Auto Insurance Claims: How an adjust determine a car is recoverable, hi art, car light

Question
My car is stolen and found front end totally stripped. The adjuster told me that the car is worth $4800 and repair cost $2900 so it is recoverable and I will get $2400. I am moving and do not have time to wait. I negotiate with them for just paying me $3000 after deduct $500 as I already had a buyer willing to pay $3500 then my car was stolen. The adjuster suggested me to sell my car as it is to get another $500. He gives out a few numbers for me to call, I called no one even want to pay for $100. I asked my buyer if the car is totally recovered is he still interested. He said no. This means after repairing the car diminish in value.

My question is how an adjuster determine to repair at such a high cost when a car cannot sale as it is even for a couple of hundreds $ as he suggested. It is to me like out of common sense. You don't repair something at a cost worth much more than itself unless there is a sentimental value (in this case, $2900 vs. not even $500). If his decision is right can diminished value claimed? This is in MA.

Thank you so much to answering my questions.

art

Answer
Hi Art,

Most insurance companies will declare a car, light truck, or SUV to be a total loss when the preliminary cost of repairs  reaches some pre-determined percentage of the vehicle's value. Generally, the percentage used is anywhere from 70% to 80%. A total loss is declared when it is determined that it is in the insurance company's best financial interest to declare the vehicle a total loss. This percentage is an insurance industry practice and in most cases is not related to a state law. There are only a few states that require a vehicle be declared a total loss when a certain threshold is met. Most states allow an insurer to repair a vehicle all the way up to 100% of the vehicles value.  Another way insurance companies calculate if a vehicle should be totaled is to determine what they could sell the salvage for and then subtract that figure from the value of the vehicle. If the cost to repair the vehicle exceeds that figure then the vehicle is a total loss.

In your case, the insurance adjuster has determined that your car is worth $4800.00. 75% of that figure is $3600.00. So the cost of repairs would have to be at least $3600.00 before they would consider totaling it. You should ask the body shop to look over the car very carfully to see if there is anything that the insurance company missed that would increase the cost of repairs by $700.00 which would bring the total cost of repairs to $3600.00 or more. Otherwise, you will have to have the vehicle repaired.

In your state you can not collect diminished value from your own insurance policy.

I hope this helps
Richard Hixenbaugh