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What Happens When the Insurance Company Totals Your Motorcycle?
Having the insurance company deem your motorcycle a total loss after an accident someone else caused can make you feel disheartened and concerned. You’re already likely dealing with injuries from the motorcycle accident, and the news your bike is totaled feels like a second blow. You probably have a lot of questions about the situation.
What happens when the insurance company totals your motorcycle? How does the claims process work? What are my rights and options to get full compensation for not only the value of my motorcycle but my other injuries and losses stemming from the crash?
While this blog provides an overview, it’s always best to speak directly with an experienced motorcycle accident attorney near you who can evaluate your unique situation and fight to get you the compensation you deserve.
Determining if Your Motorcycle Is a Total Loss
When an insurance company totals your motorcycle, the cost to repair it to its pre-accident condition is greater than a certain percentage of the bike’s value, or may even exceed the motorcycle’s value entirely. Insurance companies refer to this as a total loss.
Each insurance company has its own formula for determining when a vehicle is a total loss. It typically involves comparing the cost of repairs to the motorcycle’s value – its actual cash value (ACV) or replacement cost value (RCV).
The location of the crash also factors in, as states have different thresholds for defining a total loss. For instance, Florida Highway Safety and Motor Vehicles (FLHSMV) defines a total loss as when the cost to repair or rebuild the vehicle is 80% or more of the cost to replace it with one of like kind and quality.
The insurance adjuster will assess various factors when determining whether to total your bike, including its:
- Make
- Model
- Age
- Mileage
- Upgrades
- Overall condition before the crash
- Resale value
Structural damage to the frame raises the odds of it being declared a total loss. The cost of repairs includes parts, labor, and painting. Your insurer may total it if the repairs cost more than the motorcycle’s worth.
Insurance Company’s Settlement Offer
When someone else causes a crash that totals your motorcycle, the at-fault party’s insurance company must compensate you for the loss. The insurer will make a settlement offer reflecting what they believe is the pre-accident actual cash value (ACV) or the replacement cash value (RCV) of your motorcycle.
To calculate this offer, the adjuster will consult sources like Kelley Blue Book, NADA Appraisal Guides, and CycleTrader to determine the motorcycle’s market resale value. They’ll factor in depreciation based on its age and mileage.
If your motorcycle was older, expect the ACV to be less than what you originally paid. The adjuster might also use comparable vehicles recently sold or listed for sale in your local market to generate a value.
RCV is the cost to replace your totaled motorcycle with one of similar make, model, and condition. Some insurance policies include RCV coverage for newer bikes.
If you have this coverage, you’ll receive a larger settlement reflecting what it would cost to buy a comparable replacement. However, most standard policies only pay out the ACV of your motorcycle at the time of the accident.
If you disagree with the insurance company’s valuation of your motorcycle, you can protest it and negotiate for a higher settlement amount.
You can bolster your position by providing evidence like recent service records, aftermarket upgrades, and photos showing the bike was in excellent condition. An independent appraiser can develop an estimate to counter a lowball offer.
Negotiating with insurance companies is a tricky business. They are for-profit entities that will use tactics to minimize payouts and boost their bottom line.
If you get pushback on a fair settlement amount, it’s time to enlist an experienced motorcycle accident lawyer to handle the negotiations. They understand the games insurance adjusters play and know how to fight back and pursue the maximum compensation you’re owed.
Keeping Your Totaled Motorcycle
In some cases, you may want to keep your totaled motorcycle, either to repair it yourself or salvage it for parts. It could have sentimental value, or maybe you think you can restore it for less than the replacement cost. Whatever the reason, you usually can keep your totaled bike.
If you decide to go this route, the insurance company will subtract the motorcycle’s estimated salvage value from your settlement amount, and you retain the asset. You would then receive a salvage title for the motorcycle, indicating that the insurance company declared it a total loss.
The downside of a salvage title is that it significantly decreases the motorcycle’s value. You can find it difficult to insure or sell. Some lenders won’t finance a salvage title vehicle. In many states, including Florida, you can’t legally ride the salvaged motorcycle until it undergoes a safety inspection to reclassify it as a rebuilt title.
