After an accident in Florida, the insurance company will inspect your car and will determine what the cost of repairs would be. If it costs more to fix the car than what it is worth, then they will declare the car a total loss. When this happens, instead of paying to fix the car, the insurance company will pay you what the car is worth.
The commonly used rule in Florida for diminished value is that a car will be deemed a total loss if the cost of repairs exceed 80% of it’s value. However, different insurance companies have different methods of determining when a car is a total loss. It is not uncommon for an insurance company to declare a total loss even when the cost of repairs is less than 80% of the car’s value. The insurance companies may take other factors into consideration when making their decision. Usually, these other factors concern whether or not the insurance company believes that they will have to pay for additional expenses if the car is fixed. For example, they may consider the likelihood that their initial repair estimate is low and that they may find additional hidden or unknown damages once the repair process is underway. This will result in an increase in the cost of repairs that may ultimately exceed the 80% threshold. It is common for body shops to request supplements for additional damages that are not known at the time of the initial estimate.
Insurance companies are also be concerned that if a car is fixed, that they may be exposed to a claim for diminished value by the owner of the car. Once a car is in an accident, it will sustain a diminution of value, even if it is fixed properly. The car now has an accident history that will show up on a Carfax report, and any potential buyer of the car will know about the prior accident. So insurance companies sometimes calculate their potential payout for a diminished value claim if they fix a car, and this affects their decision of whether or not to declare a car a total loss. If a car is a total loss, then there is no diminished value claim. A diminished value claim only exists of the car is fixed.
If your car is declared a total loss, the insurance company should pay you the value of your car. They do not owe you what it would cost to buy a new car. Rather, they only owe you what your car was worth on the day of the accident, immediately before the accident. Different insurance companies use different methods to determine what your car is worth. Some insurance companies rely on the blue book value of the car, others look to see what comparable vehicles are selling for in your area. It is important to double check the insurance company’s numbers to make sure that the total loss settlement offer is accurate. Often times, the insurance company’s total loss settlement offer is too low and does not reflect the true value of your car.
If your car is declared a total loss, The Collision Law Center can assist you with the total loss claims process and we can make sure that you receive a total loss settlement offer that is fair and appropriate.