After a motorcycle accident, you naturally want to receive fair compensation for your damages. Most people focus on the money they deserve for their tangible and physical damages. The responsible driver’s insurance company must put you in the same position as if the accident never happened, using money as a yardstick.
When you are involved in a motorcycle accident, the insurance company should pay you both economic and non-economic damages. Economic damages represent the actual money that came out of your pocket because of the accident. This category of damages includes lost wages and medical bills. It also encompasses the property damage that you have suffered in the crash. Here, the property damage is to your motorcycle itself.
The Insurance Company Will Total a Motorcycle When It Does Not Make Sense to Repair It
When the adjuster inspects the damage, they will come up with an estimate of what it will cost to repair your motorcycle. Even though motorcycles are comparatively small, they are complex machines that can cost as much to fix as cars.
It does not make economic sense to spend more money than the bike is worth to pay for repairs. The adjuster will compare the damage to the value of the motorcycle. If the bike costs more to repair than it is worth, the adjuster will declare your motorcycle a total loss.
Instead of paying to fix the damage, the insurance company will write you a check for the value of the motorcycle. It does not matter that the motorcycle had sentimental value to you. For the insurance company, it is strictly a business decision. They are not in business to respect the human element of things.
How Adjusters Decide Whether to Total a Motorcycle?
Adjusters may use two principles to guide them in deciding whether your motorcycle is a total loss:
- Is the cost to repair the vehicle higher than the insurance value of the bike?
- Does the cost to repair the motorcycle exceed a certain percentage of the value of the motorcycle?
The principle the insurer follows depends on the law of the state. In any situation, the adjuster cannot simply total a vehicle whenever they want or because they think it is in the best financial interests of their employer. However, the adjuster may try to tip the scale toward a determination of totaling your bike if it can save the insurance company money.
The Formula for Declaring a Total Loss in Missouri
As an example, Missouri uses a formula to determine whether the insurance company can declare a total loss:
- The calculation will begin with the pre-crash value of the motorcycle.
- Then, the insurance company will estimate the costs of repairing the motorcycle.
- The insurer will add the repair cost to the salvage value of the bike.
- If the repair costs plus the salvage value exceed 80 percent of the pre-crash value of the motorcycle, the motorcycle will be considered a total loss.
There is an 80 percent loss threshold because there may be hidden damage beyond the cost of repair that may not be apparent when the adjuster makes the estimate. The mechanic might begin repairs and spot problems the adjuster did not see. Missouri’s threshold is higher than the one used in many other states, as it is a function of state law.
You Can Lose Money When Your Motorcycle Is Totaled
Totaling a motorcycle is not always in your economic interests. The insurance company will pay you based on the motorcycle’s value at the time of the crash. Assuming that you have put miles on your bike, this value will be lower than what you paid. There is always a pricing premium from a new bike to a used bike.
If your bike is totaled, it will likely cost you a significant amount of money to replace it. In a sense, the insurance company is forcing you to sell the bike at the cash value of the motorcycle, which is often less than a used bike with those features will cost. You will likely be disappointed with the check that you get to pay for your totaled motorcycle.
How the Insurance Company Values Your Motorcycle?
The insurance company may look at these factors in coming up with the insurance value of your motorcycle:
- How well-maintained the motorcycle was at the time of the accident
- Specific options that you had on your bike
- The mileage on the bike
- The demand for a bike that is similar to yours
- Local market conditions for used motorcycles
Ideally, the adjuster will use the Kelly Blue Book and the National Automobile Dealers Association to come up with a value. However, you cannot trust the insurance company and its calculations. Always ask for more information about the basis for calculating actual cash value.
You Can Still End Up Owing Money on Your Motorcycle After a Settlement
The market value of your motorcycle has nothing to do with what you paid for it. You might still owe plenty of money on the bike, and the check you get is nowhere near enough to pay back your loan. The insurance company is not required to consider what you paid in the first place.
If you paid for extras on your bike, the insurer might not factor these expenditures into the value as much as you want. Even if you do not want to get a new motorcycle (or cannot), you may still end up owing money after the bike is declared totaled.
The amount you get can certainly be much less than it costs to buy a new motorcycle. In all likelihood, totaling the motorcycle will cost you money. In most cases, repairing your bike is in your best economic interests if it is possible to fix it. Missouri does not require the insurance company to reimburse you for the sales tax you paid when buying the bike in the first place. You need to go to the state to request a refund of the sales tax.
