At Cohen & Cohen Personal Injury Lawyers, P.C., we understand the kind of stress that accident victims face when their vehicle has been severely damaged in a crash. Many of our clients not only face the physical injuries they sustain, medical bills, and a significant disruption to their daily lives, but also the sudden financial and logistical burden of dealing with an automobile that has been damaged. In some cases, the amount of damage to the car may result in the vehicle being claimed as a total loss.
To better help accident victims in Queens and throughout New York City understand how total-loss vehicle settlements work under New York law, our team has compiled all the information you need. This article will specifically discuss how the “total loss” threshold is determined, what you, as a car accident or personal injury victim, need to know, and how claims adjusters may evaluate your vehicle’s value during settlement negotiations.
What Is A Total Loss Vehicle Settlement Under New York Law?
When your vehicle is damaged, whether in a collision in which another motorist was at fault or in a no-fault context under your own collision or comprehensive coverage, the insurance company may determine that it is no longer economically feasible or safe to pursue repairs on the vehicle. In these situations, insurance companies may offer a total loss settlement in New York rather than provide financial compensation for vehicle repairs. Under New York law, an insurer must pay you the vehicle’s actual cash value (ACV) or another defined total loss vehicle settlement amount, but is subject to the terms of your specific vehicle insurance policy.
When a crash causes substantial vehicle damage, victims typically want to focus on their injuries and recovery. Yet the property damage side of the claim, such as the car, its value, and the settlement offer, should not be pushed off. If you accept a New York total loss vehicle settlement without fully understanding how your insurer determined its value, you may receive less than you deserve for your vehicle. That is why knowing how the settlement process works is so valuable.
Understanding The Total Loss Threshold Under New York Law
One key component in these cases is the total loss threshold. This is the point at which an insurer must determine whether the vehicle is a total loss or can be repaired economically. Under New York law, the threshold for declaring a vehicle a total loss is when the cost of repairs is at least 75% of the vehicle’s total actual cash value (ACV) immediately before the accident.
For example, if your car’s fair market value just before the accident was, $10,000, and the repair estimate for the vehicle is $7,500 or more, then under New York law, the insurer will typically declare it a total loss. This is where the term “totaled” comes from when speaking of vehicles that cannot be repaired after being in an accident.
Because this threshold plays an important role in determining whether you receive a total loss vehicle settlement rather than repairs, it can be a significant point of negotiation for your vehicle claim.
How The Vehicle’s Value Is Determined Before The Accident
When your insurance offers a settlement for a total loss vehicle, one of the most important numbers in the settlement will be the actual cash value (ACV) of the car just before the accident occurred. Under New York law, accident victims are entitled to receive a settlement based on the vehicle’s actual cash value (ACV), which is defined as the lesser amount between the cost of repairing the vehicle to its pre-accident condition and the cost of replacing it with a comparable vehicle.
According to the New York State Department of Financial Services (DFS), carriers must use one of several valuation methods. These valuation methods are:
- Averaging the retail values of comparable vehicles from two approved valuation manuals
- Obtaining a dealer quote for a substantially similar vehicle
- Using a computerized database that shows fair market values for similar vehicles in the area.
Car owners should know that they are not simply required to accept the insurance company’s settlement offer without question. You may need to supply your own evidence of value if you believe your vehicle’s pre-accident value is higher than the company proposes.
What The Insurance Company Must Include in the Total Vehicle Loss Settlement Offer
If your vehicle is declared a total loss after being in an accident that was not your fault, the insurer’s offer must meet certain regulatory standards that are defined under New York law. For example, the insurer may offer a cash settlement under Regulation 64 (11 NYCRR § 216) target=”_blank”, which requires that if they choose to pay cash, the offer must use approved valuation methods.
It’s also important for policyholders to understand how settlement payments are calculated. If you paid sales tax when you bought your vehicle, that tax must be included in the insurer’s calculation of the vehicle’s actual cash value (ACV). However, title and registration fees do not have to be included in your settlement.
When you receive a settlement check, the insurance company may first subtract your deductible if your claim falls under collision or comprehensive coverage. They will then pay you the ACV of the vehicle, including sales tax, and may take ownership of the damaged (salvage) vehicle if it applies. If your car was financed or leased, the insurer will pay the lienholder or leasing company first, which may reduce the amount you personally receive.
What Does Total Loss With Clean Title in New York Mean?
Another term that you may see in serious car accident damage scenarios is the idea of a vehicle that has sustained major damage, but still keeps a clean title rather than being changed to a salvage title. In New York, the titling rules require that a title has a REBUILT SALVAGE title if the vehicle is eight model years old or newer and the cost of rebuilding or reconstructing before legal operation exceeds 75% of the undamaged retail value.
If your car is declared a total loss and the salvage title brand is involved, it may impact the resale value of the vehicle, or your ability to sell it at all. Even if your car has a clean title, you still should be wary of the settlement value offered. The term total loss with clean title highlights the risk of accepting a low offer simply because the title appears unbranded, when in fact the damage was extensive and the value higher than calculated.
Need Help With Your Total Vehicle Loss Settlement in New York?
If you’ve been involved in a crash in Queens and your vehicle has been declared a total loss, you don’t simply need to accept whatever the insurance company offers you. Under New York law, the threshold for declaring a vehicle a total loss is when repair costs reach about 75% of the vehicle’s ACV, and insurance providers must adhere to it.
Your insurer must provide a fair settlement based on approved valuation methods. But you also have rights to challenge low offers, to provide your own evidence, and to ensure your settlement reflects the full value of your loss. At Cohen & Cohen Personal Injury Lawyers, P.C., we are committed to protecting your rights, not only in pursuit of justice for the injuries you suffered but for the full financial and practical consequences of the crash, including your vehicle damage claim.
If you would like our help evaluating your total loss vehicle settlement offer, handling it with your injury claim, or negotiating with the insurer, please contact our team today. We will work to make sure your total-loss vehicle settlement reflects your true losses and supports your recovery.