What to Do About a “Total Loss”

Keeping or buying a total loss vehicle if your vehicle has been declared a total loss may leave you wondering what that actually means in legal terms.

Simply stated a “Total Loss” means that an insurance company decided it was more practical to pay for the value of the car than it was to pay for the repair of the car. This does not mean the car is not safe to repair just not practical bases on the cost of parts and labor to repair it

ABARI has successfully lobbied for a law that protects consumers and requires a vehicle be totaled at 75% unless the consumer prefers to total it for less.

In simple math a car worth $10,000 dollars will be repaired if the cost is less than $7,500. If the cost is over that then it will usually be declared a total loss.

If your car was determined to be a total loss by an insurance company there is a lot you should know before agreeing to keep that vehicle with the thoughts of fixing it yourself and returning it to the road. The vehicle will not be able to be registered in Rhode Island until all the process is completed.

FIRST AND MOST IMPORTANTLY: You need to secure the services of an Auto Body Repair facility that holds a special salvage rebuilders license if you intend to repair your vehicle. THERE IS NO OTHER WAY!

There are about 250 licensed Auto Body Repair shops in Rhode Island but only about 50 of these shops are licensed as a “Salvage Rebuilder”. If you use the services of any shop not licensed as a SALVAGE REBUILDER you are wasting your money! You need to engage the services of one of these facilities and agree with them on an estimated cost for the restoration of your damaged vehicle.

The Rhode Island Department of Business Regulations does maintain a list of these Salvage Rebuilders.

To go directly to the Department of Business Regulations web-site CLICK HERE

If you are not able to navigate their website to find this list yourself then, you can call the Department of Business Regulations (401-462-9500) and ask for the COMMERCIAL LICENSING DIVISION.

IMPORTANT INFORMATION:

• Not all insurance companies will provide coverage for a vehicle that was rebuilt after a TOTAL LOSS.

• The vehicle will have a “BRANDED TITLE” noting it as a RECONSTRUCTED/REBUILT“ Total Loss.

• In most all cases the value of the vehicle will be greatly reduced.

• Most financial institutions will not finance a rebuilt total loss vehicle.

• The time frame to rebuild a vehicle from once it is deemed a total loss and when the vehicle is ready to be returned to service is lengthy. As a guide the process can take anywhere from three (3) to five (5) months.

• You cannot rely upon the insurance estimate as the true cost of repairs! Once you start the repair process you and you alone are financially responsible for the cost of restoration. Hidden damage or unforeseen cost must be factored into your decision to proceed with the repairs.

• Everything listed on the insurance estimate must be done. You cannot pick and choose what needs to be repaired.

• If the vehicle does not complete the SALVAGE REBUILDING PROCESS or the SALVAGE INSPECTION, the vehicle cannot be sold to anyone other than a salvage yard, and only by the owner of the vehicle at the time of the Total Loss and who is listed on that title.

This is the PROCESS that must be followed!

1. Settle with the insurance company on a value for your vehicle.

2. Verify that the salvage is classed as “Rebuildable” and not that of “Parts Only”.

3. If there are any tow or shop charges that are outstanding you need to know who is responsible for these charges and how they will be paid.

4. You must have clear title to the vehicle. Any and all leans must be satisfied.

5. The registered owner MUST surrender the vehicle’s title to the DMV and then apply for a red salvage certificate title for proof of ownership. This is NOT the same as a registration.

6. ALL repair work must be performed by a licensed auto body “SALVAGE REBUILDER”. Any repair work done by any auto body shop or repairer other than a licensed Salvage Rebuilder will not qualify.

7. The insurance estimate will become the “Blueprint” for how the vehicle is inspected by state officials after the repair work has been completed. Everything listed on the insurance estimate MUST be repaired. You cannot NOT pick and choose what repair work you most need to perform in order to get the vehicle roadworthy.

8. Once ALL REPAIRS have been made, the vehicle must pass a Rhode Island Safety and Emissions inspection. The vehicle must have a new RI STATE INSPECTION STICKER displayed on the windshield.

9. Once the vehicle has passed the safety and emissions inspection you must make an application to the DMV and provide them with ALL REQUIRED DOCUMENTS for them to review. If everything is in order the DMV will then set an appointment with you for the SALVAGE INSPECTION.

The APPLICATION for the SALVAGE INSPECTION to the DMV must be completely filled out. It must be the ORIGINAL signed by both the applicant and a Notary. It MUST contain ALL of the following documents:

1. A Copy of the Salvage Title – both front and back

2. Copies of all receipts for replacement parts and labor used in the repairs. Any receipts for used or salvaged parts must include the Vehicle Identification Number (VIN) showing from what vehicle these parts legally came from.

3. Photos of vehicle showing all damage

4. Copy of the work repair order from a RI licensed salvage rebuilder (No exceptions!)

5. Copy of the insurance appraisal of damages

6. Original salvage inspection certificate

7. Copy of bill of sale

8. Original completed used parts VIN list (This would be a summary of all of the used parts purchased. A simple hand written sheet with 2 columns. One column listing a description of the used part and the second column showing the VIN of the donor vehicle.

9. A CERTIFIED check or money order in the amount of $57.50, made payable to “DMV”

10. The completed APPLICATION FOR SALVAGE INSPECTION along with payment and all required documents must be mailed to the DIVISION OF MOTOR VEHICLES to the address that appears on the form.

At the time of the SALVAGE INSPECTION at the DMV you MUST present the following:

1. The ORIGINAL receipts (Not copies) for replacement parts and labor used in the repairs. Any receipts for used or salvaged parts must include the Vehicle Identification Number (VIN) showing from what vehicle these parts legally came from.

2. Properly assigned SALVAGE TITLE (The original this time)

3. Positive Identification. This could by your driver’s license or ID card.

4. All of the ORIGINAL paperwork (for the copies) that were submitted in the original APPLICATION. This would include the following:

5. The Original insurance appraisal

6. The Original Bill of Sale

7. The Original work repair order from a RI licensed salvage rebuilder

8. Vehicle must be COMPLETELY restored. This means EVERYTHING listed on the insurance estimate!

9. Another set of Photos of the vehicle BEFORE restoration.

You MUST have all of the above documents at the time of the SALVAGE INSPECTION. If anything is missing a new appointment will be necessary, along with another payment of $57.50. If the salvage rebuilding process is not complete or if it failed during the state inspection the vehicle cannot be sold to anyone other than a salvage yard for “parts only”.

Once the vehicle has passed the state SALVAGE INSPECTION the owner must then follow the required DMV procedures in order to register a vehicle that has been branded as a “Reconstructed Salvage Vehicle”

The State of Rhode Island has also issued information on this topic.

DBR BULLETIN 2021-1 (Consumers and Salvaged Vehicles)

You can view this BULLETIN by CLICKING HERE