Your car is paid off. Someone crashed into your car. The insurance company declares it a total loss. You have to buy a replacement car. And even worse, you were hurt in the accident. What are your rights?
The aftermath of a car accident can be overwhelming, especially when you have no car. How will you get to work? Where will you find money to buy a car? Your neck hurts. How will you get to the doctor?
If you find yourself in a situation where your vehicle is deemed a total loss, it’s essential to know what steps to take and what you can expect. You could also have a right to claim compensation for bodily injury. Contact Apis Law 603-785-1013.
How is a Total Loss Determined in New Hampshire?
In New Hampshire, a vehicle is considered a total loss if the cost of repairs plus the salvage value of the vehicle equals or exceeds 75% of the vehicle’s actual cash value (ACV). This is a threshold that insurance companies use to determine whether to repair or total your car.
Example of Total Loss Calculation
Let’s say your car has an actual cash value (ACV) of $10,000. After the accident, your insurer estimates that the repair costs will be $6,000. The salvage value of your car — which is the amount the car could be sold for as scrap or for parts — is estimated at $1,000. When you add the repair costs ($6,000) and the salvage value ($1,000), you get $7,000. Since $7,000 is 70% of the vehicle’s ACV, it’s not quite enough to declare the vehicle a total loss in New Hampshire (remember, it needs to be 75%). However, if the repair costs were slightly higher or the salvage value was more, this could easily push the total above the 75% threshold, making it a total loss.
Exclusions from Repair Costs
It’s important to note that not all repair costs are considered when calculating whether a car is a total loss. In New Hampshire, the cost of replacing tires, entertainment systems, and inflatable safety restraints (such as airbags) are excluded from the total cost of repairs. These are considered non-essential for determining the vehicle’s structural integrity or safety after an accident.
So, if your car has a damaged entertainment system, but the rest of the repairs would make the car drivable and safe again, the insurer may not factor in the cost to replace the entertainment system when making the total loss determination.
How is the Value of Your Vehicle Determined?
Once your vehicle is considered a total loss, the next step is for your insurer to determine the value of your vehicle. This process is crucial because the valuation directly impacts how much compensation you’ll receive from your insurance company.
Valuation Criteria in New Hampshire
When determining the value of your vehicle, insurers must consider specific characteristics of the car. These include factors such as the make, model, year, condition, and any other unique features that affect the car’s worth. For example, if your car has additional aftermarket modifications (such as custom wheels or a performance exhaust system), these will likely be factored into the valuation.
Additionally, the community in which the vehicle is located also plays a role in determining its value. This is important because car prices can vary depending on the region. For instance, a 2005 Honda Accord in excellent condition might get a higher price in a metropolitan area with higher demand for used cars compared to a rural area with less demand. Insurance companies take into account the local market when valuing the vehicle, ensuring that the offer reflects what similar vehicles are selling for in that specific area.
No Arbitrary Valuation Methods
Insurers are prohibited from using arbitrary methods to determine the value of a car. This means that insurance companies must rely on objective criteria and accepted practices for valuing vehicles. They cannot simply pick a random figure or low-ball the value in hopes of reducing their payout. For instance, they can’t rely on outdated pricing models or make decisions based solely on outdated or incomplete market data.
Instead, insurers typically base their settlement offers on the fair market value of similar vehicles in the area using statistically valid methods or documented sales. This could involve using statistical guides like the National Automobile Dealers Association (NADA) values, or checking listings for comparable vehicle sales in your local area.
What is a Salvage Certificate, and When is it Needed?
Once your vehicle is deemed a total loss, it doesn’t necessarily mean the car is headed straight to the junkyard. In many cases, insurance companies choose to sell the damaged vehicle to salvage buyers or auction houses. In New Hampshire, a salvage certificate of title must be applied for when a vehicle is declared a total loss.
Applying for a Salvage Certificate
In New Hampshire, the insurance company must apply for a salvage certificate within 20 days after declaring a vehicle a total loss. This certificate is necessary because it officially documents that the vehicle has been damaged beyond repair or deemed uneconomical to fix. It’s also important for tracking the vehicle’s status in case the car is later repaired and resold, ensuring that future buyers are aware of the vehicle's history.
The salvage certificate must include several key pieces of information, including:
Vehicle’s year, make, model, and color
Vehicle Identification Number (VIN)
Current odometer mileage
Date of purchase (if available)
The salvage certificate will help to prevent the vehicle from being sold or repaired without disclosure of its damaged status. If the car is ever repaired and resold, the salvage certificate will remain on the car’s title history.
Valuation Methods in New Hampshire
Insurance companies are required to use approved valuation methods when determining the value of your vehicle. The New Hampshire Insurance Department publishes a list of accepted valuation methods at the start of each year. These methods are designed to ensure that the valuation process is fair and consistent across the state.
By using one of the accepted methods, insurers can avoid undervaluing vehicles, which can otherwise result in a settlement offer that is too low. As a policyholder, you have the right to question the valuation methods used by your insurer and ask for clarification on how they arrived at their settlement offer.
What You Need to Know About Insurance Settlements After Total Loss
If your vehicle is declared a total loss, you may be wondering what to expect in terms of the payout. Typically, the insurance company will offer you a settlement based on the actual cash value (ACV) of your car, factoring in depreciation and the current market value of similar vehicles. However, this may not always be enough to replace your vehicle with something similar, particularly if the car has sentimental value or was worth more than the settlement offer suggests.
If you feel the valuation is too low or the settlement doesn’t reflect your vehicle’s true worth, you can dispute the offer. You may want to seek a second opinion from a trusted appraiser or use alternative valuation methods. Be sure to keep records and documents that can support your case.
To Sum It All Up
Always be aware of your rights as a policyholder, and don’t hesitate to seek legal advice or a second opinion if you feel that your insurance company isn’t offering a fair settlement. By understanding how New Hampshire handles total loss determinations, you can protect yourself and ensure a smoother recovery after an accident.
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