Even though motorcycles offer many benefits compared to traditional passenger vehicles, they have drawbacks. For starters, they aren’t as crash-worthy. When an accident involves a motorcycle, the bike is more likely to suffer severe damage than the motor vehicle. The damage it suffers is usually worse than the other vehicle.
If you were recently in an accident with your motorcycle, you might receive news that your motorcycle was “totaled.” You likely have many questions. What does this mean? What happens next?
Dealing with insurance companies can often be a nightmare, especially after a motorcycle accident. However, a better understanding of total loss insurance claims can help you receive all the compensation you’re entitled to after a motorcycle accident. In addition, having an experienced motorcycle accident attorney to represent your claim can also ensure that you receive maximum compensation not just for your bike but also for your other damages.
How Insurance Companies Calculate the Value of a Claim?
Most motor vehicle insurance claims involve both economic and non-economic damages. For claims involving property damage and bodily injuries, the adjuster will provide a settlement offer for each. Insurance companies do not lump these payments together.
The claims adjuster determines how much it will cost to repair your motorcycle. You should exercise your right to ensure that the insurance company’s repair estimate covers the costs of any necessary repairs. Most insurance companies require claimants to obtain at least one repair estimate.
The adjuster usually chooses the lowest repair estimate to save the insurance company money. You want to protect your interest by getting your motorcycle necessary and covered repairs. They protect their interest by only paying what they must to repair your bike.
If the repair shop replaces your motorcycle’s parts with brand new parts, the insurance company might argue that your motorcycle’s new parts enhance its value. They can use this point, often called “betterment,” to reasonably reduce the value of your claim.
The good news is that when a qualified motorcycle accident attorney represents you, they can stand up for your rights and help you obtain the best repairs and compensation possible for your claim.
Repairing Your Motorcycle
You can take your motorcycle to any repair shop you choose. However, the insurance company has a specific amount they are willing to pay for the damage.
If you take your motorcycle to your own repair shop, you will need to pay them at the time of the repairs and submit proof to the insurance company. You will pay for any repairs over what the insurance company is willing to pay for. The insurance company will reimburse you for the repairs, subtracting the amount over what they said they’d pay and any applicable deductible you have on your policy.
For instance, if the insurance company agrees to pay $2,500 for damage to your motorcycle, but you take it to a shop that charges $3,500, you will pay the additional $1,000. If you have a $100 deductible, you will pay that in addition to the $1,000, for a total of $1,100. Some insurance carriers will require you to pay the full amount upfront at the shop, and the insurance company will send you a check for the portion they agreed to cover minus your deductible.
If you decide to have your motorcycle repairs completed at an insurance company-approved repair shop, they pay the shop directly. You will need to pay your deductible directly to the repair shop after they finish the repairs.
What is a Deductible?
When you file a claim with your own insurance carrier, your deductible is the dollar amount you must pay before your insurance policy covers the damages. Deductibles help lower policy premiums. With most motorcycle insurance policies, the higher your deductible, the lower your monthly payment. Suppose the value of the property damage is less than your deductible. In that case, you won’t receive anything from the insurance company for it.
You won’t have to pay a deductible if the other party’s insurance company is responsible for your damages.
Example of a Claim Involving a Deductible
A car rear-ended your motorcycle while you were waiting at a red light downtown. Your auto insurance company determined that your motorcycle needed $4,000 worth of repairs. You have a $500 deductible for property damage coverage. You took your motorcycle to an insurance-approved repair shop, where you paid your $500 deductible. Your auto insurance company paid the remaining $3,500 directly to the repair shop.
What Happens When a Motorcycle’s Damages Exceed Its Total Value?
Some motorcycles sustain so much damage that repair costs exceed the motorcycle’s worth. This is often referred to as the vehicle being totaled. In other words, it’s a total loss and not worth repairing. You won’t know if this applies to you until after the insurance company assesses the damages to the motorcycle.
About half of all states allow insurance companies to use the Total Loss Threshold (TLT) to determine if a motorcycle is a total loss. Generally, if the repairs surpass 50 to 75 percent of the bike’s value, the insurance company will deem it a total loss.
Example of Using TLT
You live in a state where the TLT is 70 percent. Before the accident, your motorcycle had a value of $10,000.00. As a result of an accident, it will cost $7,000.00 or more to repair the damages. Since the damages are at least 70 percent of the motorcycle’s total value, the insurance carrier considers it a total loss.
The other states use the Total Loss Formula (TLF). With this method, the insurer adds the repair expenses to its salvage costs. If that figure exceeds the Actual Cash Value (ACV) of the motorcycle at the time of the accident, it will be a total loss.
