There are a number of obstacles that can arise after car accidents occur. One of these obstacles is that, unfortunately, some motor vehicles are not capable of being repaired. Each year, numerous motor vehicle drivers end up being told by their insurance carrier that their vehicle has been classified a total loss. While this situation can be overwhelming, this article reviews some of the most common frequently asked questions by individuals who are faced with this situation.
Once a vehicle is “totaled,” it is often stated that the vehicle is not capable of being repaired. In reality, the cost of repairing damages determines whether a vehicle should be classified as a total loss. As a result, even a small accident has the potential to result in a total loss, which is also sometimes referred to as a total loss threshold.
Louisiana law states the National Automobile Dealer’s Association Handbook is used to determine a vehicle’s value for purposes of calculating a Total Loss Car. If the cost to repair a vehicle is 75 percent or more of the vehicle’s total value then the automobile must be classified as a total loss. LA R.S. 32:702(14). Even in situations where vehicles have high values, it is still possible for a total loss to occur as the vehicle may have has hidden damage, for example, hidden frame damage. Since 2005, Louisiana has allowed motor vehicle drivers to use the cost of repairing or replacing airbags to decide whether a vehicle is a total loss, but the policyholder must agree to this in writing. LA-R.S. 22:1293
There is an exception to the 75% threshold where cosmetic damage in involved. Where a motor vehicle that sustains cosmetic damages caused by hail equivalent to seventy-five percent or more of its market value as a result of costs for repairs to items such as windshields, windows, and rear glass, exterior paint and paint materials, and body damage such as dents shall not be deemed a “total loss” and salvaged; however, such vehicles shall be issued a branded title indicating the vehicle has sustained hail damage. What guide is used for calculating the payment may depend on whether the payment is being made by your own insurance policy or the policy of the other car responsible for the accident.
There is no per se rule that the NADA guide is the only measure of actual cash value. Whether a NADA valuation is superior to another calculation is question of fact that must be examined on a case-by-case basis. Although the Louisiana Supreme Court noted the Industry-wide use of the NADA Guide in State Farm Mut. Auto Ins. Co. v. Berthelot, 98-1011 (La. 4/13/99), 732 So.2d 1230, this court, in Hayes v. Allstate Ins. Co., 99-1558 (La.App. 3 Cir. 3/1/00), 758 So.2d 900, writ denied, 00-1587 (La. 8/31/00), 766 So.2d 1280, held that a trial court is not always required to use the NADA Guide value. Additionally, other circuits have supported the contention that the valuation method used by the trial court is a question of fact. Bonner v. Louisiana Indem. Co., 607 So.2d 915 (La.App. 2 Cir. 1992), (accepting a valuation made without using the NADA Guide); Brown v. Morgan, 449 So.2d 606 (La.App. 1 Cir. 1984), (accepting a valuation higher than the NADA guide); Usand v. New Orleans Pub. Serv., Inc., 438 So.2d 258 (La.App. 4 Cir. 1983), (adjusting the value given by the NADA Guide).
If a motorist is seeking payment of property damages under his or her own insurance policy and the policy has certain policy provisions, the law requires insurance companies to use one of several methods to determine the cash value of a vehicle before the accident. LA R.S. 22:1892B(5).
LA R.S. 22:1892(5) provides in relevant part,
(5) When an insurance policy provides for the adjustment and settlement of first-party motor vehicle total losses on the basis of actual cash value or replacement with another of like kind and quality, and the insurer elects a cash settlement based on the actual cost to purchase a comparable motor vehicle, such costs shall be derived by using one of the following:
(a) A fair market value survey conducted using qualified retail automobile dealers in the local market area as resources. If there are no dealers in the local market area, the nearest reasonable market can be used.
(b) The retail cost as determined from a generally recognized used motor vehicle industry source; such as, an electronic database, if the valuation documents generated by the database are provided to the first-party claimant, or a guidebook that is available to the general public. If the insured demonstrates, by presenting two independent appraisals, based on measurable and discernible factors, including the vehicle’s preloss condition, that the vehicle would have a higher cash value in the local market area than the value reflected in the source’s database or the guidebook, the local market value shall be used in determining the actual cash value.
(c) A qualified expert appraiser selected and agreed upon by the insured and insurer. The appraiser shall produce a written nonbinding appraisal establishing the actual cash value of the vehicle’s preloss condition.
