional appraisals usually carry tremendous weight in court, should the claim ever land there.

I owe more on my car than it’s worth! This can be a huge issue, especially on a recently purchased car. We’ve all heard the old, “After you buy a new car, you’ll lose three grand just driving it off the lot”, right? Well, assuming for the moment that might be true, what happens if a half-mile down the highway someone does a hit-and-run to your new car, leaving you on the side of the road with a total loss? The short answer is that the insurance company owes market value at the time of the accident. So, I’m sure you can imagine where this could lead. The good news is that there’s a wonderful solution called gap insurance. Gap insurance is designed to protect someone from exposure in an instance like the one mentioned above. Your gap insurance policy would step in and fill the “gap” between what is owed and the current market value of the auto – whew!

57 comments on “Total Loss

  1. spanky on said:

    Fabulous blog post.. I enjoyed reading your blog for the reason that the writers often give us well written posts about computers and new technology. Thanks for sharing once again. I think I shall subscribe to the websites feed. I have already bookmark this website.Thank you PS: I love sports cars in the next few years….

  2. Mao Ditolla on said:

    Where can i find your rss? I cant find it

  3. Seshaya on said:

    Fantastic – I preferably should exclaim, ipressed with your site. I had no trouble navigating through all the tabs along with information seemed to be incredibly easy to access. I recently found what I yearned-for almost instantly? In any respect. Easy to watch, significant. Would certainly appreciate it in the event you add user discussion forums or something, simply install a colorings way for your potential customers to work together. Perfect work..

  4. Audrey on said:

    Lovely entry. I just stumbled upon your blog as well as wanted to mention that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed coupled with I hope you review all over again in a little while.

  5. Pitambharadharaya on said:

    Your views are amazing. Your web site, not so a lot. I dont would like to disrespect you, just hear me out. Add a bit something listed here. What youre expressing is really important itd be a shame if folks missed it due to the fact they were bored to death. May be considered a video clip or even a link to a thing as effective since the topic. Only a suggestion.

  6. Thanks for the input. I happen to agree with you about making the info a bit snazzier for the reader. I began the blog with zero training in creating one and am largely learning as I go. I appreciate everyone’s patience as I grow in my understanding of the technical side of pulling off the actual make up of the site and all that can be done with the technology – thanks again.

  7. Janardhanaya on said:

    Undeniably realize everything you suggested. Your current explanation appeared to be clearly the simplest thing to have an understanding of. You managed to hit the nail at the head or stated all these fantastic benefits with no problem. Will likely be back to get more. Thanks

  8. Fritz Aitkin on said:

    thanks for this article

  9. Ashley on said:

    Hi – I really should try to tell you, impressed with your site. I had no trouble navigating through all the tabs in addition to data seemed to be truly very easy to access. I discovered what I needed almost instantly anyway. Quite best. Probably would appreciate it for those who add community forums something like that, song would be a ideal way for your consumers to interact. Exceptional role..

  10. Bill Penick on said:

    Intriguing article. I know I’m a little late in posting my comment but the article was to the point and just the information I was looking for. I can’t say that I agree with all the points you made but it was emphatically fascinating! I still believe America just keeps getting better and better in spite of our current difficulties. BTW…I found your site through a Yahoo search. I’m a returning visitor to your blog and will return again soon. Thanks again for a great blog post!

  11. Patria Yerhot on said:

    I want to hear what you have to say again!

  12. Sheilah Mcnichol on said:

    Hi there! Is it OK if I go a bit off topic? I am trying to read your website on my Macbook but it doesn’t display properly, do you have any suggestions? Cheers! Kandy

  13. Pasquale Breman on said:

    Hi, This particular web blog is certainly thrilling and enjoyment to study. I’m an enormous admirer from the things discussed. I also benefit from studying the opinions, but learn that alot of individuals ought to stay on essay to try and add worth in direction of the original weblog publish. I would also motivate just about every particular person to take note of this page for a preferred help to help distributed the phrase.

  14. Kareen Ososki on said:

    Hey nice article

  15. Tameka Smyrski on said:

    Every time I come to #hostname there is another fascinating post to read. One of my friends was telling me about this topic a few weeks ago, so I think I’ll e-mail my friend the link here and see what they say.

