Dealing with a Total Loss Vehicle

Property Damage – Table of Contents

  1. Introduction
  2. Getting Your Vehicle Repaired
  3. Dealing with a Total Loss Vehicle
  4. Rental Car Issues
  5. Payments and Deductibles
  6. Insurance Company Fairness
  7. Personal Injury Claims and Other Losses
  8. Tips for Dealing with Insurance Adjusters

Dealing with a Total Loss Vehicle

How is total loss determined?

If the vehicle cannot be structurally repaired, it is considered a total loss. In addition, the vehicle may be declared a total loss if the cost to repair your vehicle is more than a certain percentage of its fair market value before the accident. (This percentage is usually between 70% and 80%.)

The law in Washington State does not require the insurance company to pay for repairs that total more than the vehicle’s fair market value before the accident.

How is a vehicle’s fair market value determined?

Fair market value is defined as the amount that a seller (who is not being forced to sell) and a buyer (who is not being forced to buy) would reasonably agree on as the sales price for the vehicle just before the accident occurred. This means that in addition to the year, make, and model of the vehicle, information about the mileage and condition of the vehicle are considered in determining fair market value.

The insurance company is required to rely on data about actual sales of similar vehicles that have taken place in your region or local market. There are several companies (the two largest are CCC and ADP) who survey the market and report this information to insurance companies. The insurance company may not use a so-called “book figure” from consumer guides such as Kelly Blue Book or Edmunds.com to establish fair market value.

What is included in a total loss settlement offer?

The insurance company must include the following items in a total loss settlement offer:

  1. Fair market value of the vehicle just before the accident occurred.
  2. Sales tax on the fair market value amount.
  3. Pro-rated unused portion of the license tab fees.
  4. Payment for a rental car for you up to the point that the settlement offer is made. (If you don’t use a rental car, you are entitled to receive an amount equivalent to the cost of a rental car for the same period representing your “loss of use.”)
  5. Title transfer fee.

If you agree to the settlement offer, you are required to provide the insurance company with title to the vehicle and possession of the vehicle before you receive the settlement check. You don’t get to keep the vehicle.

Can I negotiate with the insurance company regarding the fair market value of my vehicle?

Yes. If you feel that the total loss settlement offered by the insurance company is inadequate, you have every right to present information to support an increased fair market value. You are required to supply documentation for your claims, which may include any of the following:

  • Odometer (mileage) reading.
  • Photos of the vehicle, especially photos of both the damaged and undamaged areas from different angles, as well as photos of the interior.
  • Receipts for add-on equipment you purchased, such as mag wheels, high-end stereo systems, special paint jobs, etc.
  • Purchase documents if you have owned the car for less than four months.
  • Written estimates from two or three local car dealers on what amount they would have paid for your vehicle before it was damaged.

Note: Items that are considered normal vehicle maintenance, such as tune-ups, new tires, etc., are not considered in the determination of fair market value.

What if the total loss settlement offer is less than the amount I owe on the vehicle loan?

Under the terms of most auto loan agreements, you are responsible for paying the difference to the holder of the loan. It’s a fact of the market that some cars, especially new cars, lose fair market value faster than loan balance decreases as you pay off the loan.

To deal with this problem, most auto loan providers offer “gap” insurance, which covers this difference, or gap, in the event your vehicle is declared a total loss.

What if I want to keep the damaged vehicle that has been declared a total loss?

To keep the vehicle, you must pay the insurance company the “salvage value” of the vehicle. You have the right to match the highest bid from an auto wrecker for your vehicle, and the insurance company will pay you the fair market settlement less the salvage value.

If you keep your vehicle, you must notify the State of Washington by writing on the title document that the vehicle was “TOTALED,” and then send the title to the Department of Licensing (DOL). The DOL has procedures by which you can repair the vehicle, have it inspected, and return it to service. Contact the DOL Customer Service Unit for details.

Note: If you vehicle still has an outstanding loan balance, you may have to negotiate an agreement with the holder of the auto loan to keep the salvaged vehicle.

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