What is the Legal Definition of a Total Loss in California

[KevinBadiei]

My question involves insurance law for the state of: California

I own a 2011 Toyota Camry worth approximately $21,000. A storm occurred and water got sucked into the engine and damaged the engine internally. The cost to repair the engine was approximately $4,000. My insurance company, Travelers Insurance, refuses to pay for the repair claiming that my car is a total loss. I do not understand how a $21,000 car can be a total loss just because there is $4,000 in damage to its engine. I do not understand why the vehicle cannot just be repaired for the $4,000. My insurance company has told me that because the salvage value is $14,400, the car is a total loss.

What is the legal definition of a total loss in California? I want to see whether my vehicle meets this legal definition, because if it doesn't, I intend to fight the insurance company on this. I have a hard time believing that a $21,000 car with $4,000 in damage to its engine is a total loss. I do not understand why the insurance company cannot just pay the $4,000 for the repair of the engine and instead considers this a total loss. This appears to be insurance bad faith. What is the legal definition of a total loss in California?

[cdwjava]

Check for "total loss" at the state's Insurance website:

http://www.insurance.ca.gov/0100-con...-insurance.cfm

You should also check your insurer's definition, rights and responsibilities for paying off a total loss.

It seems they are willing to give you $14,400 fr the vehicle. If they declare it a total loss, you may have a hard time registering it again. A "total loss" is also covered here:

http://www.dmv.ca.gov/pubs/vctop/d01/vc544.htm

Why do you think the repairs will cost only $4,000? Will that get the vehicle fully operational once more? Is that a quote from their recommended repair facility?

[KevinBadiei]

Check for "total loss" at the state's Insurance website:

http://www.insurance.ca.gov/0100-con...-insurance.cfm

You should also check your insurer's definition, rights and responsibilities for paying off a total loss.

It seems they are willing to give you $14,400 fr the vehicle. If they declare it a total loss, you may have a hard time registering it again. A "total loss" is also covered here:

http://www.dmv.ca.gov/pubs/vctop/d01/vc544.htm

Why do you think the repairs will cost only $4,000? Will that get the vehicle fully operational once more? Is that a quote from their recommended repair facility?

Check for "total loss" at the state's Insurance website:

http://www.insurance.ca.gov/0100-con...-insurance.cfm

You should also check your insurer's definition, rights and responsibilities for paying off a total loss.

It seems they are willing to give you $14,400 fr the vehicle. If they declare it a total loss, you may have a hard time registering it again. A "total loss" is also covered here:

http://www.dmv.ca.gov/pubs/vctop/d01/vc544.htm

Why do you think the repairs will cost only $4,000? Will that get the vehicle fully operational once more? Is that a quote from their recommended repair facility?

I will check the state's insurance website. Thank you for that link.

I have looked at my insurance contract regarding a total loss. All I have found is that the insurance contract says they will pay the lesser of the cost to repair or the cost to replace, whichever is less. Clearly, the cost to repair of $4,000 is less than the cost to replace. There is also a $1,000 deductible, so the actual amount insurance is liable for is only $3,000 for the repair. Clearly, a $3,000 cost to repair is less than the cost to replace.

They have not valued my vehicle at $14,400 as you state. You have misunderstood what I was saying. The $14,400 is the "salvage value". To clear up any confusion, I quote their letter which states the following:

"We have inspected your vehicle and have determined that it is a total loss. We have enclosed a copy of the market valuation for your vehicle. The following is a breakdown of the Total Loss settlement figures regarding your comprehensive claim:

Actual Cash Value: $20,756.00
Tax: $ 1,608.59
DMV Transfer Fees:$ 13.75
Less Deductible: -$ 1,000.00
Subtotal: $21,378.34
Salvage Value: -$14,486.00
Settlement Total: $ 6,892.34

If you should have any questions regarding this total loss settlement, please call."

This letter has a Traveler's Insurance logo on its letterhead. They are using that the "salvage value" of $14,486 to say that my car is a total loss instead of paying $3,000 for the repairs ($4,000 cost of repair - $1,000 deductible = $3,000 liability to insurance).

