Documents Involved in a Total Loss Claim
Once a price is agreed upon, the insurance carrier will require you to convey the title of the vehicle to the insurance company. This is in your best interest. You should not be obligated for ongoing property tax payments if the vehicle is no longer with you.
The documents used to complete the total loss transaction include the bill of sale and odometer statement, the power of attorney, and the certificate of title. If you have financing on the vehicle, the bank holds your certificate of title. In these cases, you would sign an authorization allowing payment directly to the finance company and authorizing the finance company to release title directly to the insurance carrier.
Many clients are concerned when they are asked to sign a power of attorney in a total loss claim. This document is safe to sign. Under North Carolina law, the property damage claim is entirely separate from the personal injury claim. Even if the insurance carrier sneaks hidden release language into the property damage documents, these releases are illegal, null, and void. The purpose of the power of attorney is to allow the insurance carrier to directly apply for transfer of title. Our Department of Motor Vehicles can be very strict when considering title application documents. If there is anyerror or concern with the paperwork, the DMV will reject the title transfer application. The power of attorney allows the insurance carrier to resubmit applications and complete the title transfer process without your involvement.
Retaining Your Salvage Vehicle
A total loss claim is essentially a forced sale. They pay the full fair market value of the vehicle and take possession of the damaged vehicle. Once the insurer secures legal title, they will then sell the damaged vehicle through auction to recover a portion of their payout. This is the typical and recommended approach. However, as owner, you do have the legal right to retain the damaged vehicle after the total loss claim is closed.
If you choose to retain salvage, the insurance carrier will reduce the amount they pay you for your total loss claim by the amount they estimate as the fair market value of the damaged vehicle in its post-accident condition. Salvage value is typically determined by securing bids from experienced wholesalers and parts dealers.
If you intend to keep the damaged vehicle, the adjuster will determine the value of the wreckage. Once the adjusters determine salvage value, they then reduce your total loss value/payment by the salvage value. If you wish to confirm the adjuster’s salvage value determination, you have the legal right to request the name, address, and contact information for the salvage dealers who offered bids to purchase the vehicle for the amount indicated by the adjuster (11 NCAC 04.0418(3)).
If you do retain salvage, the insurance adjuster will notify the Department of Motor Vehicles and a salvage notation will be made on the vehicle title. This would significantly decrease the resale value of the vehicle if you do repair and later sell it. Unless you have significant experience with vehicle repairs or a true need for the undamaged parts on your vehicle, it is typically best to avoid salvage retention.