Buying back a totaled motorcycle isn’t the right choice for most people. But if you’re confident you can make the necessary repairs or want to keep it for parts, you can negotiate with the insurance company to do so. Just know you’ll forfeit a portion of your cash settlement.
Replacing Your Motorcycle
The more common scenario is using the insurance settlement to purchase a replacement motorcycle. Once the insurance company totals your bike, they’ll write you a check for its determined value. It’s then up to you to find a suitable replacement with that money.
However, the settlement check may be less than what you owe on the motorcycle if you financed its purchase and have a remaining loan balance. In this case, you would be responsible for paying off the difference out of pocket. One way around this is to have gap insurance.
Gap coverage is an optional add-on to your motorcycle insurance policy that covers the gap between what you owe on the bike and what it’s worth at the time it’s totaled.
It’s especially valuable for new motorcycles, as they depreciate rapidly in the first few years. If you have gap insurance and you’re still paying on your bike when it’s totaled, your settlement check should cover the outstanding balance.
When shopping for a replacement motorcycle, consider any injuries you sustained in the accident. These may necessitate modifications like a more cushioned seat, backrest, or custom foot pegs. Factor the cost of any required alterations into your replacement budget.
You’ll want to purchase adequate insurance for your new ride right away. Many states require motorcyclists to have insurance before they can register their bikes. Some states, like Florida, don’t require motorcyclists to have insurance, but the state offers a certificate of self-insurance for those who qualify.
Regardless, having insurance on your motorcycle is important. Consider adding optional coverages like comprehensive, collision, uninsured/underinsured motorist, and medical payments to safeguard yourself and your bike.
Consult an independent insurance agent to build a policy that fits your unique needs and budget.
Legal Issues and Disputes
Disputes over totaled motorcycles are common between accident survivors and insurance companies. The insurance adjuster might lowball you on the settlement offer, arguing your bike was worth less than it actually was.
They might undervalue your custom upgrades or aftermarket parts. They could also use manipulated data to arrive at an unfairly low valuation.
If negotiations with the insurance company have stalled and you believe they’re treating you unfairly, you need to contact an attorney who handles motorcycle accident cases and insurance disputes.
A lawyer will protect your rights and handle all communication with the insurance company. They can help substantiate the true value of your totaled motorcycle and fight for the full compensation you deserve.
Another option is having an attorney file a complaint with your state’s insurance department.
Most states allow you to dispute an insurance company’s actions if you believe they are acting in bad faith or violating state regulations. You can file a complaint online or by mail. The insurance commissioner’s office will then investigate the matter to determine if the insurance company handled your claim properly under the law.
Additionally, if all other avenues prove futile, an attorney can file a lawsuit and take your case to trial.
From resolving disputes to negotiating top dollar for your motorcycle accident claim, hiring a motorcycle accident attorney is the most effective way to take on the insurance giants and win.
Insurance companies have armies of lawyers, scheming to pay you as little as possible. You need an aggressive legal advocate in your corner who knows all their tricks and will go to battle on your behalf.
Contact an Experienced Motorcycle Accident Lawyer Today
Having your motorcycle totaled in an accident is a stressful, overwhelming experience. You shouldn’t have to pay for the consequences when someone else causes an accident.
Their insurance company should fairly compensate you so you can replace your motorcycle and move on with your life. Too often, though, these massive corporations put profits over people and employ dirty tactics to shortchange those who already suffered so much because of someone else’s negligence.
You are entitled to a settlement that reflects the true pre-accident value of your motorcycle. You have the right to dispute an unfairly low offer, and you can choose to keep your totaled bike or replace it. You should also hire a personal injury attorney as early as possible to protect your interests and build a strong claim for you.
At the Grife Law Firm, we have decades of experience standing up to greedy insurance companies and fighting for the rights of injured motorcyclists. We know the emotional and financial toll an unexpected accident can take. Let us handle the complex legal process so you can focus on healing.
Contact us today for your free, no-obligation consultation to discuss your case and explore your options for pursuing the compensation you need.