Insurance companies declare a vehicle a “total loss” when the cost to repair the car’s damage is greater than the market value. In this scenario, the insurer determines the value of a vehicle based upon its “actual worth” (commonly referred to as actual cash value “ACV”), and NOT the “fair market value” (“FMV”) and not the “replacement value.” In other words, the insurer focuses on what the car was worth prior to an accident and/or loss. As such, the ACV is based upon the make and model of the vehicle; its condition (wear and tear; previous accidents, etc.); age; mileage; extent of damage and cost of repair. Most importantly, the cost to replace the vehicle or FMV is likely to be much greater than the ACV [notably, the latter is what the insurer is willing to pay].

Be aware that insurance companies save money by declaring a vehicle a total loss since it can cost them 20%-30% less than if they were to pay for the repairs. You can level the playing field by retaining an experienced lawyer to handle your accident case. Also, you can obtain a repair estimate from a reliable [potentially, a factory authorized] body shop. In addition, you can make your own analysis based upon a combination of other advertised, but similar vehicles of like condition, etc., and/or utilize a published guide, such as Kelley Blue Book, Edmunds, Nada, etc. The guidebooks research and establish values, generally divided into three categories:  Retail Value (car dealer), Wholesale Value (trade-In) and Private Party.

Under the circumstances, knowing your rights may seem like “David vs. Goliath.” Nonetheless, the valuation of a vehicle is not a single magical number. It is generally a range; it is with this in mind, one can employ an attorney to settle the property claim or on your own use the “art” of negotiation to arrive at a dollar amount that is closest to the fair market value or replacement value., which ultimately is what you will need to buy another vehicle. Be mindful, arriving at and settling a property damage (“PD”) claim is far different than a bodily injury (“BI”) claim. As such, obtain the advice of an experienced personal injury lawyer immediately after an accident, so you do not enter into a settlement or sign a “Release” without understanding these claims are separate and distinct from each other.