(d) For the purposes of this Paragraph, local market area shall mean a reasonable distance surrounding the area where a motor vehicle is principally garaged, or the usual location of the vehicle covered by the policy.
In many situations when a total loss occurs, a driver will receive a settlement offer for the vehicle’s actual cash value. People often discover that the amount that is offered by the insurance company is much less than they had wanted. In some situations, it is possible to negotiate the value of a totaled vehicle.
In some situations, however, accident victims discover that the best option is to keep their vehicle. This might be due to a sentimental connection to a vehicle or because a person believes that the repairs can be done more cheaply on their own.
One of the most challenging elements of a totaled motor vehicle accident case occurs when victims are left without a vehicle or alternative source of transportation. If your vehicle’s insurance policy includes rental car compensation, your insurance carrier will provide for the rental vehicle. If you have not paid for rental insurance, you can ask the at fault person’s insurance company to pay, and, if they do not, apply pressure through the threat of potential penalties by establishing 1) that the insurer received a satisfactory proof of loss; 2) that you were denied use of a personal vehicle for more than five working days as a direct consequence of the inaction of the insurer, and 3) that the insurer’s failure to pay reasonable expenses was arbitrary, capricious, or without probable cause;
Once the at fault party’s insurance company accepts the claim for payment, the at-fault party’s insurance carrier will either declare your vehicle a total loss or begin making repairs. It is important to understand that under Louisiana law, there is a 30-day timeline for payment or property damage claims. While your car is in the process of being declared a total loss or repairs are made, however, you should qualify for a rental vehicle. Many insurance companies will provide you with a Rental Authorization Number with Enterprise Rental Car.
After a total loss decision by an insurance company, individuals will be prohibited from driving the vehicle because it will be viewed as unsafe for public use. If you or your insurance carriers decide to repair the vehicle despite the costs and to re-inspect and register the vehicle, it will then be classified as a rebuilt vehicle.
A large number of insurance companies deny insurance coverage for these vehicles due to the risks. Despite this, some people discover that by being upfront with insurance companies, they are still able to obtain insurance for salvaged vehicles.
If your insurance company pays the claim, you can recover sales tax if sales tax is provided for in the policy. If the at fault person’s insurance pays the claim, sales taxes are owed on the repair or replacement of the property damaged.
Some drivers decide to purchase an extended warranty on their vehicle. If the car is declared a total loss before the expiration of the extended warranty, it is often possible to obtain a refund for the amount of unused warranty. In these situations, a person must have purchased a vehicle with an applicable refundable warranty.
If your vehicle is totaled and the loan on the car exceeds the insurance company payment, you will still be responsible for the remaining balance between the loan and the insurance payout. However, you purchased gap insurance, your gap insurance carrier would then cover the remaining difference between the vehicle’s actual cash value and the remaining loan balance.
There are two options to decide on when purchasing gap insurance: through a dealership or through an insurance agent. If you decide to purchase gap insurance through the dealership, the gap insurance will be part of your loan. If you decide to purchase gap insurance from an insurance agent, however, this would be part of your insurance policy. Many drivers discover that purchasing gap insurance is particularly valuable.
If you do not have gap insurance, you may have enough money left over from the injury part of the accident claim to help pay down the car loan or purchase another car.
At the Lavis Law Firm – Personal Injury & Accident Attorney, we have helped numerous people whose vehicles have been declared a total loss. We understand just how frustrating the situation can be and are prepared to help you navigate matters to obtain a better result. While we hope your vehicle is not totaled, you should not hesitate to contact us for an initial free case evaluation. If you hire Lavis Law Firm – Personal Injury & Accident Attorney on a contingency fee basis to handle your injury claim , no fee is charged on your property damage claim if the property damage matter is resolved without filing suit.
“Hi I was involved in a car accident July 30th 2017 after doing some research I decided to choose attorney Charles, after 6 months my case was already complete. Attorney Charles is one of the best attorneys I have ever picked. he’s very Hands-On and get the job done. He was more than an attorney, he made me feel comfortable and welcome. I was very pleased with the outcome of my case and will definitely recommend seeing Attorney Charles. If you want a lawyer thats hands on, that communicates with you no matter what day of the week it is, then this is the attorney for you😊”
Review by: Nina Smith
Reviewing: Lavis Law Firm – Personal Injury & Accident Attorney
Read More Testimonials