For many motorcycle enthusiasts, their two-wheeled companion serves as much more than just a vehicle. A motorcycle feels like a symbol of freedom, a statement of lifestyle, and often a significant financial investment.
What happens when an unfortunate accident or theft turns your prized possession into a damaged good?
You turn to your insurance company, but then they declare your motorcycle a total loss—a term that might leave some owners confused and anxious.
Examining what it means when the insurance company totals your motorcycle can give you a better idea of what to do next. Contact a motorcycle accident attorney for legal assistance.
The Process of Declaring a Motorcycle as a Total Loss
When you are involved in an accident, or if someone steals your motorcycle, your insurance company may declare it a total loss.
Criteria That Insurance Companies Use to Declare a Motorcycle as a Total Loss
An insurance company typically declares a vehicle as a total loss when the cost of repairs exceeds the vehicle’s ACV, but this is not a universal rule. Some insurance companies might declare a motorcycle a total loss if the repair cost reaches 60 percent to 80 percent of the vehicle’s ACV.
The insurance company may look at several critical factors to determine when to declare the motorcycle a loss.
- The extent of the damage: Damage to just one part of the motorcycle may sometimes prove much easier to replace or repair than if the vehicle suffers extensive damage in multiple parts.
- The cost of potential repairs: Some repairs will cost considerably more than others due to their nature or location. They may require more in-depth care from a specialist, while other motorcycle areas to fix may need less involvement.
- The model of the motorcycle: Some models can cost considerably more than others.
- The motorcycle’s mileage and condition before the accident: A motorcycle in excellent shape may require more money to replace in its current condition than one that has deteriorated significantly over time.
The insurance company may offer insight into the criteria it used to evaluate whether to declare your vehicle a total loss, or you may only receive a notice that the insurance company has decided to total the vehicle.
A Step-by-Step Description of the Process That Insurance Companies Follow
The process of declaring a motorcycle as a total loss starts with an evaluation of the damage. An insurance adjuster will inspect the motorcycle and estimate the cost of repairs. If the repair costs meet the company’s total loss threshold, they may declare the motorcycle a total loss.
This also applies if someone steals your motorcycle and there is no possibility of recovering it within a specific time frame.
The company will then calculate the ACV of the motorcycle. The process involves determining its fair market value and accounting for factors such as its make, model, year, mileage, and condition before any damages. Note that the insurer’s calculation may not align with your view of the motorcycle’s worth. It also does not consider sentimental value.
The insurance company will typically pay you the ACV minus your deductible. If you disagree with the insurance company’s payout offer, you may negotiate.
If you have any questions about the process or the value of your claim, call an attorney for more information.
The Financial Implications of a Total Loss Declaration
Before accepting a total loss declaration from your insurance company, ensure you understand its short-term financial implications and how it may continue to affect you long term.
How Insurance Companies Calculate Payouts
The ACV method is the most common way insurance companies calculate payouts. They will determine the ACV of your motorcycle and then subtract your deductible. This may not cover the cost of a new motorcycle or even the remaining balance on your loan if you have one.
This is where gap insurance can come into play. If you do not have gap insurance on your motorcycle, you may not receive compensation for any additional value left on your loan. Working with a lawyer can maximize the compensation you recover after losing your motorcycle, decreasing your financial obligations.
The Potential Financial Impact on the Motorcycle Owner
Depending on the payout, a total loss declaration can have a significant financial impact on the motorcycle’s owner. If the insurance payout does not cover your loan balance, you might end up paying off a motorcycle you no longer own.
The payout may also not offer enough to purchase a comparable motorcycle, placing an additional financial burden on you if you need it to get around. The cost of gas may be higher if you use a larger vehicle, or you may end up needing to pay for public transportation.
What to Do When Your Motorcycle Is a Total Loss
When your insurance company declares your motorcycle a total loss, there are several steps you can take to protect your interests and ensure a fair settlement.
Do Not Accept an Early Offer Immediately
Do not rush to accept the insurance company’s first offer. Investigate the value of your motorcycle, considering factors such as upgrades and recent maintenance. Make sure the insurance company has all the relevant information about the motorcycle, and examine your policy to assess your coverage.
Talk to a Lawyer
Contact a lawyer if you have questions about a settlement offer that the insurance company issues after your motorcycle accident. A lawyer can review your policy’s terms and identify any additional coverage, such as gap insurance, which could help with your claim.
Negotiate With the Insurance Company
Armed with your research and a lawyer’s support, negotiate with the insurance company.
To start the negotiation process, gather all the relevant documentation, such as the motorcycle’s market value, maintenance records, and any recent upgrades you have made. This information will serve as evidence to support your case for a higher payout.
Open a line of communication with your insurance adjuster, and provide them with the documentation you have collected. Politely and professionally present your arguments for a higher settlement, citing factors such as the motorcycle’s condition, mileage, and the current market value of similar models.
Be ready for a counteroffer from the insurance company, and be willing to negotiate back and forth. You may need to go through several rounds of negotiation before you arrive at an agreement that fits your needs and reflects the value of your motorcycle. Stay calm, and stick to your points, emphasizing why you deserve a better settlement. You want to secure an offer that covers your damages.
Deal With Disputes
Dealing with a dispute over your motorcycle’s value can feel devastating, especially if it results in an upside-down loan. A lawyer can strengthen your negotiation position in an impasse and secure fair compensation through strategic communication.
Buying a New Motorcycle After a Total Loss Declaration
After a total loss declaration, buying a new motorcycle can feel like a daunting process. You may need to reflect on several things.
Can You Ride Again?
A motorcycle accident resulting in the total loss of the vehicle can also result in severe injuries, including brain or spinal cord injuries, which might make it physically impossible for you to get back on a motorcycle after the accident. Emotional conditions such as post-traumatic stress disorder can also prevent you from getting back on the road after a motorcycle accident.
What Does Your Insurance Payout Cover?
Your insurance payout may cover the full value of a new motorcycle or serve as a deposit on a new model. Carefully contemplate the financial implications of buying a new motorcycle and what they may mean for you in the long term.
Consider Your Insurance Coverage
If you totaled your motorcycle in an accident that your negligence caused, the price of your insurance coverage may go up significantly. Consider the cost of your new insurance policy carefully, as well as the type of motorcycle you will be buying next, as this can also influence the price of the policy. You may want to talk to your insurance agent to understand how much you will have to pay if you get a specific type of motorcycle.
Do Your Research
Do not jump into a new motorcycle purchase. Take the time to research and understand what is most suitable for your needs. Consider any further physical limitations. You may discover, for example, that a touring motorcycle proves more comfortable and better fits your physical capability if you suffered a back injury in your accident.
If you want a faster vehicle, purchase a lighter bike. Try riding several different motorcycles to evaluate how they fit your needs.
Learn About Your Rights After a Motorcycle Accident Resulting in Total Loss
Understanding what it means when the insurance company totals your motorcycle can give you greater insight into the appropriate steps to take after an accident. Do not rush into decisions. Do your research, and work with an attorney to determine the compensation you deserve for your lost motorcycle. Do you have any questions about an insurance claim? Call a personal injury lawyer to discuss your rights and the next steps.