When an insurance company totals a car for economic reasons

[curious100]

What is the name of your state? California

My husband's truck was "totaled" a week ago. The driver of the other car, and his insurance company, accept full liability for the accident. (My husband was stopped at a red light and was rear-ended.) All of the damage is cosmetic--tailgate smashed and bent, bumper smashed in, and both rear fenders dented--but it drives just as good as before.

Due to the age of our truck (1993), the insurance company has decided to total it instead of repair it, which is a shame, because it was in very good condition and ran great. Of course, we would have preferred to have the truck repaired back to it's pre-accident condition, but they say it's not worth it and will only offer us the fair value of the truck. We accept the fact that our truck will be totaled, but based on research we've done, we dispute the amount they're quoting us as the baseline value and believe it's worth about $800 more than they say.

We intend to keep our truck, since it drives perfectly well--no mechanical damage whatsoever was done--it just looks like crap. We've had the truck inspected prior to having it re-registered at the DMV, and it passed just fine. However, since we want to keep it, the insurance company is now reducing the settlement offer by another $458 to make-up for the fact that they cannot sell off the parts. So, that makes their settlement offer about $1250 below what we believe the value of the truck is.

All of this happened while my husband was minding his own business and doing nothing wrong. I know the law says we are to be made whole and are not entitled to a windfall, but I don't see how a low settlement rationalized by the insurance company, leaving us with a smashed-in truck that that we cannot legally drive w/o further expense to us, (the insurance company says all expenses of re-registering a salvaged vehicle are to be paid by us and are not included in the settlement) is making us whole. We are even being penalized for keeping our truck and not letting them sell off its parts. Seems like being returned to where we were before the accident would be making us whole.

We plan on negotiating with the insurance company in an attempt to raise their offer to what we believe the truck is worth, plus inspection and registration costs, but I'm not sure if we'll be successful or not. Since we're being nickled and dimed, and we're only talking about $1500, I'm trying hard not to contact an attorney.

What I'm trying to find out is if we're required to deal only with the insurance company, or can we pursue the driver for damages above a low settlement offer? If we cannot come to terms with the insurance company, can we pursue the driver for what we believe the car is worth, plus expenses of the inspection and re-registration? Can we ignore the insurance company altogether and pursue the driver, letting him turn to his insurance company for partial payment to us with him paying the rest? If we go to small claims court, will the judge defer to the insurance company and require us to settle with them because the driver has coverage?

Does anyone know of a site that spells out California law, and what damages one is entitled to collect and not collect?

Thank you for any help or guidance.

 

[moburkes]

You're entitled to actual cash value. No lawyer will even take your case, unless you plan on paying his fee, upfront, yourself. All you can do is provide prrof that the vehilce is worth what you say it is worth. Since CA does not recognize diminished value, there is no obligation on the insurance company's part, or the at fault party, to provide you with enough money to repair or replace the vehicle. Sorry.

 

[curious100]

Thank you for your response. I was afraid that would be the answer.

Just to clarify: Is the insurance company legally entitled to deduct money from the fair market value of a vehicle they've deemed a total loss, if the owner retains the vehicle, thereby preventing the insurance company from selling off parts?

For instance, if both parties agree the value of the vehicle is $3,458, can the insurance company legally reduce the value by whatever they estimate they will lose by not being able to sell off parts (in this case $458), making the net value and settlement offer $3,000? Or, can we tell them to take a hike and pay us the full value of the car?

Thanks again--I appreciate the advice.

 

[moburkes]

Yes, absolutely they can.

 

[stephenk]

Your best bet is to just sue the other driver in small claims court. You will be awarded the lower of two values: cost of repairs or the fair value of the truck at the time of the accident. The court does not care about the insurance company not being able to sell your truck or get money for parts.

The other driver's insurance company will negotiate with you to avoid having a judgment entered against their insured.

Just be sure you bring the repair estimates and all information you have on the fair market value of the truck.

Small claims limit is $7500.

 

[ecmst12]

Of course they can deduct the salvage value, though my company does not deduct salvage for any vehicle more then 10 years old. But you are basically buying the totalled vehicle back from them.

