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Car wrecks take a toll on your day, but when the insurance company tries to give you the runaround on what they’ll pay for, it makes matters worse. In some Texas car accident cases, insurance companies try to pay less than what a victim deserves. To do so, they leverage the “total loss statute” for wrecked vehicles.
What Is the Statute?
Across the United States, many states have laws that require special titles that apply to damaged vehicles. The point of these laws is to protect someone who purchases a used vehicle. When they do, they receive a notice on the vehicle title that the vehicle sustained damage in some kind of incident, whether an accident, flood, or natural disaster.
According to the Texas Transportation Code, there are two levels of damage that require a special title.
- A nonrepairable vehicle is one that has severe damage, limiting the value to the scrap or spare parts.
- A salvage vehicle is one where the cost of repairs exceeds the market value of the vehicle immediately before the incident occurred.
How Do Insurance Companies Use the Texas Total Loss Statute Against Victims?
In Texas, insurance companies use the definition of a salvage vehicle as the benchmark for total loss. If the cost of repairs exceeds the market value of the vehicle prior to the crash, they deem it a total loss under your insurance policy. Then, they decline to pay for repairs.
Instead, you have to surrender the vehicle to the company, which pays out a settlement. In theory, the settlement is equal to that market value, allowing the driver to buy a similar vehicle.
However, this theory does not always pan out, and some drivers do not receive the amount they should.
When insurance companies use these values and costs as benchmarks, the amounts aren’t really set in stone. Generally, they vary and are subjective. Moreover, the company has the potential to manipulate them for its own profit, which comes at your expense.
Let’s take a look at an example.
Shifting Values Into Illusions
Let’s say you have a car that is 10 years old with around 100,000 miles on it. It’s a reliable vehicle that runs and gets you wherever you need to go. Then, you take a crack at valuation and believe you could get $6,000 for it as a trade-in or in a private sale.
After The Accident
In an unfortunate turn of events, the car sustains some damage. Next, you take it to the preferred autobody shop of the insurance company. After an evaluation, they estimate repairs will cost about $4,000.
This sounds a bit steep, but it feels worth it because the damage was cosmetic. You call your provider and ask them to approve the quote.
Then, they decline to pay for the repairs.
Talking Through Adjusters
You call your representative to see what’s wrong. On the phone, the adjuster claims that the market value of the vehicle is $3,000 according to their internal formula. So, they declare the vehicle “totaled” per the Texas Total Loss Statute.
Now, the insurance company refuses to pay for repairs. Instead, they want you to surrender the car. If you do, they will provide the market value minus your deductible.
$3,000 – $1,000 (deductible) = $2,000
Unfortunately, that $2,000 is not going to buy you a comparable vehicle.
Alternatively, the adjuster says you can keep the vehicle. However, you now have to get a salvage title issued, which will raise your insurance premium.
If you choose this option, the adjuster sends you a check for the market value minus the deductible and salvage title value.
$3,000 – $1,000 (deductible) – $1,000 (salvage title value) = $1,000
Weighing Your Options
In this situation where the company uses the Texas total loss statute, neither option is appealing. However, you probably think you’re better off with $2,000 over $1,000.
Still, it feels like a rip-off, right? It is.
Next, your insurance company takes the vehicle and auctions it for salvage for $3,000. They get a solid profit overall because they didn’t pay the $4,000 in repairs.
Finally, you see your old car listed for sale, fully repaired by the dealer who bought it, at $6,500. After all of that, it’s normal to feel frustrated.
Fight Back with an Experienced Attorney
If the example above leaves you frustrated, don’t let the insurer do it to you. While insurance companies try to toy with your life and possessions, you don’t have to stand for it. Instead, you can partner with a skilled Houston car accident attorney.
With an advocate on your side, you have someone to fight back against the insurance company. Moreover, you have someone fighting for your best interests and your future.
Consult a Skilled Texas Accident Attorney
Insurance companies stay in business because they try to pay out as little as possible. Oftentimes, they get away with these tactics because consumers believe the company is on their side. Now, you know better than to fall for catchy jingles.
If your vehicle sustains damage in an accident, hire an attorney to be your advocate. Learn more about your rights and legal options by scheduling a meeting with an experienced personal injury attorney in Houston, TX.