They paid my lien holder $26k, but the repair estimate was $14k? How is that a total loss??
ETA: thank you for all the friendly clarification! I’m obviously sad about the loss of my baby and wanted to be sure I’m not being bamboozled! It’s my first total loss 😖
The cost of repairs was 10k less than the value of my car and they called it a total loss.
byu/Ok_Ad_9392 inInsurance
Posted by Ok_Ad_9392
13 Comments
Depends on your state’s threshold and your carrier can also total the car earlier if they want.
75% of the total is what I have heard in my state. Other states may vary.
Some states require the insurer to include the salvage value in the total loss formula.
The insurance company *has* to total a vehicle when it reaches the total loss threshold set by the state. But they can total it anytime they want before that.
Or buy the car from leasing co And get the check
In CA I was told the threshold is 60% of the car value for a total loss. The adjust told me I t is primarily due to the likelihood of additional costs arising once repairs have started that would drive the repair cost over the total value.
Some states have a mandated threshold, which can fall between 65 and 80%, with most that have such a threshold at 75%. So depending on the state, that can come into play.
Additionally, the insurer is going to consider both written damage and expected damage. Unless the vehicle is entirely torn down, that 14k estimate isn’t complete. So they’re going to be expecting additional supplemental damage, that will also affect the decision.
Some years ago I purchased a totaled Maxima (back when they were still a sporty vehicle). I bought it for a little over 1/2 the wholesale value. It only had 3500 miles on it, still under mfg warrantee. It didn’t have any frame damage, only bumper hood radiator and A/C core. I paid to have it fixed which brought me up to still quite a bit below wholesale. I drove it for about 5 years with no issues, Sold it used at a decent price telling the buyer the car had some front end damage before I purchased it.
Everyone was happy, it was a great car.
Like other have stated, additional cost to the repair from unseen damage and possible rental costs would factor in. Another big consideration to them is what the value of the salvage vehicle would be. Some vehicles have a salvage value wrecked that is close to the book of an undamaged vehicle.
I can tell you that in California 1) we have to include the salvage vehicle value (which on a new car can be quite a lot!), and 2) we don’t go up to 100% of the value of your car because, you know, hidden damage. No insurer wants to pay to start car repairs on a vehicle that can be repaired for 90% of its value and then find out they have to pay more. No car repair shop is going to promise they’ll include everything for a particular cost for the same reason…what if there’s more? 3) we would include car rental cost estimates for however long it takes to hypothetically repair your car. Years and years ago that was 30$/day, but regardless you can see how that would add up to a lot.
I loooove when a car gets totaled vs repaired
I do not want to have to worry about a repaired car
You don’t want a 26k car back that had had 14k or more damage repaired. Be thankful.
There is also the time factor, many body shops closed for good during Covid, there is less capacity to make the repairs so it takes longer. Parts can be hard to get as well. They may just total it if they can on there the vehicle fixed in a timely manner
People always say there’s a threshold but it’s just not true. There is actually a calculation that determines a total loss and it has to do with what is known as salvage value.
If a car currently has a high salvage value, it will be easier to be deemed a total loss.
The equation is (Actual Cash Value) – (Salvage Value) = (Maximum Repair Cost)
Salvage value is higher for a vehicle with less damage or has expensive replacement parts.
If a car is worth $10K and has a salvage value of $3000 (based on the damages), then it can only go up to $7000 in repairs.
Of course, a choice is sometimes made based on hidden damages not being accounted for.
During COVID, just about each and every single vehicle was being deemed a total loss due to shortage in parts (which caused parts to explode in prices), and resulted in an increase to the vehicles’ salvage values. Simple fender benders were being deemed a total loss, whether it was due to lacking of parts or the salvage value being too high.
Your vehicle being deemed a total loss sounds like a choice was made since it might have been getting to that calculation with potential hidden damages, just my guess.