A total loss claim is an insurance claim made when the insured item suffers irreparable damage. For instance, a total loss can occur after a car accident that leaves your car so severely damaged that repairing it becomes uneconomical. As a result, your insurance company must give you a payout equivalent to the car’s value.
These claims can be confusing and stressful, especially when insurers refuse to cooperate. As such, you can benefit a lot by consulting an attorney. Let’s look into when hiring an attorney becomes critical during total loss claims.
The Problem with Total Loss Claims
Understanding total loss vehicle claims is simple enough: your vehicle’s repair costs exceed its value, making repairs impractical, so the insurance company has to pay you. The problem comes during the payout. The insurer typically pays the actual cash value (ACV), which is equivalent to the market value of the vehicle before the accident. However, this value also accounts for depreciation and other factors that lower it.
As a result, this payout may be lower than expected for many policyholders, especially if local prices have been higher or they made upgrades recently. This often leads to frustration, and that is where attorneys come in.
When Is Legal Help Necessary?
Legal help becomes necessary in the following cases:
- Dispute Over Vehicle Valuation
As we mention above, many policyholders feel disappointed by the ACV that the insurers offer. Insurers calculate this figure based on depreciation, mileage, and market comparisons. However, it might not reflect your car’s true value. You have the right to challenge this claim if, for instance, the insurers offer you a lesser value than the vehicle’s price in your area.
Here, an attorney can help by gathering supporting evidence to dispute the insurer’s claims. They can collect independent appraisals, vehicle history, and local market data to strengthen your claim and ensure you get a fair payout.
- Bad Faith Insurance Practices
Sometimes, insurance companies use tactics to avoid paying policyholders. Here are two example scenarios of these ”bad faith” insurance practices:
- Unjustified delay in processing claims: You submit all documents immediately, but the insurer takes over two months to respond or keeps ”losing” paperwork.
- Lowball settlement offer without explanation: Your vehicle is worth $18,000, but the insurer offers you only $13,000. They do not provide any appraisal or comparable sales data and give little to no justification.
You must consult an attorney if you suspect that your insurer is not treating you fairly. They can assess whether your insurer’s behavior is violating state laws and pursue compensation and penalties accordingly.
- Disputes Involving Third Parties
Navigating claims becomes more complex when third parties are involved. For example, if your car is totaled because of another driver, you will likely be dealing with their insurance company, which may be less motivated to offer a fair settlement. The insurer might delay processing, deny liability, or offer a low settlement.
Consulting an attorney can help handle communication and provide supporting evidence to negotiate directly with the other insurer. This involvement also helps avoid unintentional mistakes that could weaken your claim.
- Loan or Lease Balance Discrepancy
A total loss settlement will be complicated if your vehicle is leased or financed. The insurance payout may be less than what you owe, leaving you responsible for the remaining balance. While gap insurance usually covers this, there is no guarantee that they won’t deny your claim or that you even have the insurance in the first place.
Legal advice can help in such a situation. An attorney will review your loan agreement, insurance policy, and gap coverage terms to see if you have grounds to contest the shortfall. They can also negotiate with lenders and insurance to minimize your out-of-pocket expenses.
Endnote
While you can resolve many total loss claims without issue, there are clear warning signals for when you need expert guidance. You must know your rights and when to assert them, and an attorney can help greatly with this. Read the points above to know when to consult legal expertise and ensure fair compensation after a total loss claim.
