by Crawford Law Firm » Thu Jun 21, 2012 03:06 am
In Pennsylvania, a total loss is generally declared when “the cost of repairing a motor vehicle exceeds its appraised value less salvage value, or the motor vehicle cannot be repaired to its predamaged condition.” 31 P.S. § 62.3(e). Recently, I have observed different insurance carriers declare a total loss when the cost of repair was less than the assessed value. Moreover, the cost of repair to vehicle value ratio (i.e. the percentage) seems to vary from carrier to carrier. For example, Carrier A declared a total loss when the cost of repair was 65% of the vehicle value. On another claim, Carrier B declared a total loss when the cost of repair was 80% of the vehicle value. I have been unsuccessful in locating the regulatory or legal authority that: 1) permits the vehicle to be totaled when the cost of repair is less than the assessed value and 2) sets forth the guidelines for determining when such a total loss determination is appropriate. Can anybody point me in the right direction
Posted: Thu Jun 21, 2012 03:32 am Post Subject:
I can point you to your own post which gives this information:
"the cost of repairing a motor vehicle exceeds its appraised value less salvage value, or the motor vehicle cannot be repaired to its predamaged condition.”
I see nothing that does not allow an insurance company to consider paying the value of the vehicle instead of the repair cost. If the vehicle has a scratch that would cost $100 to repair I see no reason why the insurance company can consider the vehicle to be a "total loss" (really just two words) and paying it's value. The owner can feel free to keep the "salvage" (again, just a word) and collect the difference.The point I'm making is that paying more on a "total loss" when it can be repaired for far less only benefits the vehicle owner. The state sets _maximums_ that can be paid on a repairable vehicle because the don't want frankenvehicles on the road.
With all of that said, most insurance companies will use a percentage across the board is they think that will work. That is, apply the same percentage of value when considering a total loss as the same amount in every state. It's just easier for them. They can feel free to set the "percentage" low in any state... it's only the max (closer to 100%) that can get them in trouble.
So really in PA they should be using the value less the salvage value and comparing this to the vehicle's value. But instead the carrier is probably going to stick with a percentage as it's easier to use the same determination in every state.
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