Generally, Louisiana law defines a “Total loss” as a motor vehicle which has sustained damages equivalent to seventy-five percent or more of the market value as determined by the most current National Automobile Dealers Association Handbook. LA-R.S. 32:702(13).
Since 2005, Louisiana law has expressly permitted automobile insurers to use the cost of repairing or replacing airbags used or damage in an accident to determine whether the vehicle is a total loss. However, the policyholder must agree to this in writing.
LA-R.S. 22:1293 provides,
An insurer may use the cost to repair or replace airbags used or damaged in an automobile accident to determine if the automobile is a total loss under the total loss provisions of the insurance policy if the policyholder agrees in writing. As used in this Section a “total loss” provision is any provision in an automobile insurance contract that allows the insurer to purchase the vehicle from the insured in lieu of paying for damages to the vehicle. Nothing in this Section shall require an insurer to pay more than the actual cash value of the vehicle, including the value of the airbags.
This law was designed to allow an insurer to consider whether a vehicle would be a total loss if the cost to repair or replace the airbags system is excluded from the total loss determination. This would make it possible for the insurer, if the insured agrees, to pay more than 75% of the NADA book value to repair a vehicle without declaring it a total loss, subject to salvage titling, as long as the cost to repair or replace the airbag system makes the total damage exceed 75% of the NADA market value.
When you are using your own policy (First Party Claim), your insurance company is required to use one of several methods for calculating the actual cash value of the vehicle before it was damaged.
LA R.S. 22:1892(5) provides,
(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 discernable 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.
Please don’t hesitate to call me to discuss your total loss claim. You can talk with me for free and I’ll be happy to help you in every way possible.