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According to the Office of the Illinois Secretary of State, there are over 300,000 motorcycles on the road in Illinois. Although less than 1% of all crashes involved a motorcycle, motorcycle accidents accounted for 14.6% of all fatal crashes and 3% of all injury crashes according to the Illinois Department of Transportation. In 2019 alone, there were almost 3,000 motorcycle crashes in Illinois.
With these serious accidents comes the hassle of dealing with your insurance company which is financially incentivized to pay you less than the fair value of your motorcycle. In this article, we discuss how the value of a totaled motorcycle is calculated and what you can do in the event of a motorcycle accident.
Have you been injured in an accident? Get help from the experienced lawyers at The Kryder Law Group.
As with all motor vehicles in Illinois, a motorcycle is deemed a “total loss” when its cost of repair plus its scrap value exceeds the fair market value of the bike prior to the crash.
As an example, let’s assume your motorcycle had a fair value of $6,000 at the time of your wreck. If your motorcycle’s scrap value was $2,000 and would cost $5,000 to repair, then your motorcycle is “totaled” since its scrap value and costs of repair exceed its fair market value ($7,000 scrap and repair versus $6,000 fair value).
When your motorcycle is a total loss, your insurance company must pay you its full market value, minus any deductibles.
According to The National Association of Insurance Commissioners (NAIC), fair value (or fair market value) is defined as the amount at which an asset might be sold or bought in a recent transaction between two willing parties. NAIC further explains that the the best evidence of fair value are quoted market prices in active markets and so should be used as the basis for the measurement.
In simple English, the NAIC is stating that the market value is what an average buyer would pay for your bike in its current condition (before the wreck) on the open market. This value is different than the Kelley Blue Book value or the NADA value, which often can provide a low-ball estimate for your bike’s value. The fair value takes into account unique features, personalization, and sentimental worth that an appraisal guide may not reveal.
This is different from a motorcycle’s actual cash value (ACV), which represents the replacement cost minus depreciation of a damaged bike at the time of the loss.
Just like with a totaled car, the insurance company must pay the full market value, minus any deductibles. The full market value is the value of the motorcycle at the time of the accident, not the time of the purchase. Usually, the full market value is less than the purchase value as depreciation, miles driven, wear and tear are factored in and deducted from the motorcycle’s value. If your motorcycle has low miles and well-maintained, it will be worth more when calculating fair value.
Under the Illinois total loss formula, the cutoff value of repair is the fair market value of the motorcycle prior to the accident minus its scrap value. If the actual cost of repair exceeds this value, then the motorcycle is considered a total loss, and an insurance company has no obligation to pay for repairs.
In the event of a total loss, you are entitled to the full market value of your motorcycle at the time of the accident, minus any deductibles. To see whether your insurance company is offering you a reasonable settlement for your bike, calculate its actual cash value and market values. Additionally, having your bike appraised by a third-party is another way to assure yourself of receiving a fair settlement for your totaled bike. Insurance companies employ their own in-house appraisers who have the insurance company’s best interests in mind. As a result, these appraisers might underestimate the value of your motorcycle.
It is critical to obtain a second opinion from an independent expert appraiser. When assessing the value of your totaled motorcycle, an impartial appraiser will not have any financial interest in the result and will be more objective.
Auto shops typically use three types of parts to perform repairs. Naturally, high quality, original parts are the most expensive, and insurance companies avoid paying for these parts whenever possible.
While can request that your insurance company use OEM parts to repair your motorcycle, they have the right to use non-OEM parts if the cost of using OEM parts is unreasonable and so long as the non-OEM parts are of like kind and quality. To minimize their costs, insurance companies almost exclusively use generic non-OEM parts to keep costs down, although under Illinois law they are required to disclose this practice whenever it is employed.
The insurance company is financially incentivized to pay out the least amount of money in the event your motorcycle is totaled. If you believe their offer is not the fair value, you have the right to object to the offer and demand a higher payment. To increase the chances that they are willing to come to the bargaining table, be prepared to back your demand up with evidence.
Kelley Blue Book can be an excellent starting resource. If it is an expensive motorcycle, it may be worth retaining an appraiser. Documentation of proper maintenance records and special features is also helpful when proving your bike is worth more than the Blue Book numbers. Your motorcycle dealership may also have this information, so you should contact your dealer as well.
If your efforts are unsuccessful, your may have to file a lawsuit or arbitrate your claim. However, this process can be expensive and should only be done as a last case scenario.
The insurance company must pay all sales taxes, licensing fees, and transfer fees if you purchase a new motorcycle. As Chicagoans know, vehicle sales taxes and fees can be quite expensive, so hold on to your purchase documents!
Unfortunately, if the fair value of your motorcycle is less than your loan balance, you will be responsible for the difference. Gap insurance can be helpful in these instances, as it will cover any shortfall between the fair market value and the balance on your loan.
If you were in an accident where the other driver was at fault, you may be also entitled to compensation from that driver’s insurance coverage to cover any shortfall. When making a claim, do NOT provide any written or recorded statements because insurance adjusters use those statements against you to attempt to pay out less than what you are rightfully owed.
If your bike was totaled, there is a good chance that you have been seriously injured too. If that is the case, it is crucial that you speak with an experienced motorcycle accident lawyer immediately. If the other driver was at fault, you may be able to recover damages for your injuries, lost wages, and pain and suffering. Call today for a free consultation to discuss your case.
The insurance company will likely have an adjuster and attorney working on their behalf. When you’ve been seriously injured, you should too. A motorcycle accident lawyer can help you by:
A skilled personal injury lawyer will know how to obtain the maximum compensation for your injuries. To determine how much your case is worth, contact The Kryder Law Group, Accident & Injury Lawyers for a free consultation. The consultation is free, and you will not owe any attorney fees unless we win your case.