When Is My Car a Total Loss in California?

So, you’ve been involved in a motor vehicle accident. At this point, you’ve no doubt got a lot on your plate. Dealing with insurance companies is a headache no matter what. When you combine this with repairing or replacing your vehicle — and maybe even personal injuries — everything might seem overwhelming. Unfortunately, things can get even worse if your car is declared a total loss in California.

That’s because a declaration of “total loss” means an insurer isn’t going to repair your vehicle. Instead, they plan on giving you money that’s supposed to reimburse you for the value of your car. Insanely enough, this doesn’t mean they’ll give you enough to replace the vehicle. As such, it’s important that you understand your rights under California law — along with your options if an insurer treats you unfairly.

What Is California’s Vehicle Total Loss Calculation?

To calculate whether an insurer will designate a vehicle as a total loss (i.e., “totaled”) after an accident, there are a few things you’ll need to know. These include the pre-crash value (i.e., actual cash value) of the vehicle, the salvage value of the vehicle, and the cost of repair. The pre-crash value is what the car was worth immediately preceding the accident. Remember, this isn’t what you paid — it’s the current value.

The salvage value of a vehicle is how much it’s worth after an accident. After all, an expensive vehicle could still be worth tens of thousands of dollars after a collision. California insurance companies designate a vehicle as a total loss if the combined salvage value and cost of repair are equal to or exceed the actual cash value.

Let’s look at an example. A vehicle is worth $15,000 before colliding with another car. Due to the damage it sustains, it’s only worth $10,000 after the accident (i.e., salvage value). Estimates state that it will take $5,500 to repair the vehicle. This means the salvage value and repair costs equal $15,500 — a full $500 more than the pre-crash value of the car. In this case, the insurer will only pay out the actual cash value instead of repairing the vehicle.

Is There Any Way to Protect Yourself?

If an insurer designates your vehicle as a total loss, you may have trouble purchasing another car. Depreciation affects all automobiles, and at some point, a vehicle will have more value as transport than its resell value could ever equal. If your vehicle has already been totaled, then speaking with an attorney may be one of the few options available to you. However, there are some things you can do in advance that might protect you.

For instance, many insurers offer coverage add-ons like new car replacement. In this situation, it won’t matter if the insurance company labels your vehicle as a total loss. You also have the option to invest in Guaranteed Asset Protection (Gap) insurance. Gap coverage will cover the “gap” between the money you owe on a vehicle and its actual cash value if it’s declared a loss. This can safeguard you and help avoid serious financial issues.

What Can You Do if an Insurer Treats You Unfairly?

As any personal injury lawyer can tell you, insurance companies are all about profit. Even if you sustain a life-altering injury, they’ll do their best to minimize any payout you receive. As such, it’s really no surprise that they treat people unfairly when it comes to repairing their vehicles. Unfortunately, the law is often on their side.

However, this isn’t always the case. If an insurer is acting in bad faith to save money, you may be entitled to more than just the damages related to your accident. And even if their mistake is an honest one, you have options available such as seeking second opinions, settlement negotiations, and mediation. Your next move will depend on the circumstances of your case.

Clearly, there’s plenty of subjectivity when it comes to the total loss of a vehicle after an auto accident. If an insurer is giving you trouble, contact us today at V&A Law Firm by calling 818-369-3270. Our legal team is here to help.