An unexpected collision can do a lot of damage to your car. When a car accident isn’t your fault, you can recover damages to compensate for the cost of replacing or repairing your vehicle. Insurance companies don’t want to pay you a cent more than your car is worth. If they determine that your car is totaled, you may not be able to recover all of the compensation you really deserve.
What Does it Mean When a Car is Totaled?
Generally speaking, a car is totaled when the cost of replacing it is more than the car is worth. Insurance companies will say that your car is a total loss when it is economically unreasonable to pay to have your car fixed.
When does an insurance company decide that it’s not economically feasible to fix your car? The answer to that question varies by state.
In Florida, a car is totaled when the cost of repairs is greater than 80 percent of the car’s actual cash value. There are a couple of ways to define actual cash value. The first involves determining the cost of replacing your vehicle, reduced by depreciation. The second involves the vehicle’s fair market value.
Many factors are considered when determining your vehicle’s fair market value. These include:
- Cosmetic condition
- Prior accidents and damage
- Make and model, and
In other words, a total loss can be declared if the cost of repairing your car exceeds 80 percent of how much it is worth today.
Let’s say that your car has a fair market value of $10,000.. After an accident, it’s estimated that repairs will cost $8,500. An insurance company will declare your vehicle to be a total loss. Why? The cost of repairing the car is 85 percent of its FMV.
My Car Was Leased or Financed. What Happens Now?
Things can get complicated if your totaled vehicle was leased or financed. In these situations, you don’t technically own the car. Instead, a bank or finance company retains the title while you make payments. When a leased or financed car is totaled, compensation is typically forwarded to the company that owns the car. It’s possible to get some money from an insurance payout, but it really depends on how much you still owe on the vehicle.
Today, most leased vehicles will have GAP insurance coverage built into the monthly lease fee. GAP insurance protects you if you owe more on the car than it is currently worth. Without GAP insurance, the company that owns your car may go after you for the difference between what insurance pays and how much you owe on the vehicle. If you finance a vehicle, it’s a good idea to look into GAP coverage for yourself.
What Are My Options If My Car is Totaled?
You never want to hear that your car has been totaled in a Miami accident. Once the insurance company has made the call, there’s very little you can do to contest their decision. It’s not just a financial decision, it’s one that concerns public safety, as well.
You have a few options if your car has been declared a total loss.
Accept Compensation For the Car’s Actual Cash Value
When your car is totaled, insurers will offer to settle your claim for the vehicle’s actual cash value. In this situation, you’d receive a check for what your car was worth right before to the accident. If you accept the offer, the insurance company will trade you the check for the (salvage) title to your car.
Negotiate a Settlement and Keep Your Car
Do you know someone who fixes cars? Do you have a sentimental attachment to the vehicle? If so, you may not be willing to simply trade it for a check. Fortunately, you don’t have to. You can negotiate with the insurance company.
In this situation, you’d agree to accept a check for less than the vehicle’s actual cash value. However, you’d be able to retain title to and possession of the car. Keep in mind that a totaled vehicle will have a salvage title. This can (a) limit what you can do with the car and (b) send your insurance rates through the roof.
If you’ve been in an accident and need to find out more about compensation including the value of your car, speak with our Miami personal injury lawyers today for more information. We know how to deal with the insurance company and maximize the money you receive.