If your motorcycle is a total loss, you have two options:
- Surrender your motorcycle to the auto insurance company in exchange for the amount that they say your bike is worth minus your deductible. You can use the money to purchase a new motorcycle (or whatever you like), and the insurance company will sell your damaged motorcycle to a salvage yard. However, if you still have financing left to pay on your bike, you will need to pay that first with the insurance proceeds. If there are additional funds after paying the loan off, you get to choose what to do with them.
- Keep your motorcycle and pay for the repairs yourself. Your insurer will pay you its ACV, less your deductible and the amount you might have salvaged your motorcycle for.
How Does the Insurance Company Determine ACV?
ACV is also called “market value” and represents the depreciated value of a motorcycle. Insurance companies determine a motorcycle’s ACV in a similar way that real estate agents determine the value of a home. They look at what exact or similar motorcycles have sold for in your area. Often, they rely on sources such as NADA or Kelley Blue Book.
Factors that can impact ACV include:
- Wear and tear
- Owner upgrades
- Any upkeep performed to keep the motorcycle in service
For example, if you just put new tires on your motorcycle, the ACV should reflect that investment. You can use evidence such as receipts for parts and repairs, pre-accident photos, and accurate service records to attempt to negotiate a higher ACV.
If My Bike Is Totaled Due to the Fault of the Other Driver, Will They Pay for a Rental?
The responsible party’s insurance company must cover the following for the motorcycle rider suffering the loss for a reasonable period:
- A rental car or motorcycle during the time it takes for the total loss claim to be processed and delivered to the motorcycle rider
- The reasonable rental value or “loss of use” for each day the rider is without their motorcycle within a reasonable period however, this period will vary between insurance carriers.
Other Property Damages
Your motorcycle may not be the only piece of property that sustained damages in your accident.
Other damaged or lost items that may be covered under an insurance policy after a motorcycle accident include:
- Boots or other riding gear
- Hearing aids
- Jewelry or watches
- Cargo on the motorcycle
Insurance policies applicable to the accident should pay for the repair or replacement of these items.
General, also referred to as non-economic damages, don’t come with a bill or a receipt like economic damages do. As such, they can be harder to prove. However, there’s no ignoring that a connection exists between the at-fault party’s actions and the injured person’s general damages.
Depending on the specifics of an injury claim, general damages can include:
- Pain and suffering: The real physical pain and discomfort experienced at the time of the accident and suffering resulting from injuries treatments
- Physical impairment or disability: For example, not being able to care for yourself after a brain injury or being unable to walk independently due to a spinal cord injury (SCI)
- Disfigurement or scarring: The embarrassment or humiliation because of severe scarring or an amputation
- Loss of enjoyment of life: When an injury keeps the victim from the enjoyment of everyday activities, recreational pursuits, exercise, traveling, hobbies, and family traditions, among many other things
- Mental anguish, including feelings of distress, fear, anxiety, depression, trauma, or grief
- Loss of consortium: Also sometimes called loss of affection or companionship, it’s the loss of marital, parental, or other benefits of meaningful close relationships
Since non-economic damages can’t be established in the same tangible way that economic damages can be, they can be challenging to prove. Therefore, it’s crucial to have a knowledgeable motorcycle accident lawyer representing your claim so that you can recover fairly for your non-economic damages.
If the victim suffers some type of permanent disability, they should be compensated accordingly for both economic and non-economic damages. In these cases, having an attorney on your side is imperative.
Suppose someone acted intentionally to cause injuries or with extreme disregard for your safety and well-being. Perhaps you were hit by a driver who was drunk or was deliberately running from the police and caused your accident. In that case, your lawyer might ask the court for punitive damages. You can ask your attorney if punitive damages might apply in your case.
Sometimes referred to as exemplary damages, these typically only apply in extreme cases with representation from an experienced personal injury lawyer.
Unfortunately, personal injury settlements with insurance companies don’t involve punitive damages. Instead, courts reserve punitive damages for cases involving the at-fault party’s willful, malicious, oppressive, fraudulent, or reckless behavior. Although much less common, courts use punitive damages to deter the at-fault party and others from behaving in similar ways in the future.
Were You in a Motorcycle Accident? Contact an Experienced Motorcycle Accident Attorney Today
If you were in a motorcycle accident, having an experienced motorcycle accident lawyer on your side is crucial. Don’t let the insurance company take advantage of you during this difficult time. You deserve full and fair compensation for all of your damages including your totaled motorcycle.
Keep in mind that your rights have an expiration date. You will lose them if you don’t exercise them by the legally provided deadline. Denver personal injury law firm’s attorney can ensure you are aware of all of your rights and that you take action before any legal deadlines.