Can they really consider my car a "total loss"?

Question

I got in an accident about a month ago, actually i was driving minding my own business when i company van slammed into me from behind. My entire rear end was smashed in but the damage didn't look TOO bad. After tear down they found the body underneath was damaged beyond repair, it needs to be completely replaced. The original check they issued to the body shop was $3,200. They said it would cost an additional $3,000 for USED parts seeing as the dealership no longer services my vehicle as they no longer make dodge neons. It's a 2005 and is worth about $8,500 give or take. I'm curious about this whole process because I'm getting the short end of the deal. They will offer what the car is worth even though I owe $500 - $1,000 more than that on the vehicle. Plus the rest of the check goes to the body shop, leaving me with nothing and no car! I'd have to start all over again with a brand new car. So is there anything I need to know from anyone who's gone through this? Can they really consider it totaled even though it's not exceeding my cars worth?

Answer 1

If you owe more than the car is worth - you are "upside down". The insurance company does not owe the amount of your note. They owe the fair market value of the car (what you could sell if for given it's age, condition and mileage).

If you have been a good customer - your bank may be willing to do a substitution of collateral or roll the overage into the note for your new car. You need to talk to your bank about what your options are.

The body shop will be paid for their tear down/labor - but this should not come out of the value of the car.

In most states - a car is a total loss if the cost to repair the car (including parts and labor) equals or exceeds 75% of the cars value. This is not an insurance company rule -- it is a state law.

If the car is worth 8500. 75% of that is 6375.00.  You have an initial estimate of 3200+ 3000 supplement = 6200.00. You are right about the 75% mark.

As far as the parts go -- the parts they are taking off your car are USED. They were new when you bought the car but have been driving around with you ever since.

Your car is a total loss. It was hit in the back. When the insurance company totals it -it will get sold at a salvage auction. A parts dealer will buy it for parts. They will not sell the rear parts that were damaged in the accident. Those will be taken to a scrap yard.  But you hood was not damaged in the accident. Any reason why the hood could not be taken off of your car - painted and put on another one?  That's all USED parts are --- taking the non-damaged parts and selling them to be used as replacement parts.

Also- used parts are cheaper. So - if they wrote the supplement using brand new parts -- the repair cost will go much higher and the car is definitely a total loss. So if you don't want the insurance company to total the car -- stop pushing for new parts.  

Answer 2

Okay here an answer short and sweet.  Your car is totaled, and the damage sounds pretty bad.  Okay lets say the fix your car, and you decide to trade in the car or sell the car a month latter.  Guess what state laws require you to tell the buyer that the car has been damaged in a wreck.  Which this may come on your title as a salvaged vehicle.  The value of your car is shot.  You may only be able to sell your car for 4,000 dollars because of this.  Also you can sue the other driver for the money you have to pay out of pocket to pay off your car.  Which would make you even, or a little better.