Electric Cars Are Creating a Problem When They Get Damaged in Accidents

As more and more electric cars come onto our roadways, people in accidents—even seemingly minor accidents—are finding that their property damage insurance, and repairing their vehicles, are presenting some very serious problems.

How Property Damage Claims Work

To understand the problem, it helps to understand generally how property damage (damage to your car after an accident) works.

Many people mistakenly believe that when your car is damaged, you submit a claim to the insurance company, and they pay whatever it takes to fix your car. But that’s not how it actually works.

They only repair your vehicle, if the cost to repair the vehicle is less than 80% of the total value of the car. If repairs would cost more than 80% of the value of the car, the insurance company can opt to just declare the car total loss, not repair the car, and pay you the market value of the vehicle.

Here’s the Problem

Before you say “great, now I have money to buy a new car,” you actually in many cases, do not, because they don’t pay you what a new car costs—they pay you the value of your car at the time of the accident.

And it doesn’t matter if you have a loan for more than the value of the car; the insurance company doesn’t have to pay you what you owe to the bank, they only have to pay the value of the car.

Let’s say you buy a $40,000 car, with a loan for $35,000. A few months later, the car was declared a total loss by the insurance company. At the time of the accident, the car is valued at $28,000, but you still owe $30,000 on the vehicle.

The insurance company will give you $28,000, which will go to pay off the car loan, but you still would have a $2,000 loan balance on the car.

That’s right—even though you didn’t cause an accident, and even though you paid for insurance, you now have no car, no money to get a new one, and you owe $2,000.

It’s worth noting that gap insurance can fix this problem, if you opted to take out a policy with gap insurance, but if you did not, you could be stuck.

Electric Cars are Being Declared Losses

And this is why electric cars are so difficult—they are extraordinarily expensive to fix. That means that even small accidents, which would be repairable if the car were a traditional car, end up with the vehicle being declared a total loss.

So, someone who gets into an accident, even a small one, can’t just get the car repaired. They will end up with the whole car being totaled, for what seems like a “minor accident,” and thus, the owners are finding that they owe balances on car loans after these smaller car accidents.

Contact the Tampa personal injury lawyers at Barbas, Nunez, Sanders, Butler & Hovsepian and schedule a consultation today for help with your injuries, and other insurance issues you may face after an accident.

Sources:

caranddriver.com/news/a42709679/tesla-insurance-fixes-expense/

reuters.com/business/autos-transportation/tesla-insurers-take-different-paths-deal-with-expensive-repairs-2023-01-26/