I know you didn't read the Disclaimer in the first article so here it is again
Disclaimer - Important! Don't Skip!
I'm an auto damage adjuster for a large insurance company here in Alaska. The information here is certainly applicable to Alaska but don't go all Milly-Vanilly on some poor adjuster because "George said..." Also, even if you are in Alaska, check with your insurance company - always - before proceeding. Every total loss claim is different so it's possible that the information here may not apply to your 1969 Ford LTD claim. Take this as it's meant: Generally Speaking.
Where were we? Oh, that's right. Your adjuster gave all of the information about your car to the valuation service and we're awaiting its return with bait-like breath. Here is where a little patience can come in handy. Sometimes the value will come back right away, sometimes it takes a little longer. It kind of depends on the car. Remember, the valuation service is going to try and find comparable vehicles so if your vehicle was a later model Chevy truck, there will probably be a lot of comparables available. If on the other hand your car was a replica of the station wagon used by the Griswolds in Vacation then the service might have to do a bit more research.
Oh, Goody. The Value Came Back
Once the adjuster receives the value, they should be giving you a call to present the figures. The only thing that could delay that call is if the value is higher than the adjuster's authority. If the adjuster's authority is $20,000 and the value comes back at $25,000 then the whole shootin' match needs to go up the flagpole and get saluted by a supervisor. This prevents the adjuster from making seriously stupid mistakes. In my company I think this is referred to as "George's Law" but I can't be certain.
In Alaska, the settlement amount that will be presented consists of the value (ACV) plus the title fee (currently $15) plus the prorated remainder of the registration minus a deductible (if owed).
The Two Pathways of Total Loss
Now that we know how much the car is worth, there are two distinct pathways for settlement. The first pathway, and by far the most common is for the insurance company to pay you the full value for the vehicle, and then sell it at an auction to try and recoup some of the costs. Only in the most rare of circumstances will it be crushed or parted out.
On the second pathway, the owner chooses to keep the vehicle. Sometimes this is a really good idea and sometimes it falls into the "Hold my beer and watch this!" category. It may be a good idea to keep it if:
- It's a older car and it didn't take much damage to total it.
- It doesn't have any structural (frame) damage.
- It's been a great, reliable car and you don't mind a little ugly.
- Your buddy is a TV repairman and he has the ultimate set of tools.
It's a bad idea to keep it if:
- The damage is extensive or structural.
- You have a loan on it that is close to the settlement amount.
- You don't have the time, energy or neighbors to deal with a twisted hulk of sheet metal taking up valuable driveway space.
If you choose to have the insurance company take the vehicle, the settlement will be structured as above. If you choose to keep the vehicle, the structure of the settlement changes. It's important to know that the ACV never changes. It doesn't matter if you keep the car or not. With that said, the insurance will not reimburse the remaining registration (Why would they? You will still have the car), any applicable deductible will still be deducted and the insurance company will subtract a "buy-back fee." This buy-back fee (also known as a guaranteed salvage bid) is the minimum amount the insurance company would receive if they had kept the vehicle and sold it at auction. Salvage bids vary wildly and can range from a hundred dollars to literally thousands.
Show Me The Money!
This is everyone's favorite or least favorite part. It's a perspective thing. Now that the settlement is done, how does the money work?
Let's look at the simple stuff first. If you do not have a loan and you are holding on to a title with your name on it then the adjuster will arrange to meet with you, have you sign the title over to the insurance company and give you a check. If you are keeping the car then the adjuster will take a copy of the title to establish ownership then give you a check. Easy-Peasy. Done.
Having a loan complicates things but nothing too ridiculous. First and foremost, the insurance company is obligated to protect the interest of the lien holder. That means they get paid first. I'll give you an example: If the value of the car is $10,000 and you still owe $8000 then the bank will get a check for $8000 and you will get a check for $2000. There is another side of this coin and unfortunately a lot of folks end up in this position. The dreaded "upside-down" scenario. The car is worth $10,000 and you owe $12,000. Rut-ro. The bank will get the check for the full settlement amount of $10,000 and you will need to have a difficult conversation with the lender. In either case though, the bank will release the title to the insurance company.
You say you have gap insurance? Stand up, take a bow, go to the head of the class. Gap insurance makes up the difference between what the car is worth and what is still owed. Never - and I mean never buy a newer vehicle without it. Please note that gap insurance is not something you buy through your regular auto insurance. It is typically purchased at the dealership through a 3rd party vendor or through the lender.
And that's it! You've made it through the total loss maze with nary a scratch. Well, hopefully.
What Can I do To Help?
What a great question, and I'm so glad you asked.
- As soon as you gather your wits after the accident find your title. Clear up any issues immediately so that when it's time to get the check there won't be any delays. If you haven't changed the title to your name from when you bought it, skeedaddle down to DMV and get it done asap. In short, no titley -no checkey.
- Please communicate. Any issues, concerns or problems are best addressed early on. And while I'm at it, if you do not have voicemail set up, please do it. This is an important business matter and lack of voicemail can really slow things down.
- Before any accident even happens, keep and organize any receipts for aftermarket items and maintenance work. For that matter put your title in a safe place and never ever ever keep it in the glovebox.
- If you are asked to complete a form such as a Limited Power of Attorney, do your due diligence and complete it as directed and in a timely manner.
I want to thank you for taking the time to read these articles. It is my hope that the article will never apply to you.
Feel free to comment and let me know what you think.
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