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“Total Loss” Issues: Being in a collision with an older vehicle

Being in a total loss collision with an older vehicle adds an extra element of problems for an injured victim. This scenario has come up again and again in my practice.

Take a look at this scenario: Client X is involved in a serious collision. They have an older vehicle (7 years or older). The car is paid off and they know it is in good running condition. As a result of the collision, the vehicle is deemed a “total loss”. This means that in the eyes of the insurance company paying for the repairs, the cost to fix the car exceed the car’s total value (or at least 75% of the total value). Example: The car is worth $4000.00, but the repairs to vehicle are $3,000.00. The insurance company will take possession of the vehicle and pay the client $4000.00. The insurance companies also notoriously undervalue these older vehicles and use a computer model that finds the cheapest vehicles on the market of similar makes and models for comparables.

Most often, the client will have to take the $4,000.00 (plus tax and tag costs) and have to replace the vehicle. This becomes extremely difficult because cars in this price range will likely not be in the shape or condition of the client’s beloved vehicle, (which they have meticulously taken care of for 7 years). The client may be forced to buy a newer vehicle and will only have enough money to put a down payment on the vehicle and will likely have a car payment going forward. To them, they do not feel “made whole”.  To add insult to injury (literally), once the insurance company makes an “offer” on a total loss, they will most likely cut short any rental car coverage and make the client return their rental car. Meanwhile, without the property damage portion of the claim resolved, and without a rental car, the client may have no way to get to and from their doctors appointments for their injuries and can be forced to settle the property damage claim without being completely happy with the outcome.

The other option that may arise, is that the client keeps the vehicle, but must now have a “salvage title” and is offered less money than if they surrender the vehicle. Although they get to keep the vehicle, having a salvage title presents a new host of problems and they must still repair the vehicle, and they may find more damage later on.

This is certainly something to think about regarding the vehicle you drive. If a newer vehicle is involved in a wreck, the insurance company will have a much more difficult time “undervaluing” it. Also, if you have to replace the car completely, you will be more likely to find a comparable vehicle. Also, if you have recently put lots of money into your older vehicle prior to a major collision, the insurance company will not care and will not reimburse you for a $2000.00 motor you put in a car only worth $3000.00.

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