Even an accident that occurs at low speeds can damage a car beyond repair. In addition, a car can be irreparably damaged because of water damage, fire and other harm.
If your car has serious damage, it’s important to understand when a car is considered a total loss in California. If your car is a total loss, you need to know what happens next. Our California car accident lawyers explain.
Understanding Total Loss Vehicles in California
What is a total loss car?
A car is a total loss if it’s irreparable, or if it costs more to repair than its worth.
What is the California total loss car law?
California Vehicle Code § 544 defines salvage vehicles. A vehicle is a salvage vehicle or “total loss” when it meets either of the following criteria:
- The vehicle has been wrecked, destroyed or damaged so badly that the leasing, lending or insurance company considers it uneconomical to repair the vehicle. The vehicle is not repaired following the damage.
- A vehicle that is not worth repairing, and for which an insurer has made a total loss payment. The insurer and claimant agree on a total loss settlement and report the total loss to the Department of Motor Vehicles for a salvage title.
California declares a vehicle a total loss if the cost of repairs and the salvage value exceeds the actual cash value of the vehicle. In other words, is the vehicle worth the cost to fix it? If the answer is no, the vehicle is a total loss. (California DMV, Total Loss Salvage & Non-Repairable Vehicles).
Some states have a specific percentage threshold in their law. In some states, a vehicle may be considered a total loss when the cost of repairs is 75% of the vehicle’s value, for example. However, even in states that have these laws, an insurance company may use a different formula to decide what to do with badly damaged cars. California doesn’t have a threshold percentage. Instead, they declare a vehicle a total loss, salvaged vehicle if it is destroyed to the point that it is uneconomical to repair.
What Happens to Total Loss Vehicles in California
If your insurance company declares your vehicle a total loss, they pay you for the value of the vehicle before the crash minus any deductible that applies to the policy. They take possession of the vehicle and apply for a salvage title.
See California Motor Vehicle Code § 11515.
What are my options if my vehicle is declared a total loss?
If a vehicle is declared a total loss in California, turning it over to the insurance company and accepting a cash payment is one of the options you have. It is the most common option, but there are other things that you can do.
If you want to keep the vehicle, you probably can. Expect a lower payment from the insurance company since they will deduct the salvage value of the vehicle. Then, you can decide what to do with the vehicle. Some options include scraping it for parts yourself, keeping it for sentimental value, donating it to charity or having the vehicle repaired at your own expense.
When the owner keeps the vehicle, they must notify the DMV of the loss within 10 days of settlement of the insurance claim. They must pay a nominal fee. The DMV will issue a salvage title for the vehicle. There are rules and regulations for repairing salvage vehicles if your intention is to return it to the roads. You must conduct repairs and provide receipts to verify that parts used were obtained legally. The vehicle must pass an inspection. (DMV, Vehicle Industry Registration Procedures Manual).
Do I still have to pay my vehicle loan if my vehicle is a total loss?
Unfortunately, yes. Even if your vehicle is a total loss, you must still pay your vehicle loan. You may have purchased gap insurance to pay the loan. However, having a vehicle declared a total loss does not, by itself, terminate your motor vehicle loan.
What type of insurance coverage pays for a total loss vehicle?
When you’re in an accident, and your vehicle is a total loss, there are multiple types of insurance coverage that may pay compensation:
- Property damage/liability insurance: The other party’s insurance that covers damages if they are at fault for an accident
- Comprehensive: Covers damages that are not the result of a crash like damage from weather, vandalism and theft
- Collision: A crash with an immovable object or with another vehicle when the other driver is not at fault
- Uninsured or underinsured motorist: Steps in to cover damages when the liable party doesn’t have insurance or enough insurance
There may be several avenues for getting fairly compensated for a total loss vehicle. It’s important to investigate and look at all the options.
What can you do if you disagree with the insurance company’s salvage value of a vehicle?
The insurance company’s first offer of a salvage value is unlikely to be their best offer. You may disagree with the insurance company’s determination that the vehicle is a total loss. You may dispute the value that they want to pay for the vehicle.
You can get your own appraisal and repair estimates. You can use this information to negotiate with the insurance company. In addition, you may decide to keep the vehicle rather than turn it over to the insurance company. Even if you keep it, you must negotiate an amount of compensation. You may file a legal claim.
Legal Help for an Accident with a Total Loss Car in California
When an accident results in damage that makes a car a total loss in California, there’s also a good chance that there are serious physical injuries. It can be difficult to address all the issues that are present at once when you’re treating physical injuries and addressing your damaged vehicle. Our law firm can look at all the issues and questions and help you with your case.
Contact us today for a consultation about your claim.