Accidents can cause varying levels of damage to the vehicles involved. After an accident, the insurance adjuster evaluates the damaged car to determine the extent of the loss. When an insurance adjuster evaluates your car after a crash, they may declare it a total loss. A total loss is when the insurance company determines that it is not cost-effective to repair the vehicle. Washington state has a total loss law that requires insurance companies to use a specific formula to decide whether or not a car is totaled, and car owners have a right to see those calculations as part of their settlement. The law sets specific thresholds, known as the total loss threshold, which are used to declare a car a total loss. Other states, such as California, use a total loss formula or different thresholds to determine when a car is considered totaled.

What is the Formula for Calculating Whether a Vehicle is a Total Loss?

To determine whether a car should be totaled or not, the insurance adjuster must first calculate the actual cash value (ACV) of the vehicle. The ACV is not what the car was worth new or what it would cost to replace it. Instead, it is the car’s fair market value immediately before the accident. The car’s actual cash value is determined by considering factors such as the vehicle’s make, model, year, mileage, and condition. The car’s ACV (actual cash value) is a key part of the total loss formula. There are several approved ways insurers can get this valuation. The car owner can request a copy of the total loss valuation report if they have questions or concerns about how it was calculated.

Once the ACV is determined, the adjuster must establish the total repair costs and the vehicle’s salvage value. This calculation is known as the total loss formula, which is typically used to determine if a car is considered totaled. The total loss formula typically involves adding the repair costs and salvage value and comparing this sum to the car’s ACV. If the salvage value plus the repair value is GREATER than the ACV then car is totaled. So for example if repairs are $5 and salvage value is $5 but ACV is $100 then no way it would get totaled. The insurance company will review all relevant factors before making a decision.

An insurance company will look at the after repair value of the vehicle and compare that to the cost to repair, salvage value, availability of parts, and type of damage in determining whether they total a vehicle.

Insurance Company’s Role in Totaling a Car

What Happens After Your Car is Totaled?

Once your car is totaled, the insurance company is required by law to pay you the ACV of the vehicle, minus any applicable deductible. This insurance payment is intended to provide compensation for your totaled vehicle, and you may need to file a claim to receive it. Insurance must also cover the sales tax, title, and licensing fees as part of your settlement. If you have a car loan, the insurance payment will first go to your lender to pay off the loan balance, and you may still owe money if the payment does not cover the full amount. Gap insurance can help cover any remaining balance so you don’t have to pay out of pocket. If you disagree with the valuation of your vehicle, you may request a third-party appraisal if your policy allows it.

If you choose to keep your vehicle after it is totaled, you will receive the ACV of your totaled car minus the salvage value and any applicable deductibles. The insurance company will report the vehicle as a totaled car, so to legally drive the vehicle again you’ll have to get the state patrol to inspect the car and make sure it’s safe to drive. You may choose to sell the totaled car or its parts, which can be a good option for recovering some money. Alternatively, donating a totaled car to charity may allow you to claim a tax deduction. If you disagree with the totaled car’s value or the compensation offered, you can negotiate with the insurance company. You may also want to review your insurance policy and access additional resources to understand your options for a replacement vehicle.

How Can a Lawyer Help You With the Claims Process?

Navigating the claims process after an accident can be complex and stressful, especially if you are still recovering from injuries. A lawyer can help you file an insurance claim, negotiate with the insurance company, and ensure your claim is properly handled. You may be concerned that your insurance company is not treating you fairly, or you might simply have questions about the process. A lawyer can assist in resolving disputes with the insurer and ensure that all parties involved, including any other driver, are held accountable. Legal assistance is especially important if there is a dispute over fault or if the collision involved another driver. Whatever your concerns, an experienced car accident attorney can help guide you, ensure that your rights are protected, and help you understand your auto insurance policy and coverage. Contact our office today to learn more: 206-447-1425.