When Is a Car Considered Totaled in New Jersey?
In New Jersey, a car is totaled – or considered a total loss that an insurance company will not pay to repair – if the amount of damage exceeds 80 percent of the vehicle’s actual cash value (ACV). In this situation, an insurance company will instead offer a settlement for the total amount of the pre-crash value of the car. Make sure to contact a car accident lawyer in New Jersey for legal guidance.
How Do Insurance Companies Determine Whether a Car Is Totaled?
To determine whether a vehicle is totaled after a car accident in New Jersey, an automobile insurance company will compare the cost of required repairs plus its salvage value to the vehicle’s actual cash value. This is known as the Total Loss Formula (TLF).
The ACV is the vehicle’s fair market value before the car accident took place. This value is calculated based on the vehicle itself, its mileage, any existing damage and the status of the current market. The salvage value is an estimate of what the insurance company can sell the totaled vehicle for to a salvage yard or junkyard.
In New Jersey, the threshold for a total loss is 80 percent of a damaged vehicle’s ACV during a car accident claim. If the cost of repairs is equal to or greater than 80 percent of the ACV, the car is deemed a total loss.
For example, if a car’s ACV is calculated at $10,000, the price of repairs would need to fall below $8,000 for an insurance company to pay to repair the vehicle. The total loss threshold drops to 75 percent if the vehicle damage was caused by flooding or environmental factors.
How Are Settlements Calculated in New Jersey When a Car Is Totaled?
A car insurance company will assign a settlement value to your totaled vehicle by first assessing the ACV. Then, the insurance company will use repair estimates provided by appraisers or certified mechanics, often of their own choosing, taking into account additional costs such as towing and storage.
Next, the car insurance company will subtract any deductible you must pay from the vehicle’s ACV. The insurance company will pay you the remaining amount as coverage for your totaled car, up to the limits on the policy.
Can You Negotiate?
Yes, you can and generally should negotiate the assigned value of your totaled vehicle as part of a car accident settlement in New Jersey. Car insurance companies often lowball or underestimate the value of claims to protect their own profits. This is especially true when the vehicle involved is a total loss, as the payout will be higher.
When you receive the initial settlement offer from a car insurance company, do not accept right away. Instead, do research on your own to determine if the amount offered is fair and reasonable. You may know that certain after-market additions or modifications increase the value of your vehicle in today’s market, for example, or have a higher Kelley Blue Book value that you found yourself. You can submit this information as evidence to the insurance company to argue for a higher settlement value.
What Can You Do if Your Car Is Totaled?
If a car accident in New Jersey totals your vehicle, you have the option to either accept or negotiate the initial insurance settlement offer. You should consult with a New Jersey personal injury attorney to find out if the initial payout offered is too low. Once your case achieves a settlement, it is up to you what to do with your totaled vehicle. An insurance company cannot require you to sell it to a salvage yard.
You can pay to repair the vehicle yourself, but know that an insurance company will not pay for these repairs. You can also let the insurance company sell your vehicle to a salvage yard and add this to your settlement value. Finally, you have the right to file a personal injury lawsuit if you believe the insurance company is acting in bad faith or undervaluing your vehicle. A personal injury attorney in New Jersey can help you with this process to seek a higher payout.