There Was a Car Crash and My Vehicle is a Total Loss or Has Major Damage – What Rules Apply?
A friend of mine recently was involved in a parking lot accident in which his two-door luxury vehicle sustained major damage. Eventually his vehicle was taken to a certified repair facility for repairs. After repairs were approved by his insurance company, they called him and advised him that another frame rail was bent and the extra cost of repair made his vehicle a total loss. The additional repair cost for the frame rail was about $3,000.00.
His insurance company offered him $31,000.00 for the total loss value of his vehicle. My friend considered that price to be unfair. He told his insurance company that his vehicle had a premium plus option package instead of a premium package. His insurance company thereafter informed him that the premium plus option package increased the value of his vehicle and advised him that his vehicle was not a total loss and again authorized repairs. As of this date, the final disposition of this property damage claim has not been determined.
WHAT RULES APPLY TO TOTAL LOSS AND MAJOR DAMAGE?
Approximately one out of seven vehicles involved in an accident results in a total loss.
- A total loss in Nevada involves a vehicle that has been damaged to the extent that the estimated cost of repair, not including the cost associated with painting any part of the vehicle, would exceed 65 percent of the fair market value (Actual Cash Value-ACV) of the vehicle immediately before the damage was incurred. Vehicles with less than 65 percent damage are not considered a total loss and are not salvage vehicles. If your vehicle has damage of 65 percent or more, it is considered a salvage vehicle. The actual cash value includes sales tax, DMV and transfer fees.
- Your vehicle also can be considered a total loss if it has been submerged in water to a point that the level of the water is higher than the door sill of the vehicle and the water has entered the passenger, trunk or engine compartment of the vehicle and has come into contact with the electrical system of the vehicle; or a vehicle that is part of a total loss settlement resulting from water damage. An insurance claim for water damage will be under your comprehensive coverage.
- Non-repairable vehicle- A vehicle, other than an abandoned vehicle, that has value only as a source of scrap metal, or has been designated by its owner for dismantling, or has been stripped of all body panels, doors, lights, etc., or has been burned or destroyed beyond a restorable condition is a non-repairable vehicle. Non-repairable vehicles are issued a Certificate and may not be restored to operating condition. If your vehicle qualifies as a total loss it becomes a salvage vehicle.
Vehicles Over 10 Years Old
Older vehicles, 10 model years old or older, are not considered salvage vehicles if the only repairs needed are a limited number of items. Specifically, the hood, the trunk lid, and/or up to two of the following: doors, grill assembly, bumper, assembly, headlight assembly and taillight assembly.
If the vehicle requires more repairs than this, the 65 percent rule applies. For example, the 65 percent rule would apply if the grill, front bumper and one headlight assembly were replaced. If only the hood, the grill and the bumper were replaced, the 65 percent rule wound not apply and the vehicle would not be considered a salvage vehicle. Remember that the 65 percent rule does not include any cost of paint or labor to paint the vehicle.
You Can Choose to Retain the Total Loss Vehicle
Before you decide to retain a salvaged vehicle you should consider the following:
- The insurance company will deduct the salvage value of your vehicle from the fair market value of your vehicle. If your vehicle is a total loss and has a fair market value of $10,000.00, the salvage value may be only $2,000.00. So, if you retain the salvage you only get $8,000.00 from the insurance company. You can retain salvage and sell the salvaged vehicle to a salvage yard perhaps for more than the salvage value, however this option may not be worth your time. Or, you can choose to repair the salvaged vehicle on your own.
- In accordance with NRS 487.860, a vehicle that has been issued a salvage title may not be registered in Nevada until it has been inspected by a Nevada registered garage, Nevada licensed body shop or Nevada licensed re-builder and the DMV.
If your vehicle is total loss, remove your license plates from your vehicle. Your options are:
- Transfer them to another vehicle within 30 days.
- Surrender them to the DMV and apply for a registration fee refund. You must have a copy of the Salvage Title to apply for a refund.
- Surrender them to the DMV and receive a credit toward another registration.
You must transfer or surrender the plates before your cancel the liability insurance on any vehicle.
Application for Salvage Title
If you have collision/comprehensive insurance coverage and your vehicle is totaled, your insurance company will assist you in completing the Salvage Title procedures and application. If you do not elect to retain the salvaged total loss vehicle, you must transfer Title of your vehicle to the insurance company, and they will pay you the full fair market value on your vehicle. Once the Title is transferred, the insurer will have the right to the car as well as the duty to dispose of it.
A salvage vehicle means a motor vehicle, that at any time, has been declared a total loss vehicle, flood damaged, or non-repairable and has the term salvage or similar words placed on any title issued for the vehicle.
Salvage vehicles in Nevada are issued an orange-colored Salvage Title. An original Title is blue. A salvage vehicle may not be registered or operated on any public street until it has been rebuilt and inspected. Once a salvage vehicle has been repaired, it becomes a rebuilt vehicle and may be registered and/or sold if the proper procedures have been followed.
