A total loss incident is when a severe car accident takes place. The point of impact in total loss collisions could originate from anywhere, whether it be head-on, T-bone, or rear-end. If you’ve incurred significant enough damages to your vehicle, your insurance company may deem your car as a ‘total loss.’
A total loss car accident can leave you without a car and potentially in a financial bind. Furthermore, insurance companies may offer an amount that is much less than what you think your vehicle may be worth.
Through this article, you’ll gain an understanding of what a total loss car is, what happens if you have a total loss, and steps to take after a total loss.
What is a total loss vehicle?
A total loss vehicle occurs when the total damages of the car exceed the actual cash value (ACV) of the car itself.
Your insurance company will assess how much it would cost to repair the damages. At the same time, it’ll calculate your car’s ACV. The ACV is the replacement cost of your car minus depreciation. Essentially, the ACV is the present-day market value of your pre-collision car.
While the concept is relatively simple, what total loss means can vary from state to state. Some states have a Total Loss Threshold (TLT), which means a car is deemed ‘total loss’ once the cost of repairs reaches a certain percentage of the car’s value. For example, in Nevada, a car is considered a total loss if damages exceed 65% of your car’s value.
Almost half of the states in America don’t use TLT but rather utilize what is known as a Total Loss Formula (TLF). With the TLF method, insurance adjusters will sum the cost of repairs and the salvage value of your car together. If the sum of the two is greater than the actual cash value of your car, your car will be written off as a total loss.
What happens if you have a total loss?
Once your insurance company determines the car as a total loss, a total loss insurance claim can be initiated. The total loss car insurance process typically involves the following:
- Deciding who’s at fault: If the other driver caused the accident, your insurance total loss payout would come from the other driver’s insurance company. Their insurance company will assess the damages and come up with a payment offer.
If you were at fault with the accident, depending on the coverage you have in place, your insurance company would come up with a payment offer. Note that your insurance rates will likely go up if you were found to be at fault.
- Payout: A car insurance total loss payout will occur once the assessment of damages has been finalized. Keep in mind, if you have an outstanding loan on the totaled vehicle, your payout could be less than what you still owe.
For example, after its assessment, your insurance company offers you $10,000 on your totaled car. However, if you have, say, $14,000 left on your car loan, you still owe $4,000. Unless you have what is known as ‘GAP insurance’ that covers for this shortfall, you’ll need to come up with the extra funds to pay off the loan.
- Seizure of the car: Upon payout, your insurance company will then seize your car. The DMV will be notified of the totaled status of your vehicle. Your car will receive a Salvage Title, which indicates to prospective buyers this vehicle had been totaled.
What to do after a total loss
From seeking medical treatment to dealing with insurance companies to all the paperwork involved, a total loss car accident can be quite overwhelming.
Here we break down the necessary steps you’ll need to take after a total loss.
1. Notify your insurance company
Immediately notify your insurance company about the accident to get your claim process started. The claims process can take over a month in some cases, so the earlier you notify your insurance company, the faster you’ll receive your payout.
2. Wait for the insurance company assessment
Depending on who is at fault, either your insurance company or the other driver’s insurance company will assess how much compensation you’ll receive.
Your compensation will also depend on the type of coverage you have with your insurance company. Most states mandate that all drivers, at a minimum, have property damage liability (PD) as part of their insurance coverage. If the other driver has PD and was found negligent, their insurance will cover your damages.
On the other hand, if you were found negligent, you must go through your own insurance company. Only if you have comprehensive or collision insurance coverage will you be able to recover any damages.
3. Research the value of your vehicle
While the insurance company assesses the damage of your vehicle, do some research on how much your car would be worth on the market today. Having a ballpark idea of your car’s worth will help you validate whether the total loss payment offer from the insurance company is fair.
4. Receive payment and transfer title
Once you’ve agreed upon the payment amount with the insurance company, complete any paperwork to receive your funds. You’ll also need to prepare any paperwork required to transfer your vehicle title over to the insurance company.
If your car has been totaled and you require assistance navigating through the claim process, contact Valiente Mott today. We offer expert guidance on the settlement process so you can get the most out of your payout. If you’ve sustained any injuries from the accident, our Las Vegas personal injury attorney team can help with your claim. Schedule your free consultation or call us at (702) 623-2323.