My Car Was Totaled in a Georgia Car Accident; What Happens Now?
Possibly the worst news you can receive after an auto accident is hearing that your car has been totaled. Despite the fact that you drive safely, stop at intersections, and never go above the speed limit, you’re facing the prospect of a lengthy period without your car – and due to no fault of yours. When a car has been declared a total loss in an accident, what happens next will depend on various factors. The validity and value of your car insurance, the age and worth of your car, and whether the other party has insurance can all affect the outcome of your claim.
In this article, the Georgia car accident attorneys at The Ferguson Law Group explain when a car is considered totaled and what follows next.
When is a vehicle considered totaled?
A car is said to be totaled when, in the opinion of the insurance company, it is declared a “total loss”. Contrary to popular opinion, this doesn’t just mean that your vehicle is damaged beyond repair. A declaration of a total loss is usually used when the insurer believes the cost of repairing your car is either the same or close to the market value of the car. In many states, whether a car can be considered a total loss is often a matter defined in local law. For instance, in Arkansas, a car will be considered totaled if the cost of repair is up to 70% of the value of the car. In other states like Texas and Colorado, the threshold is 100% of the value of the car.
Unlike these states, however, Georgia does not define a total loss threshold in statute. Instead, it is up to insurance companies to define what amounts to a total loss. As you would expect, insurance adjusters bring several approaches to this. Some determine a vehicle is a total loss if the cost of repair reaches 75% of the car’s value. Others might consider a vehicle as a total loss only if the cost of repair exceeds the worth of the car. To avoid any doubt about an insurer’s approach, you should contact the insurer for more information.
What must an insurer do when a car is totaled?
While Georgia law does not explain when a car is totaled, it does impose obligations on insurers who make a total loss determination. According to Georgia Rule 120-2-52-06, the insurer must do one of two things after making its determination:
- Replace your vehicle: The replacement vehicle must be comparable to the totaled one. A comparable vehicle may be of the same model, make, or class. It could also have similar mileage, body style, and other similar features. You are entitled to inspect the vehicle within 50 miles of your residence. Keep in mind that the insurance company will likely keep the car wreck, which would now be considered “salvage”, after replacing your vehicle.
- Pay its value in cash: If the insurer determines paying a cash equivalent makes better sense for them, then they can offer a cash payment. However, the rules stipulate that the insurer must pay the “actual cost” of the vehicle, minus any deductibles. The actual cost of the vehicle is often taken to mean its market value at the time of the accident. The payment should be sufficient to purchase a vehicle of similar make, model, class, etc. The insurer will also keep the car wreck here, unless you agree to purchase the salvage from the insurer.
Regardless of whatever decision the insurer makes, an important part of the process is properly valuing your car and the cost of repair. Without proper valuation, or where the insurance company is determined to cut corners, you may end up receiving much less than your car is worth. Next, we’ll discuss what an accurate valuation looks like.
How will the insurer determine your car’s value and the cost of repair?
The cost of repairing your vehicle will likely come from an assessment made by a repair shop trusted by the insurer. The total cost should include an estimate of the likely cost of parts, finish, and fees for the repair work. However, it’s important to be careful here, as certain insurers may use shops that over-estimate the cost of repair. You may want to obtain a fair estimate from a repair shop you trust as well.
As for the valuation of your car, there are more varied methods that insurers typically use. One way of doing this is to refer to popular used car sales platforms such as Edmunds, Kelley Blue Book, and Autotrader. These platforms typically host thousands of vehicles of various models and age, and this can provide important sales data to compare your car against. Another method is to determine what a vehicle of similar make, age, and model would be sold for in the particular neighborhood where it is used. The goal of the valuation process is to determine a fair market price for the vehicle. It is this market value that will then be compared with the cost of repair to identify if your car is a total loss. Keep in mind that there are several factors that may affect the valuation and cost of repairing your car. A new car will obviously receive a much higher valuation than a much older model. In addition, the difficulty of acquiring parts for an older model may make the cost of repair high, even when the vehicle didn’t suffer all that much damage in the accident. Once the insurance company is able to make a valuation of your car in relation to the cost of repair, they will determine if the car is a total loss. This will then be followed with an offer for the value of the vehicle.
What if you still owe money on your car?
If you financed the initial purchase of your car, you may still be making payments on the car at the time of the accident. Unfortunately, this situation may have no effect on the valuation of your car or how much the insurance company will offer you. The loan agreement you used to finance your vehicle is a separate legal contract and will continue to have binding force. As a result, you will be expected to pay what you owe on the loan out of any money you receive from the insurance company. The obvious downside to this is you will likely end up with even less than you expect – meaning you will no longer be able to purchase a comparable vehicle. An even worse situation is where the valuation of the vehicle is less than what you owe on the car. Here, you may find yourself owing money even after receiving the settlement from the insurance company.
One way you can avoid this situation is if you invested in GAP insurance before the accident. GAP insurance, which is short for Guaranteed Asset Protection insurance, can help pay the difference between what your car is worth and the outstanding amount on your loan. This way, you don’t have to pay the lender more than what your car is worth.
Do you have to accept what the insurance company offers?
Finally, it is important to keep in mind that you do not have to accept what the insurance company offers. A settlement offer from the insurer is just that – an offer. You still get to decide if it makes sense for you to accept their offer. As we have discussed above, there are situations where the insurer may be cutting corners on their valuation of your car or the estimated repair cost. If you believe that the insurance company is not being entirely upfront with you, it is possible to push for a higher sum. Likewise, if you do not believe that the insurer has arrived at a fair valuation of your vehicle, you can demand a higher settlement.
A skilled Georgia car accident attorney can help you determine whether the offer you have received is fair. In addition, they can assist in challenging the insurance company and providing a more accurate valuation of your vehicle so you can get the settlement you deserve. If you would like to learn how an attorney can help, schedule a free case review with The Ferguson Law Group today.