How Is A Vehicle Considered “Totaled?”
A lot of words get thrown around casually when discussing vehicle accidents and insurance claims, and one of those words is “totaled.”
What exactly does it mean when a car gets totaled as a result of a collision?
That’s what we want to delve into here, but we also encourage you to reach out to a Kentucky car accident attorney if you have an injury or property damage claim due to the negligent actions of another party.
How Kentucky Defines a “Totaled” Vehicle
In Kentucky, a vehicle is considered “totaled” if the cost of repairing the vehicle, combined with the vehicle’s salvage value, is equal to or greater than 75% of its actual cash value (ACV). Here’s what these terms mean:
- Actual Cash Value (ACV). This is how much the vehicle was worth immediately before the accident. Factors such as age, condition, mileage, and market demand all play a role in determining this value.
- Salvage Value. This is the amount the vehicle is worth in its damaged state. Salvage value considers what parts or scrap can be recovered from the car, even if it cannot be repaired for normal use.
Example of How a Vehicle May Be Totaled in Kentucky
Imagine you have a vehicle with an ACV of $10,000. If it’s involved in an accident, and the estimated cost to repair it is $6,000 while its salvage value is $3,000, the total calculation would be:
- Repair Cost ($6,000) + Salvage Value ($3,000) = $9,000
- This $9,000 is 90% of the vehicle’s ACV, which exceeds Kentucky’s 75% threshold.
In this scenario, the vehicle would be considered totaled. Kentucky’s “total loss” threshold provides a way to determine when repairing a vehicle is no longer economically feasible compared to its market value.
What to Do If Your Vehicle is Declared a Total Loss
If your car is totaled after an accident in Kentucky, you may have options for recovering its value, but the steps differ depending on whether the accident was caused by you or another party.
When the Other Driver is at Fault
If another driver’s negligence caused the accident, you would likely file a claim against their insurance policy. In Kentucky, drivers are required to carry at least $25,000 of property damage liability coverage, which should cover the cost of your totaled vehicle up to the policy limits.
- Determine the Insurance Settlement. The at-fault party’s insurance company will calculate the ACV of your vehicle and offer a settlement based on this value. You may need to provide records, such as vehicle maintenance records or upgrades, to help support a higher ACV.
- Review and Negotiate the Settlement. If you feel the insurance company undervalued your car, you have the right to negotiate. Sometimes, hiring an attorney can strengthen your case during negotiations.
When You Are at Fault or No Other Party is Involved
If you are at fault or if no other party is involved, your own insurance policy will determine how much compensation you can receive, based on your coverage.
- Collision Coverage. Collision insurance, an optional policy, helps cover damage to your own vehicle regardless of fault. If you have this coverage, your insurer will pay for the totaled vehicle based on its ACV up to the policy limit.
- Loan and Lease Coverage (Gap Insurance). If you are still making payments on your car loan, your car’s ACV may not cover the entire remaining balance. Gap insurance can cover the difference between the car’s ACV and what you owe.
Understanding the Claims Process and Compensation Amount
Once a vehicle is deemed a total loss, insurance companies typically follow a set process to settle the claim:
- Inspection and Valuation. After the accident, an insurance adjuster inspects your car and determines the ACV, factoring in pre-accident condition, market value, and depreciation.
- Settlement Offer. Based on the valuation, the insurance company makes an initial settlement offer. Kentucky law does not require the insurer to consider sentimental or personal value.
- Receiving Payment. Once you accept the offer, the insurance company issues payment for the ACV, typically minus any deductibles if you are filing through your own insurer.
What If You Want to Keep the Totaled Vehicle?
In some cases, Kentucky drivers may choose to keep a totaled vehicle, especially if it holds personal or sentimental value. If you opt to retain the car:
- Reduced Settlement Amount. Your insurance settlement will be reduced by the salvage value, as you are keeping the vehicle.
- Rebuilt Title Requirement. Kentucky requires vehicles that are repaired after being declared a total loss to undergo inspection and receive a “rebuilt” title. This inspection process ensures the car meets the minimum safety standards for driving.
