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Maryland Insurance Administration • 800-492-6116 • www.mdinsurance.state.md.us
A Consumer Guide to Auto insurAnCe
5. has mileage that is within the greater of 4,000 miles or 10 percent of
the mileage on the damaged motor vehicle at the time that the damage
occurred unless the vehicle is limited in production, specialty in nature, or
older than 10 model years at the time of total loss.
Generally, insurers refer to the National Auto Dealers Association (NADA) Official
Used Car Guide, Kelley Blue Book or CCC database to determine your vehicle’s
fair market value. The offer will be based on that value plus the applicable taxes and
transfer fees, less the amount of your deductible, if applicable. Alternatively, the
insurer may determine the fair market value of your vehicle by obtaining a quote
for a substantially similar vehicle from a qualified dealer at a location reasonably
convenient to you. If the insurer uses the quotation to make its offer, it will add the
applicable taxes and transfer fees and then subtract the deductible, if applicable.
If a vehicle is damaged by collision, fire, flood, accident, trespass, or other
occurrence to the extent that the cost to repair (excluding cosmetic damage) the
vehicleforlegaloperationonahighwayexceeds75%ofthefairmarketvalueofthe
vehicle prior to sustaining damage, by law, the vehicle is considered “salvage.” If
you decide to keep the damaged vehicle for salvage, there will be a deduction in the
settlement offer for the amount of the vehicle’s salvage value.
You may request that the insurer put, in writing: (1) its settlement offer; (2) an
explanation of the method used to arrive at the offer; (3) a detailed explanation of
the calculation of the motor vehicle’s total loss value, including the calculation of
any value added to the motor vehicle by options; (4) a list of all the deductions that
will be made from the value of the motor vehicle; and (5) a copy of the inspection
guidelines relied on to determine the condition of the vehicle at the time of the
loss. An insurer is required by law to respond within 7 business days of your
request. Upon receipt of the insurer’s written settlement offer, you may either
accept or, in writing, reject the offer and make a counteroffer based on quotes you
have gotten from dealers for a substantially similar motor vehicle, ads you have
found for a substantially similar motor vehicle, or any other source of valuation
for a substantially similar motor vehicle. If you make a counteroffer, the insurer
has 5 business days within which to accept your counteroffer or to provide you