Going through a total loss situation? It happens when the insurance company identifies that your vehicle is irreparable. And, if the repairs are done, the cost to fix it will be higher than its actual worth. This is called a total loss!
It suggests that your vehicle is no longer safe to drive on the road. And, if it is repaired, it needs to pass a thorough inspection test to be qualified for safe driving.
But one question that may strike your mind is how do they do that? How does an insurance company decide that a damaged vehicle is a total loss? It uses the state’s law, which is called the Total Loss Threshold Arizona.
Most states in the US use one of the two major rules regarding total loss. They either apply a total loss formula or a percentage-specific figure to determine it. Arizona is one of those states that follow the TLF or total loss formula.
As per this method, your car will be declared a total loss if its pre-cash value or ACV is equal to or less than the total of the repair cost and salvage value. Take a look at the TLF:
Repair Cost + Salvage Value ≥ Actual Cash Value (ACV)
Now, let us break down these terms to make it simpler for you:
Let us find out how the total loss formula (TLF) works in Arizona with the help of an example: Imagine,
Your car’s actual cash value (pre-accident worth) was $10,000.
The repair cost after the accident is $6,500.
The salvage value is $4,000.
Now, apply the Total Loss Formula (TLF):
Repair cost ($6,500) + Salvage value ($4,000) = $10,500
We know that the ACV was $10,000. Now, the total of the repair cost and salvage value is greater than the Actual Cash Value. It means that your vehicle is a total loss.
When your car is deemed a totaled vehicle, it does not mean that nothing is in your control now. You have some options as per the Arizona Total Loss Threshold that you should be well aware of. As it can help you make the right and timely decision:
The first thing that you get on your plate is a settlement offer, which is an agreement to resolve the claim between you and the insurer. The amount they offer you will be based on the ACV (your vehicle’s worth before the accident) minus the deductible.
After receiving the offer, you have two options. You can either accept the payout in the settlement or dispute it in case you believe that your car is undervalued. It allows you to negotiate a higher payment with the help of solid evidence such as a maintenance record, appraisal report, or listing of comparable vehicles.
In case you accept their insurance offer, you need to sign over the title and transfer the ownership to them. It means you are officially handing it over to the insurance company. After the process is done, the insurance company is the legal owner of the vehicle, which they usually sell to a salvage yard.
It is the option under Total Loss Threshold Arizona in which you can keep your totaled vehicle instead of giving it to the insurance company. However, you will still receive a payout, but after the deduction of the salvage cost. Most people opt for this option when they think that their car is still usable.
However, choosing owner retention comes with some responsibilities, too. You need to apply for a salvage title, then a rebuilt title to meet the safety requirements.
What steps you take after the declaration of total loss to your car depend on how much you are aware of these rules. It affects the following process entirely. By knowing the law, you understand your responsibilities, interests, and rights.
Plus, it helps you understand the process the insurance company follows for making decisions. You can also make decisions for yourself, as it gives you the chance to find where the action is required, whether for fair settlement, keeping, or giving up the vehicle.
The process of negotiating a total loss claim can be overwhelming. But with ADR Claims, you do not have to handle it all by yourself. We are your trusted partner when it comes to seeking professional guidance and assistance during the total loss claim process. We help you negotiate a better outcome that you are looking for!
Ensure a fair settlement and make an informed decision by getting in touch with the ADR-Claims team. Our seasoned experts can assist you in the best way if you are unsure about the process or have questions regarding the Arizona Total Loss Threshold. Do not wait any longer, contact us today!
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