Totaled Cars And Salvage Value

A lot of information can come your way after a car accident, and this could include learning that your car or truck has been declared a total loss. If you have a sentimental attachment to your car or believe it could still be useful after repairs, it is essential to understand the concept of salvage value and your options for retaining the vehicle. A Baltimore personal injury lawyer can help you navigate the process.

Determining Salvage Value

A car is typically declared a total loss when the cost to repair the vehicle exceeds a certain percentage of its actual cash value (ACV) before the accident. Maryland law generally uses a threshold of 75%. So, if the repair costs reach or exceed 75% of the car’s ACV, the insurance company may declare the car a total loss. This means that instead of paying for the repairs, the insurer will offer you a settlement based on the ACV of the vehicle.

Salvage value is the estimated amount that a totaled vehicle can be sold for in its damaged state. This value is determined by the insurance company and reflects what the car could potentially be worth if sold to a salvage yard or for parts. The concept of salvage value is important if you’re considering retaining your vehicle after it’s been declared a total loss.

If your vehicle is declared a total loss but you want to keep it, you can opt for what is known as owner-retained salvage. Then, the insurance company will deduct the salvage value from your total loss settlement. Then, if your car’s ACV is $15,000 and the salvage value is determined to be $2,000, you would receive a settlement of $13,000 if you choose to keep the car.

Recognize that in this scenario your car will be issued a salvage title, which indicates that it has been significantly damaged. This title affects the vehicle’s future resale value and can make it more difficult to insure. In Maryland, if you decide to repair the vehicle and return it to the road, you will need to have it inspected and re-titled.

Insurance Payout Considerations

Salvage value directly impacts your insurance payout and can influence whether retaining the vehicle is a financially sound decision. Talk to a Baltimore personal injury lawyer about whether accepting a full settlement from an insurance company and relinquishing the vehicle is in your financial best interests or not.

A lawyer can support you if you have the means to repair the car and believe it can be safely returned to the road. Doing so may make sense, as long as you keep in mind the challenges that could arise in insuring a rebuilt vehicle, as not all insurers will offer coverage, and those that do may charge higher premiums.

What do you want to do now that an insurance company considers your car to be totaled? Discuss your recovery options with the legal team at Iamele & Iamele, LLP so you can be confident you are making an informed choice. Contact us to book a confidential consultation.