A car is considered a total loss in New York when the cost of repairs plus the salvage value is at least 75% of the vehicle’s actual cash value. Actual cash value refers to how much the car was worth immediately before the damage, while the salvage value is the car’s worth in its damaged state.
When a car is totaled according to the New York totaled car law, the policyholder will receive the car’s actual cash value from the insurance company if the loss was covered. Insurance companies in New York are also required to pay for applicable taxes and title costs if the policyholder purchases a replacement vehicle.
New York Total Loss Threshold
The New York total loss law is also called a total loss threshold. Threshold systems account for the fact that damage is often more extensive than it appears. For instance, the threshold of 75% assumes that a car with that much damage is likely to have even more problems that won’t be visible until a mechanic starts repairing the car.
New York Total Loss Law Example
- Pre-crash value: $15,000
- Cost of repairs: $3,000
- Salvage value: $8,000
- Sum of salvage value plus repair cost: $11,000 (less than $11,250, which is 75% of the pre-crash value)
- Result: car is not declared a total loss
In this example, the driver’s car is not totaled according to New York law because the sum of its repair cost plus its salvage value is less than 75% of its pre-crash value, or actual cash value (ACV).
It’s also worth noting that the vehicle used in this example probably cost more than $15,000 when it was originally purchased. The ACV is meant to reflect the car’s worth in its depreciated state, not the cost of replacing the vehicle. If you want a higher payout in the event of a total loss, you should look into optional coverage add-ons like new car replacement or gap insurance.
For more information on what it means for you if your car is totaled, check out WalletHub’s totaled car guide.
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