  16. Omer Vaninetti on said:

    Good, thorough ideas here.

  17. My IT specialist suggests it may be the browser being used on your end. I apologize for any inconvenience – Thanks.

  18. Becky Yetzer on said:

    Good thorough ideas here.

  19. Estella Birnberg on said:

    I’m thankful for this brilliant page; many writers don’t get the credit they deserve. I’ll be back again and will send a couple of of my friends.

  20. Lenkes on said:

    I am loving this great post thanks for taking your time

  21. Louella Huckabey on said:

    Interesting and kept me reading.

  22. Paul Spurgers on said:

    I am always searching online for articles that can help me. Looking forward to another great blog. Good luck to the author! all the best,keep up the good work

  23. Winifred Gruis on said:

    Thanks much for the great document. I am glad I’ve taken the time to learn this.

  24. Hilario Worthey on said:

    I love your blog. I’ve added it to my favorite bookmarks and subscribed in a reader. Looking forward to reading more posts by you. Thanks.

  25. Sweet News. You can keep giving us the scoop!

  26. Austin Wakeland on said:

    I wanted to thank you for this great read!! I definitely enjoying every little bit of it.I have you bookmarked to check out new stuff you post.

  27. Approximately 5 months …

  28. Martha Susong on said:

    Do you’ve a “top posters” page to reward your very best blog site comments?

  29. Kermit Troxler on said:

    The author has written an informative post. You have made your stage and there’s not much to argue about. It truly is like a universal truth that you just can not argue with. With thanks for the info.

  30. Thao Sumbera on said:

    Wow! Thank you! I always wanted to write in my site something like that. Can I take part of your post to my blog?

  31. Brinda Koeppe on said:

    First of all you need to be sure that you take the time to find a great auto body repair shop. You must find a shop that has a good reputation, so ask around and see what you find out about auto body shops near you.

  32. great tips! thanks!

  33. Wiley Linan on said:

    Great information. Thanks a lot!

  34. Jonathon Sorokin on said:

    I just StumbledUpon this. Not bad. I’ll give it a thumbs up.

  35. Shawn Strome on said:

    Fascinating article. Thanks for sharing

  36. Adelia Dubey on said:

    Educational article, this is. It is actually awesome to see a article that is helpful.

  37. Leonie Waldon on said:

    Really nice post,thank you, best website ever

  38. Burt Leich on said:

    This is a good blog. Keep up all the work. I too love to blog. This is great everyone sharing opinions

  39. You certainly have some agreeable opinions and views. Your blog provides a fresh look at the subject.

  40. Bobbie Mcquilkin on said:

    I do agree with all the ideas you have presented in your post. They are very convincing and will definitely work. Thanks for the post.

  41. Tyson F. Fulk on said:

    I found your blog today. I love your blog very much. I really don’t know exactly what to write other than I really enjoyed reading through these blogs. Great articles indeed. I will keep visiting your your website . I learned quite a bit from you. Happy Christmas season!

  42. Craig Ramiro on said:

    Okay article. I just became aware of your blog and desired to say I have really enjoyed reading your opinions. Any way I’ll be subscribing in your feed and Lets hope you post again soon.

  43. Rodrick Saunas on said:

    Thank you for another great article. Where else could anyone get that kind of information in such a perfect way of writing? I have a presentation next week, and I am on the look for such information.

  44. Dustin Thoeny on said:

    I hope you will keep updating your content constantly as you have one dedicated reader here.

  45. Sophie Demers on said:

    Kudos for the great article. I am glad I have taken the time to learn this.

  46. Genevive Nance on said:

    Good blog, where did you come up with the knowledge in this piece of content? I’m glad I found it though, ill be checking back soon to see what other articles you have.

  47. Elliot Pine on said:

    Just what I was searching for, regards for posting .

  48. Kimiko Pelot on said:

    Thank you for the sensible critique. Me and my neighbor were just preparing to do some research about this. We got a grab a book from our local library but I think I learned more from this post. I am very glad to see such great information being shared freely out there.

  49. Lezlie Kanaan on said:

    Truly unique. Keep those articles going.

  50. maria andros on said:

    Really nice post,thank you, best website ever

Leave a Reply

Your email address will not be published. Required fields are marked *

*


*

HTML tags are not allowed.