Understanding the Meaning of a Totaled Car

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As the rate of car accidents increases, it’s becoming more and more common to hear cars becoming “totaled.” But, what does it actually mean when a car is totaled? Another corresponding term is the familiar “total loss.” Apart from indicating the severe damage done to the vehicle, such can also mean the expense to fix the damage on the car exceeds the actual value of the car, leaving the owner in a state of frustration. Though unfortunate, some instances include having the insurance company compensate you for the amount of the retail market value of the car. Below, we’ll go discuss the diverse ways to decipher a “totaled” vehicle.

Total Loss Formula

California insurance companies use a Total Loss Formula (TLF) to decide whether the car is totaled. When confirming whether a car is totaled, the formula notes that the total loss ratio must exceed the overall percentage that was established. Such formula uses the following method:

Cost of Repair + Salvage Value > Actual Cash Value

California Law

In addition, California law states that a total loss salvage vehicle is either a wrecked vehicle whose repairs cost more than the actual cash value of the car, or a wrecked vehicle where the insurance company decides it is uneconomical to repair. In other words, the vehicle isn’t considered totaled so long as the insurance company is willing to cover the repairs.

What is a “Diminished Value” Claim?

When trying to understand these claims, keep in mind that there are actually three kinds of “diminished value.” These type of value categories help individuals and insurance officials to properly allocate the extent of damage to a particular vehicle. Below, we will discuss the difference between the three.

Immediate Diminished Value

This particular value can be identified as the difference between the car value before the accident and immediately after. This method gives the individual an estimate for the extent of the damages. Ideally, this is what court systems would use as a measurement tool when indemnifying reimbursement from the negligent party.

Inherent Diminished Value

Inherent Diminished value or otherwise known as “stigma damage,” is the difference between the car value before the accident and the value of the car after it is repaired. Even if the vehicle may be in working condition after the repairs, the vehicle may have decreased in value due to the history of damage attached to it. This numerical difference is the most common and widely used form of diminished value by insurance companies.

Repair-Related Diminished Value

Lastly, we have the Repair-Related Diminished value. This diminished value is the extra amount the price may be reduced to, since the repairs were less than optimal. These “less than optimal” repairs can be represented by anything from minor cosmetic imperfections to vehicle defects.

How Do I Win a Diminished Value Claim?

Defending the better interests of your damaged vehicle can be incredibly hard to do alone. Many officials or insurance representatives will often try to belittle your claim, or even dispute it with no type of beneficial outcome. If this is something you’re seriously consider pursuing, you’ll need to also consider having trusted legal support to defend you during this process. An experienced personal injury lawyer will be able to help answer any questions you may have, assist you in filing your claim, help you compose a professional Diminished Value Report to submit to insurers, as well as help negotiate a fair and proper settlement for your unique situation. For any questions you may have, or to get started on your claim, contact our firm immediately. We’re here to help.


Your free, no-obligation consultation with a knowledgeable Los Angeles Personal Injury Attorney regarding your unique situation is available by calling:

888-529-3111 Monday-Friday, 24 hrs a day, 7 days a week.

Jack Ter-Saakyan, Esq.
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