The Insurance Company May Want to Total Your Motorcycle
An insurance company may be very quick to total your motorcycle because it can help them cut their own tab. They do not care about whether you can afford another bike or that it will usually result in you receiving less than your motorcycle is worth. They are merely looking out for their own financial interests, most often at the expense of yours.
Totaling your motorcycle is an opportunity for the insurance company to pay you out at a lower valuation. Then, they get to keep their motorcycle and take advantage of the salvage value. The insurance adjuster will act as if you have no say whatsoever in the decision.
Hire a Motorcycle Accident Lawyer to Do the Work for You
From your standpoint, you need to do extensive market research on other motorcycles before you accept the insurance company’s offer. There is a chance that the insurance company might make a comparable offer to what you can buy on the open market. If that is the case, it may be in your best interest to accept the offer. However, the insurance company fully knows the market and is likely looking to save some money on the margins.
You must also do your own homework on what it may cost to repair the vehicle. The insurance company may want to give a higher estimate of repair costs if an adjuster decides it is in the company’s interests to declare your motorcycle totaled.
Your motorcycle accident lawyer is an important resource when deciding whether to accept an insurance company’s settlement offer. They can inform you of legal standards for total loss declarations, among many other things.
Gap Insurance Can Help Cushion the Financial Blow
Chances are that your bike will be worth less than you think once the insurance company completes its calculations. You may end up with sticker shock if you try to take your check and go out to buy a new motorcycle. You will almost always get less than it will cost you to buy a different motorcycle.
Ideally, you should have gap insurance on your motorcycle, so you are not as much at risk of unfair decisions to total your bike. The gap insurance will simply give you the extra money it takes to make up the difference between the settlement check and the amount you still owe on your bike. Buying gap insurance is often the smart thing to do, and you are less at the mercy of the insurance company (at least for the property damage part of your claim). Then, a decision to total your motorcycle will not cause you economic stress.
If You Cannot Fight the Decision to Total, You Can Fight for More Money
You may have a hard time fighting the insurance company’s decision to total the motorcycle. They are generally given wide leeway in these decisions under state law so long as they use a permissible formula. You might contest some of the valuation inputs that factor into your check, but you cannot force the insurance company to write a check for repairs.
Your attorney can try to negotiate the compensation for the motorcycle itself when they negotiate an overall settlement with the insurance company. Your attorney can come up with their own calculation of what the motorcycle was worth before the accident. Even a couple of thousand dollar gap can make a large difference when you still have to make payments on a wrecked motorcycle. The last thing you need is to end up far upside down on your motorcycle payments when dealing with other financial challenges.
You Need Legal Help After a Motorcycle Accident
A motorcycle accident attorney will perform many functions for you after your accident. You likely cannot handle these administrative or legal matters on your own, both due to your injuries and a relative lack of knowledge of how to handle insurance companies.
It is not a knock on you as a plaintiff to say that you cannot deal with the insurance company. You are up against a business with unlimited resources they use to pay you as little as possible. You need to fight against them as strongly as possible to get what you deserve after an accident.
All you need to do is speak with an attorney and decide to hire them for your case. You can schedule a free initial consultation to discuss your potential claim with them. Your attorney will learn more about your case and advise you about your legal options. They are here to protect you and your legal rights and stand up when the insurance company tries to use its normal tricks to cost you money. The thousands of dollars they try to take from you here and there add up to real money very quickly.
Call a Motorcycle Accident Lawyer as Soon as Possible After an Injury
Motorcycle Accident Attorney, Phillip J. Barkett
The time to call an attorney is right after a motorcycle accident. Many issues like these will arise as you deal with the aftermath of your crash. You are likely also dealing with serious injuries, medical treatment, missed work, and more. Not only are your bike repairs on the line, but also your medical expenses, lost income, and other extensive losses. You need legal help to ensure you receive a full insurance settlement.
You do not have to worry about money getting in the way of obtaining the legal help that you need. A motorcycle accident attorney does not expect any money upfront or while your case is pending. Your lawyer will work for you on a contingency basis, which will help ease some of our financial burdens while you wait for a motorcycle accident settlement.
You have plenty to worry about without having to stress about how you will afford and pay for an attorney. Once you retain a lawyer, you will at least have more peace of mind about the legal process and possibly financial compensation.