If you get involved in a severe car accident, your insurance company may declare your car a total loss or, in other words, “totaled.” Under Nevada law, if the cost of the repair a car damaged in a car accident is at least 65% of the car’s fair market value before it was damaged, the insurance company can declare the car a total loss. The repair cost cannot include the cost of painting and towing the car.
NRS 487.790(1)(b) defines a total loss as a vehicle “which has been wrecked, destroyed or otherwise damaged to such an extent that the cost of repair, not including any cost associated with painting any portion of the vehicle, is 65 percent or more of the fair market value of the vehicle immediately before it was wrecked, destroyed or otherwise damaged.”
How Is Fair Market Value of My Car Calculated
Fair market value is how much the car would sell in the condition it was in before the wreck. The insurance company determines how much your car would sell for by looking at how much a vehicle like yours is currently selling. The look for identical make, model, year, mileage, and condition. If the insurance company determines your car a total loss, they will provide you with a total loss valuation. This document will list the cars that recently sold and are comparable to your vehicle.
Contrary to public perception, insurance companies do not use Kelly Blue Book or Edmunds to value your pre-crash vehicle. However, the Kelly Blue Book or Edmunds’ value of your vehicle may approximate the insurance company’s valuation. So, you can look up the resale value of your vehicle on Kelly Blue Book or Edmunds to get an idea. Remember, however, the amount you see will not be identical to the insurance company’s fair market valuation. The insurance company may use their own database or hire a third-party company to determine the fair market value.
Remember, the value of your vehicle usually decreases with age. The older your vehicle, the fair market value will be lower. Even if your car was in perfect working condition, with no damage, your car’s value will not be equivalent to that of a newer model. It can happen that someone has an older car that was not severely wrecked in a crash, but the cost of the repair the damage is still at least 65% of the value. As car accident attorneys, we’ve had many clients who questioned why the insurance company just can’t fix the car rather than paying the lower fair market value. In many cases, accident victims may have the option to keep the car.
What Are Your Options If Your Car Was Declared A Total Loss?
If your car has been declared a total loss after an accident, you may have two options: accept payment for the fair market value of the car or keep the car. If you accept the fair market value, you will have to give the title of the vehicle to the insurance company. By giving the insurance company the title to your wrecked car, your insurance company owns your car. Typically, the insurance company can then sell your car as, usually at an auction in a salvage yard.
If you decide to accept the fair market value, your insurance company will first pay off any loans on the car and give you the balance. Unfortunately for some people whose cars get severely damaged in a wreck, the fair market value of their vehicle may be less than what they owe on the car. This means that, even after the insurance company gives the total loss payment to the car loan company, the car owner would continue to owe the remaining balance. Unfortunately, as car accident attorneys, we see this scenario too often. After a really bad car accident, a car accident victim may end up still owing money on a car that is a total loss.
Because of this possibility, it’s important to purchase gap insurance if you still have a loan on your car. Gap insurance pays the difference between the amount a car insurance company pays for your totaled car and the amount you owe on your lease or loan.
If you do choose to keep the car, remember the insurance company will not pay you amount it will cost to repair the car. It has no obligation to do so. When your car is declared a total loss, the insurance company’s obligation is to pay the fair market value of your car. Because of that, if you choose to keep the car, the insurance company will only pay you the fair market value of the car. However, the insurance company will also reduce what they have to pay you by the salvage value of the wrecked car. Salvage value is the amount the insurance company could obtain by selling your wrecked vehicle as is, usually at an auction at a salvage yard. If you have to pay a deductible, your insurance company will also reduce what they have to pay you by this amount.
If you or a loved one have been injured in a car accident and need help dealing with the insurance company, call an experienced Las Vegas car accident attorneys at D.R. Patti & Associates. Our skilled accident lawyers will explain and guide you to the property damage evaluation and fight to get you the maximum compensation for your car and your injuries.