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Motor vehicle accidents: At What Point is Your Vehicle Declared a Total Loss

“In survey after survey, people report that the greatest dangers they face are, in this order: terrorist attack, plane crashes and nuclear accidents. This despite the fact that these three combined have killed fewer people in the past half-century than car accidents do in any given year.” – Will Self

Have you been in a motor vehicle accident and, is your vehicle badly damaged? Will insurance pay for the repairs, or will they write it off and declare it a total loss?

When a vehicle has been damaged in a road accident, the car’s insurer will decide whether the car is repairable or whether it’s declared a total loss. It is essential to know what this threshold value is. In other words, at what point will the motor vehicle’s insurance company pay for the vehicle repairs or total it?

Another question worth asking is whether there is a possibility of negotiating with your insurance company over whether you can keep the damaged vehicle or not?

At this juncture, it is vital to note that it’s best to confer with a local car accident attorney before you enter into any negotiations with your motor vehicle insurance company.

Why?

Succinctly stated, an attorney who deals with car insurance policies and their insurers has an in-depth knowledge of the insurance law and is experienced at negotiating with insurance adjusters. In summary, an attorney is going to negotiate the best deal on their client’s behalf while the insurance adjuster is going to want to get the best deal for the insurance company. It is for this reason alone that it is vital to employ a lawyer to manage the claims process for you.

When is a car declared a total loss? 

Different US states’ insurance laws are slightly different in this regard. For example, according to Nevada’s laws, a total loss is when the cost of the repairs to the vehicle is greater than 65% of the market value of the vehicle before the incident.

It is essential to take note of the phrase “market value.” People often assume that the vehicle’s market value is the same as what it was when the vehicle was purchased. This is not true. Because, the market value calculation is different depending on the car’s age and mileage. Therefore, by way of an example, let’s consider the market valuation calculation for a new vehicle.

If we assume that you bought a new vehicle at $20,000 in January 2019, therefore, its market value when it left the shop floor was $20,000. And, you were involved in a car accident 12 months later. What will the insurer pay?

Cars lose 20% of their value in the first year. Therefore, at the time of the accident, your car was only worth $16,000 – 20% of $20,000 is $4,000.

So, for the car to be declared a total loss, the repair bill has to exceed 65% of $16,000, which is $10,400. Therefore, your car would have been written off because the repair bills exceeded $10,400. If this is the case, your insurer will give you a check for a maximum value of $16,000. In real terms, it will probably be less than $16,000 because there are always excesses and other deductibles.

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