If you were involved in a serious crash caused by a reckless or negligent driver, in addition to dealing with your injuries, you may have a car with extensive damage. Even if it can be repaired, you may have no intention of ever driving it again.
However, how the insurance company will compensate you for it depends on whether it’s determined to be a “total loss.” People throw around the word “totaled,” but a total loss is based on a calculation.
States vary in how they determine whether a vehicle is a total loss. Under Missouri’s total loss law, a car is a total loss if the cost of repairs plus its salvage value equals 80% or more of its actual cash value (ACV) just before the crash.
How is total loss determined in Missouri?
Just what do all of those terms mean? Let’s look at an example:
Say the pre-crash ACV was $20,000. That’s the amount you probably could have gotten if you’d sold the car in whatever condition it was in just before the crash. This is sometimes known as the “depreciated value.”
Now say the estimate to make all the needed repairs following the crash is $5,000. Add that amount to the salvage value. The salvage value, which is typically determined by the insurance company, is what its parts, frame and other “salvageable” parts are worth.
Say the salvage value is determined to be $10,000. That means the repair cost plus the salvage value is $15,000. That is 75% of the ACV of $20,000. Therefore, the car isn’t a total loss under Missouri law.
Your insurance settlement
The insurance settlement will deal with repair costs rather than reimbursement for the pre-crash value of the car (the ACV). In some states, insurers are also required to pay the title fee and taxes for a new car. That’s not a requirement in Missouri, but some insurers will still cover these things.
This is a lot to think about at a time when you’re likely dealing with much more important things – like healing physically and emotionally. It’s just one more reason to have legal guidance to help ensure that you get the maximum compensation to which you’re entitled after a crash for medical bills and other expenses in addition to repairing or replacing your car.