Total Loss FAQ

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NOTE: Some of the information contained in these answers relate to general principles of insurance and damage recovery. Information provided herein should not be construed as legal advice nor relied upon as such. If legal advice is desired, you should always consult with an attorney licensed to practice law in your state and knowledgeable as to the issues presented. For more information in this regard, please read the “Disclaimer” for using this website.

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Total Loss FAQ

No you do not have to accept the Original Offer to Settle. You are allowed to ask for the Market Value Report and Estimate to Repair and review for shortcomings.

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After your vehicle is Totaled Out the Insurance Company will generate a Market Value Report on your vehicle to determine what they feel is the proper Settlement Value. You have a right to this Market Value Report. This Report alone is the foundation in which the Insurance Company will use to access your Vehicle Value.

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Vehicle Value Experts will analyze The Market Value Report provided by The Insurance Company and identify each and every error contained in said Report. Thus, almost always resulting in a Higher Settlement.

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The loss in value of a damaged vehicle is known as Diminished Value. The amount of Diminished Value of a damaged and repaired vehicle depends upon several factors including: the pre-loss value of the vehicle, the nature and severity of the damages and the cost, manner and thoroughness of the performed repairs.

Consider that, when a vehicle is in an accident, it loses its greatest value just after the actual impact or occurrence. During the dismantling, repair, installation and painting of replacement parts, the value is slowly restored as the repairs progress.

The full original value will likely never be regained simply because the vehicle now has a history of damage that it did not have before the loss. Prior damage history will be disclosed to potential buyers who will likely not pay the same for a vehicle with a damage history as compared to one with no damage history. This is often referred to as “the damaged goods syndrome”.

If the repairs are done thoroughly and in a workmanlike manner, the value of the vehicle can be maximized to the best of reasonable human ability but likely never to its pre-loss value.

If the repairs are done to less than thorough and workmanlike standards, the recovery in value will be limited accordingly, and the vehicle will suffer a greater loss or diminishment in value.
The more significant the damages, the greater the loss in value. The poorer the repair quality, the less recovery of the vehicle’s original and pre-loss value.

In order to make this determination you should secure the services of an independent professional to perform a visual inspection of the vehicle and prepare an expert assessment of your remaining loss.

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As a result of damages sustained in a covered loss and a claim made against an insurer, the insurer is obligated to provide for either the repair or replacement of the damaged property.

Normally the insurer is given the authority to make the decision to either repair or replace the damaged property. Once they make the decision they are held to a level of “pre-loss” condition and/or “actual cash value” (ACV).

Should the insurer elect to repair a damaged vehicle, they owe the costs to restore the damaged vehicle to its pre-loss condition to the best of reasonable, human ability.

Should the insurer elect to deem the damaged vehicle to be a total-loss, they are obligated to provide replacement or actual cash value enabling the claimant to purchase another vehicle equal to the value of the damaged vehicle, immediately prior to the loss. The rules of indemnification are clear in as much as what is owed is what was possessed just prior to the loss, no better and no worse.

Additionally, you may be entitled to sales tax, tag and title transfer costs in the event your vehicle is determined to be a total loss.

You may be entitled to ‘loss of use’ (temporary substitute vehicle) during the time required to make repair; or, seek a replacement vehicle from the at-fault party, their insurer, or as may be provided by coverage within your personal insurance policy.

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If you make a claim against your own insurer it is considered a first party claim and you will be dealing with your insurance company based on the terms and conditions as outlined within your insurance (contract) policy.

If the accident was someone else’s fault and you are making a claim against them through their insurer, it is considered a third party claim. You are under no contractual obligation to let the other person’s insurance company inspect the damages or determine the extent of damages or cost of repair. You may, if desired, secure repairs and merely submit a bill to the at-fault party and/or their insurer for reimbursement. The at-fault party’s insurer will likely provide for your damages based upon the ‘limits of liability’ coverage under the at-fault party’s insurance policy.

It’s important to understand that the at-fault party owes you for your damages and while their insurer owes them under the terms of the property damage portion of their policy contract, the at-fault party’s insurer legally owes you, the victim, nothing. The insurer will normally attempt to settle the claim on behalf of their insured as is owed to their policyholder under the terms of their insurance policy.

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The key to recovering all losses owed is to know just what it is that is owed you. Having an in depth visual inspection of the damaged/repaired vehicle and accurate assessment of your remaining damages prepared for you and understanding the necessary steps in the recovery process in paramount. Providing a detailed report with your claim will enable the insurer a clear understanding of your remaining loss and facilitate a more timely settlement.

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YES. Vehicle owners have the right to disagree with any assessed amount of loss. Depending on the policy and state law, provisions are provided for dispute resolution. Of course before one can make a determination if the insurer’s offer is reasonable or not, they will need a valuation of their own for comparison.

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The consumer is usually pitted between the insurance company’s need to minimize their losses and the repair facilities need to make a profit. Today many repair facilities and insurance companies have established mutual relationships similar to a HMO/PPO referred to as “DRP” or “Direct Repair Programs” whereas the repairers adhere to insurer mandates in exchange for continued referrals. These mandates are to keep repair costs low and may restrict proper repair techniques, materials and processes. Far too often these DRP relationships have the repair shop working for the insurer and not you or in your best interests. In most cases it is best to seek a truly independent repairer, of your own selection, (based upon recommendations from those you know and trust) who will work for you in the proper restoration of your vehicle. If it is a DRP shop than ensure that they understand it is you whom they work for in the repair of your vehicle. If needed, get it in writing! Most state laws mandate that the choice of repairer is yours and yours alone. Don’t trust others to make such important decisions with your economic and personal welfare.

The consumer may need an unbiased third party Professional Expert to assure that such circumstances do not short change them in the recovery of their losses owed them under their policy and/or the law.

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Determining if a vehicle should be repaired or not depends on the economic factors surrounding the claim as well as state mandates and regulations designed to protect consumers.

As a general rule, when the damages meet or exceed 80% of the damaged vehicle’s pre-loss market value the vehicle will be considered a total loss. Insurers may elect to total a vehicle prior to reaching this percentage and it is rare that they would exceed it.

The insurer is given the liberty to make the decision to repair or replace (within state laws and guidelines) and once determined, the insurer is held to certain standards in their performance of their selected option. In either option, the consumer is to be indemnified for their loss and placed as closely as possible to the economic position they were just prior to the loss.

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Based upon past case history, the court has stated that an insurance claims adjuster has no affirmative obligation to advise an insured or third party claimant of their rightful entitlements; however when an adjuster provides information to a claimant about the claim, the adjuster must be truthful. As “Buyer Beware” is aged and sound advice for a buyer, the same adage may be appropriate for exercising caution when one is making a claim against an insurer.

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Some information is provided courtesy of the Independent Auto Body Association and various other websites pertaining to Motor Vehicle Diminished Value and/or Motor Vehicle Value.

 

Important Notice: Vehicle Value Experts does not provide legal or financial advice and strongly recommend each user of this site seek a qualified professional familiar with such issues as outlined in this site prior to making a decision as to such. For further clarification regarding the use of this site please visit our “Disclaimer“.

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