Because insurance was refusing to pay the $3,000 they are liable for, I paid for the $4,000 repair myself out of pocket. The repairs were made with all brand new OEM Toyota parts. The repair invoice also says there is a 1 year warranty on the repairs. The car drives fine and there are no problems with it. This car has only approximately 5,000 miles on it and is in excellent condition. Insurance continues to deny paying me the $3,000 they are liable for, and instead says my vehicle is a total loss based on its $14,486 "salvage value." This makes no sense and appears to be insurance bad faith.

Any ideas/suggestions? What is the legal definition of a total loss?

A "total loss" is also covered here:

http://www.dmv.ca.gov/pubs/vctop/d01/vc544.htm

I read Vehicle Code section 544 in the link you provided. It says the standard for a total loss is when the vehicle is "uneconomical to repair." In this regard, section 544 states:

(a) A vehicle, other than a nonrepairable vehicle, of a type subject to registration that has been wrecked, destroyed, or damaged, to the extent that the owner, leasing company, financial institution, or the insurance company that insured or is responsible for repair of the vehicle, considers it uneconomical to repair the vehicle and because of this, the vehicle is not repaired by or for the person who owned the vehicle at the time of the event resulting in damage." (emphasis added)

Clearly, where liability to insurance is only $3,000, that is not "uneconomical to repair" on a vehicle valued at $21,000. Therefore, my vehicle does not meet this legal definition. Any advice on what to do about this?

[KevinBadiei]

Don't all answer at once now. Single file line please...

[pretzl28]

This letter has a Traveler's Insurance logo on its letterhead. They are using that the "salvage value" of $14,486 to say that my car is a total loss instead of paying $3,000 for the repairs ($4,000 cost of repair - $1,000 deductible = $3,000 liability to insurance).

Because insurance was refusing to pay the $3,000 they are liable for, I paid for the $4,000 repair myself out of pocket. The repairs were made with all brand new OEM Toyota parts. The repair invoice also says there is a 1 year warranty on the repairs. The car drives fine and there are no problems with it. This car has only approximately 5,000 miles on it and is in excellent condition. Insurance continues to deny paying me the $3,000 they are liable for, and instead says my vehicle is a total loss based on its $14,486 "salvage value." This makes no sense and appears to be insurance bad faith.

Any ideas/suggestions? What is the legal definition of a total loss?



I read Vehicle Code section 544 in the link you provided. It says the standard for a total loss is when the vehicle is "uneconomical to repair." In this regard, section 544 states:

(a) A vehicle, other than a nonrepairable vehicle, of a type subject to registration that has been wrecked, destroyed, or damaged, to the extent that the owner, leasing company, financial institution, or the insurance company that insured or is responsible for repair of the vehicle, considers it uneconomical to repair the vehicle and because of this, the vehicle is not repaired by or for the person who owned the vehicle at the time of the event resulting in damage." (emphasis added)

Clearly, where liability to insurance is only $3,000, that is not "uneconomical to repair" on a vehicle valued at $21,000. Therefore, my vehicle does not meet this legal definition. Any advice on what to do about this?

Water damage and/or flood vehicles are often "totaled" by insurance companies because of the possibility of damages/issues down the road. It sounds like your engine was hydrolocked from taking in water and needed to be rebuilt. That parts is easy to fix. The issue is if the car was sitting in water or had some of the main electrical components exposed to water, those parts can have issues down road as wiring gets corroded. These things can cause issues with the computers, etc. 3-4 months down the road or longer. Most insurance companies will total the car and move on to avoid these issues so you and them do not have to deal with any reworks or possibility of electrical failure. Electrical issues can be very hard and costly to actually diagnose correctly. Since electronics control the brakes, airbags, engine managment insurance companies don't want to take the chance of having an issue while you are driving the car.

The high salvage value ($14k) is because the car is still in good condition and can be parted out for 2x that much when sold for parts.