Here’s What Happens When Your Car Is Totaled

When your car is totaled, the insurance company calculates the current market value, and you’re usually paid a total loss settlement, which you can accept or dispute. Often, the actual cash value isn’t enough to replace the vehicle, especially if the loan isn’t paid off or the value has depreciated. It’s important you understand your rights in these situations before signing any agreement or accepting an offer.

The first step after a car accident is often contacting the insurance provider, because this can be a good way to recover property damage losses. North Carolina insurance providers consider a motor vehicle a total loss when the cost of repairs is equal to 75% or more of the vehicle’s actual cash value before the crash. If the insurance company’s offer feels too low, our attorneys can help you challenge the valuation and protect your financial future.

When a vehicle is totaled, the insurer will often offer two paths to recovery:

• You can file an insurance claim and surrender the vehicle to the provider in exchange for money.
• You can keep the vehicle (and be paid a reduced value) and try to have it repaired.

Filing a property damage lawsuit is a third option you could consider, depending on the circumstances.

While these options sound straightforward, you should take time to understand the benefits and inherent risks of your recovery options before accepting an offer. Read on below to learn about total loss claims and property damage lawsuits to find the best solution for your situation.

The benefit of a car accident that results in a total loss without injuries is that it’s a fairly straightforward process that often doesn’t require legal know-how. The insurance provider will offer a settlement based on the actual cash value of the vehicle. They will first pay any lienholders, such as the bank, and then the balance is awarded to you. Accepting the settlement can provide quick access to funds compared to property damage lawsuits, and it can sometimes cover incidentals like a car rental.

The problem with a total loss claim like this is that a low valuation can leave you without the funds and loan collateral to replace the vehicle. When this is the case, you have the right to negotiate or dispute the cash value offered. Doing so will require thorough documentation of repair estimates, comparable vehicle sales data, and valuation information from Kelley Blue Book or other sources. Disputes can also prolong the total loss settlement process, but accepting unfair compensation can put you at a disadvantage when it comes to purchasing a replacement vehicle.

If you’re unsure whether you should dispute an offer or if you have other resources, such as gap coverage, speak to a car accident attorney who understands the fine print associated with insurance policies and settlement offers.

You may also have the legal right to keep the damaged vehicle. The insurance provider may offer you a reduced payout for the vehicle based on the repairs needed. Retaining the salvaged vehicle can be a helpful option for those without credit or collateral to purchase another vehicle, but getting the car rebuilt is a risk and it must be certified to be road legal. If a repair shop is unable to restore the vehicle to a safe working order, you’re out of options to recover any property damage from the initial claim.

While you can sue for property damage, it may only be worth the effort if your claim involves injuries that incurred medical expenses, lost wages, pain and suffering, or similar consequences. It may be unwise to pursue a lawsuit for a slight fender-bender or sideswipe accident unless the crash combines a personal injury claim and property damage, or the car accident involved an exceptionally negligent driver. Suing can be expensive and arduous, and the risks may not always justify the reward, especially for minor accidents.

Property damage lawsuits can sometimes be handled in small claims court, which can make these situations less arduous, but those surpassing certain thresholds are escalated to civil court. For an experience involving an impaired motorist or a distracted driver, the situation may qualify for punitive damages, which can penalize the driver and make a lawsuit worthwhile.

If you’re unsure whether a lawsuit or negotiations will yield the best outcome, contact an experienced attorney for help.

A car accident with a total loss can put you in a difficult spot financially. In North Carolina, insurance companies must make a claim decision within 30 days and must offer the settlement after 10 days. People dependent on a car for work or school can face detrimental consequences during this period. A rental car may be an option but can leave you with a hefty bill if your valuation isn’t enough to cover the lien plus incidentals.

While a totaled vehicle doesn’t impact your credit directly, failing to pay off the loan does. If you didn’t have gap insurance, you could be responsible for the remaining balance of depreciation, which can be thousands of dollars in some cases.

If you need help understanding which incidentals your policy may cover, and whether you have gap coverage or other endorsements in place, the attorneys at Miller Law Group have your back. We can interpret your policy’s fine print and the insurance provider’s motives. Contact us today to discuss your options during the total loss settlement process.