Total Loss Value Formula in Illinois
After a vehicle accident that causes property damage occurs, the incident typically turns into an insurance claim relatively quickly. It may be the case that an insurance carrier determines that a vehicle is a “total loss.” Consulting with lawyers for car accidents in Chicago can help you navigate this process and ensure fair treatment.
However, understanding what a total loss actually means is important so that you can prevent being taken advantage of by the insurance carrier. Here, we want to discuss what is considered a total loss in Illinois and how a total loss is valued.
What is a “Total Loss”?
A vehicle will be considered a total loss after an Illinois vehicle accident if the repair costs for the vehicle plus the scrap value exceed the fair market value of the vehicle before the incident occurred.
Information from The National Association of Insurance Commissioners (NAIC) says that the fair market value of a vehicle should be the amount at which the vehicle can be bought and sold in its current condition (this term can also be used to discuss the value of a vehicle before the crash occurred). Basically, the best way to describe fair market value is by examining what a typical buyer would pay for the vehicle in its current condition. There are various common methods of obtaining the value of a vehicle, including Kelley Blue Book or NADA.
How Do Car Insurance Companies Calculate Total Loss Value in Illinois?
When a car is involved in an accident, the insurance carriers will do one of two things – they’ll either pay for the repairs of the vehicle, or they will declare the vehicle a total loss and write a check for the fair market value of the vehicle. The fair market value will almost never be the value of the vehicle at the time it was purchased due to depreciation, wear and tear, and mileage. Other factors can affect the fair market value of a vehicle, including the geographic location, whether or not the vehicle has been any accidents before, the availability of similar vehicles on the market, the desirability of the vehicle, and the method used to sell the vehicle.
Under the total loss formula in Illinois, the cutoff for whether to repair the vehicle or replace the vehicle is the fair market value of the vehicle prior to the incident minus the scrap value of the vehicle. If the cost to repair the vehicle exceeds this figure, then the vehicle will be considered a total loss.
For example, let us suppose all the following factors apply to a particular vehicle in question:
- Pre-cash value of $15,000
- Cost of repairs equals $6,000
- Salvage value of the vehicle equals $10,000
If we take the pre-cash value of the vehicle and subtract out the cost of repairs and the salvage value, we arrive at -$1,000, which means the vehicle is a total loss. If the vehicle is less than a total loss, the insurance carrier will have to pay for the repairs.
Can You Negotiate a Total Value Loss With the Insurance Carrier?
Insurance carriers certainly have the incentive to pay as little as possible, and they may even try to fight paying the fair market value for your vehicle. If you believe that the insurance carrier’s offer is not the true fair market value of the vehicle, you do have the right to object and then negotiate for a higher payment.
In order to determine the fair market value of your vehicle, you should look at multiple appraisal sites, including Kelley Blue Book. Additionally, you could get multiple appraisals from mechanics about the value of your vehicle and the price it would be to repair the vehicle.
Additional types of evidence, such as photographs of your vehicle in its original condition, as well as all maintenance records and any documentation of good upkeep, would be helpful. Additionally, if your vehicle has any special features or add-ons that would increase the value, you should speak to the dealership or installer to obtain written specifications regarding these additions.
We strongly encourage you to reach out to a skilled car accident lawyer who has experience handling these claims. An attorney can help you with not only your property damage claim but also any injury claim you have as a result of the same incident. When an attorney gets involved, they will handle all communication with insurance carriers. A lawyer will be responsible for helping obtain inadequate and accurate vehicle valuation.