What Happens if My Vehicle Is Totaled After an Auto Accident in Maryland?
If your vehicle was damaged or a total loss in a Maryland car accident, immediately report the car crash to the local police department and your insurance company. In Maryland auto accident cases where no one is seriously injured or killed, the first thing most people ask us is, “What about my car?” People love their cars, often driving the same car for five years, 10 years or more. Today’s vehicles are manufactured to last for many more years than our parents’ old fords, chevys and pontiacs. Now it’s not uncommon to drive a car for upwards of 150K or even 200K miles.
There are several things you should know about total loss vehicle claims in Maryland. First, any total loss claim is separate from any bodily injury claim you may have for your injuries, medical bills, lost time from work, or pain and suffering from the vehicle collision. Second, any total loss vehicle claim is paid to the owner of the vehicle not to the driver. Third, Maryland Law requires any vehicle damaged in an amount which exceeds 75% of the pre-accident fair market value (actual cash value) to be considered a total loss.
According to Maryland law, any vehicle can be deemed a total loss if the cost to repair it exceeds 75% of its fair market value before it sustained accidental or intentional damage. Many times, following a car accident, a vehicle involved has been declared a total loss by the insurance company. Now what? To the owner, the vehicle appears to be damaged but may still be drivable. How can it be a total loss?
What Exactly Is a “Total Loss” to Insurance Companies?
The term “total loss” has a different meaning in the insurance industry than it does to the average person or even an auto mechanic. When you’re told a vehicle is a total loss, you may take that to mean the car is beyond repair and must be scrapped.
Total loss, as used by an insurance adjuster in a property damage claim, does not mean your vehicle can’t be repaired. It means the expense of repairing the vehicle exceeds the present-day value of the car. This is an important distinction to understand, because the insurance company is only responsible for paying what your vehicle was valued just prior to the car accident. If the repair costs are more than 75 percent of the total value of the vehicle, the car is deemed a total loss.
To determine whether the necessary repairs exceed this amount, the insurance company must assign a value to the vehicle. That’s part of what an insurance adjuster is doing when he or she examines your vehicle.
What Determines if a Vehicle Is Totaled After a Car Crash?
A vehicle is considered totaled when repair costs exceed its value or a set threshold. The insurance company declares a total loss, pays the fair market value (actual cash value) minus the deductible, and takes ownership for salvage. If the car is financed, payment goes to the lender, and gap insurance may be needed if applicable.
First and foremost, what determines if a vehicle is totaled after an auto wreck might come as a surprise. Your car does not have to be completely smashed or damaged to be totaled. It is totaled if the damage is so severe that the total repair cost is equal to or greater than 75% of the actual cash value (ACV). In other words, a totaled car is one that is so damaged that it has no value and will cost more to repair than it is worth.
Determining an accurate and fair ACV is vital because the higher the value, the more money you will receive toward a new car. ACV is typically based on the local market value, and insurance companies often look to the Kelley Blue Book or similar databases to determine what your pre-accident car would have sold for in the region. Remember, the higher the ACV, the more the insurance company has to pay out, so calculating the lowest ACV possible is in their best interest.
A vintage 1991 Ford Mustang (or other antique vehicle) may be priceless to its driver, it will only be worth a few hundred dollars, in the eyes of the insurance companies. They are only obligated to pay the reasonable Blue Book value on the vehicle. This is a harsh reality we help clients to deal with.
Therefore, do not necessarily take the first offer the insurer makes you. You can challenge the ACV if you believe you deserve more. You can present evidence to the insurer to counter their ACV offer by doing simple research to determine the local market value.
Fault vs. No-Fault
Maryland has a fault insurance system, meaning the motorist deemed at-fault for the car crash is responsible for paying the damages. If your vehicle is totaled but you were not at-fault, the at-fault driver’s insurance should pay the ACV for your car, with no deductible assessed.
If your car is totaled but you were at-fault, your insurance carrier will pay your ACV less your applicable deductible.
What’s Included in the Valuation of the Actual Cash Value
Adjustments must be made for:
- The condition of the car at the time of the accident
- Make of the vehicle
- Mileage
- Year of vehicle
- Options and equipment
- Pre-existing damage
Deductions must be itemized and shared with the claimant in writing upon request. When an insurance company deems a vehicle a total loss, it must pay the pre-accident ACV of the car in exchange for possession of the salvage (“the wrecked vehicle”).
This means that the claimant relinquishes ownership of the vehicle title and the damaged vehicle to the insurance company, which will sell the vehicle or its parts to recover some of its loss.
Retain the Salvage and a Vehicle’s Actual Cash Value
The second, less common option, is for the owner to “retain the salvage.” The insurance carrier would deduct the “salvage value” of the vehicle in its present condition from the pre-accident actual cash value of the vehicle.
The owner is paid the difference and then keeps the salvage.
However, the owner ends up with a salvage title which indicates the vehicle has previously been deemed a total loss. Upon request, the insurer is obligated to provide the claimant with the contact details of a salvage dealer willing to buy the salvage for the deducted amount.
Insurance companies must adhere to industry-accepted valuation guides and consider the retail cost in the local market area when settling claims to ensure that the settlement amount accurately reflects the vehicle’s actual value.
They must evaluate the evidence provided by the claimant, including receipts, photographs, or other documents, to demonstrate that the completely damaged vehicle was in superior condition before the car accident than what the insurer’s settlement proposal indicates.
What Happens if You Still Owe the Lien Holder and Have No Gap Coverage?
Without Guaranteed Asset Protection (GAP) coverage, you remain responsible for any remaining loan balance that exceeds the insurer’s payment. For instance, if you owe $13,000.00 and the insurer pays $10,250.00, you would still owe your lien holder $2,750.00. You may negotiate with the lender for a payment plan, but the liability remains yours.
Repair Costs and the Value of Your Car
An insurer is only required to pay damages up to the value of your vehicle. If you’ve received a repair estimate or two and it looks like repair costs will exceed the value of your car, the insurer will often declare it a total loss, pay you the fair market value (also known as “actual cash value”), and take possession of your car.
Remember that with any type of vehicle damage claim, the amount of the claim is based on the value of the property at the time of the accident. The value of the claim has nothing to do with how much you originally paid for the vehicle. And keep in mind that whichever insurance company ends up bearing financial responsibility for the vehicle damage portion of your car accident losses, that insurer will only pay for repairs/replacement of your vehicle up to policy limits.
For example, if the other driver was at fault and caused $15,000.00 of vehicle damage to your vehicle, but only has a $10,000.00 of property damage coverage, their insurer will only pay $10,000.00 toward your repair costs.
Need Help Securing a Fair Total Loss Settlement?
Car accident claims in Maryland can be extremely complicated. By having an attorney assisting you with your total loss car crash claim, you can make sure your case receives the attention it rightfully deserves. Our attorneys have years of experience guiding injured drivers through total-loss property-damage claims.
At the Law Offices of Larry B. Litt, we are more than attorneys. We are your allies in the fight for justice. Our team-based approach, combined with our four decades of combined experience, positions us uniquely to handle your personal injury case. With our representation, you can navigate the claims process confidently, knowing that your case is in capable hands.
Remember, your path to rightful compensation begins with a single call to our office. Discover what our dedicated car accident lawyers can do for you. Reach out to the Law Offices of Larry B. Litt at 443-844-1528 today for a free case evaluation. We are here to help you secure the compensation that you deserve. Our legal team is available 24/7/365.