Fair Market Value
Be aware that your idea of fair value and you insurer’s idea fair value may differ drastically. Remember that you have the right to a fair settlement and the right to negotiate with your insurance company to get one. The insurance company has leverage over most claimants because the claimant often needs to get paid to get into another vehicle. Only if the claimant is financially solvent, can he decide to keep fighting with the insurance company to get a fair settlement. A fair settlement is receiving the amount you’ll need to by a like car, or a car of the same or similar model and the same year and condition of your totaled vehicle.
Records of past maintenance and repairs, including costs can be helpful in the fight to obtain a fair total loss value from the insurance company. This does mean a dollar-for-dollar increase in value for the cost of the repairs, however the repairs will factor into the actual cash value calculation.
You have the option of seeking professional help if you still can’t get a fair settlement value for your vehicle. The question is, can you can afford it? You have the options stated in your insurance policy. Your policy may provide for an independent arbitration. You can always hire an attorney. Both courses of action will lead to additional expenses and delay . Before entering into arbitration or suing your insurance company, make sure it’s worth the fight and the extra costs.
Insurance companies rely on allegedly independent appraisal companies or computer programs to calculate the final amount that they will offer on a total loss. Total loss adjusters make the initial assessment of value, and then enter information about the vehicle such as milage and condition, usually resulting in a lower settlement. Remember that fair market value is not the Kelly Blue Book value on your vehicle. It is considered a value which is somewhere between the fair price to purchase a like vehicle from a dealership and the price to purchase a like vehicle from a private party.
Total Loss and NO Insurance
If an insurance company is not involved, and there is no third party insurance; and, you do not have collision/comprehensive insurance coverage, it is your responsibility to assess whether your vehicle meets the definition of a salvage vehicle. You must notify any lienholder within 10 days, and the lienholder must apply for a salvage title with 30 days.
When there is no lienholder, you must you must either apply for a salvage title within 30 days or sell the vehicle to a DMV-licensed salvage pool, automobile auction, re-builder, automotive wrecker or a new or used motor vehicle dealer. You may not sell the vehicle without first obtaining a salvage title
When you retain a salvage vehicle, the re-built vehicle must be inspected by a licensed garage or body shop and the DMV before it can be sold or registered. It is he owner’s responsibility to complete these steps and to obtain a standard blue Nevada title before the sale. If your retain the vehicle but choose not to rebuild it, you should sell it only to a DMV-licensed salvage pool, automobile auction, re-builder, automobile wrecker or a new or used motor vehicle dealer.
Improperly selling a salvage vehicle can be a felony offense. Sellers must disclose in writing that the vehicle is a salvage vehicle. All future titles will be normal Nevada Certificate of Title but will be “branded” which means that title will be labeled with the word ‘‘rebuilt” or other appropriate term. The brand cannot be removed. Any purchase may considered a felony offense if the vehicle is valued at $250.00 or more. Any aggrieved purchaser or lessee also can bring a civil suit against the offender. If successful, the purchaser will be awarded court costs, attorney’s fees and whichever of the following is greater:
- Three times the amount of actual damages;
- Five thousand dollars; or
- Actual damages such as punitive damages as may be allowed by the court.
VEHICLES WITH MAJOR DAMAGE – DIMINISHED VALUE
If your vehicle major damage but is not totaled, what are your rights? All insures must be pressed to recognize and pay diminished value. A diminished value report will cost you about $59.00 and can be obtained from Claim Coach. Even though insurance companies will always tell you they don’t pay diminished value on your repaired vehicle, they are potentially on the hook for the diminished value of your vehicle.
Diminished value is the reduction of a vehicle’s market value occurring after a vehicle is wrecked and repaired. A reasonable person will not pay the same price for a wrecked-then-repaired vehicle as he would for a vehicle with no prior accident history. Even if the repairs are proper and certified, the vehicle will still lose value. To collect diminished value from an insurance company is very rare.
In Nevada there is no case law, that I am aware of, involving diminished value. There is case law in other states on diminished value, but these cases involve large and expensive vehicles such as large boats and commercial airliners. It appears that nobody wants to go through the expense of and appeal to make case law on an insurance company’s obligation for paying diminished value on a repaired passenger car. If we did have such a case that reached our Nevada Supreme Court, this could prove to be very problematic and financially detrimental to auto insurance companies in all states.
If you want to receive fair market value on a totaled vehicle and if you are looking for receiving diminished value on a repaired vehicle, be prepared and be ready to fight the involved insurance company. Get your supporting documentation together and persistently bombard the adjuster with your arguments. Who knows, you may eventually wear them down.
If you have a rare, expensive or classic vehicle, you may want to consider obtaining stated value insurance. With stated value insurance, if your vehicle is totaled the insurance companies, must pay you the stated value. This coverage is more expensive with traditional auto carriers, but is much more affordable with specialty insurance companies dealing with classic and restored cars.