ALL total losses are deemed so for economic reasons.

You are probably better off letting the insurance company keep your car and using the settlement money to buy a similar old truck that will NOT have a salvage title.

 

[racer72]

the insurance company is now reducing the settlement offer by another $458 to make-up for the fact that they cannot sell off the parts.

Is the insurance company legally entitled to deduct money from the fair market value of a vehicle they've deemed a total loss, if the owner retains the vehicle, thereby preventing the insurance company from selling off parts?

Technically you are buying the vehicle from the insurance company for $458. They are not deducting the money from the settlement. If you accept the full value of the offer, the insurance company will take the vehicle and sell it for salvage.

 

[alnorth]

To think about it another way, if the insurance company did not deduct the lost income from salvage, then the person making the claim could easily make a profit rather than just be made whole. You would always choose to keep the car, take the money for the value of the car, and sell the wreck for salvage yourself, pocketing the extra money.

 

[curious100]

Thanks to everyone for their responses and advice. This is a real learning experience.

I've tried calling my own insurance company, but since they're not involved, they're of no help. So, right now we're only hearing what the other insurance company is telling us.

The fact is, we are keeping the vehicle to use. Even though it's a 1993, it has less than 100,000 miles on it and runs great. We are the original owners and have taken very good care of it. We have other vehicles--this truck has been used solely on weekends for Home Depot excursions and the like. So, we plan to continue using it as we always have, whether we fix the dents or not. In fact, we just used it last weekend to bring home plants from the nursery. It's been inspected and passed with flying colors. The only thing wrong with it is cosmetic.

I'm positive we cannot replace our truck with an equivalent for the amount they're offering us--we've looked and looked. So, we're keeping it. The insurance company has the good fortune in being able to total it and claim loss of salvage income. It seemed to us that they *were* deducting the salvage income from the settlement, because they subtracted it from the baseline value.

Am I wrong in assuming that if no insurance companies were involved, that we would not even be discussing loss of salvage income? If the other driver had no insurance, and we had no "uninsured motorist", wouldn't we be able to sue the other driver in small claims court for the fair market value of the truck, then that would be that?

To stephenk: Since the other driver's insurance company initiated contact with us after he called to report the accident, are we required to continue to deal with them, or can we ignore them and deal with the other driver? If we do as you suggest--sue the other driver in small claims court and receive a judgment for the fair market value--will a judge then order us to surrender the truck or "buy it back", thereby putting us back in the same position we're in currently?

We're just trying to get fair market value--no more, no less. How can one even dispute the salvage figures they claim they'll lose? People not in the industry, with no injuries and damages too small for lawsuits are just out of luck when it comes to finding information.

I'm sorry if these questions are basic, but we have no one to ask or advise us, and we are just trying to get the best, and fairest, results possible. Thanks to everyone for your adivce.

 

[moburkes]

There is no law that requires them to give you fair market value - whether it is the insured directly, or the insurance company, indirectly.

In your first post, you said that the insurance company was offering you fair market value. Now you're saying that all you want is fair market value.

 

[curious100]

There is no law that requires them to give you fair market value - whether it is the insured directly, or the insurance company, indirectly.

In your first post, you said that the insurance company was offering you fair market value. Now you're saying that all you want is fair market value.

I'm sorry the way I wrote it was confusing. What I said was ....

"...but they say it's not worth it and will only offer us the fair value of the truck. We accept the fact that our truck will be totaled, but based on research we've done, we dispute the amount they're quoting us as the baseline value and believe it's worth about $800 more than they say."

What I meant by that sentence is, they say they will give us fair value of the truck, which is what they're calling baseline value and actual cash value in the estimate. (They interchange both terms.) We are disputing their estimate of baseline/actual cash value as $800 too low.

As I'm not an attorney, I have no idea if there is, or isn't, a law that requires the insurance company or the insured, directly, to give us fair market value. However, I don't see how anyone can just pull a number out of the air. A fair settlement must be based on something tangible, and if the insurance company says the truck isn't worth the repair costs, they must come up with a figure they say the truck is worth based on something credible, don't they? So, yes, we want a fair figure, whatever it is called.

Perhaps the term "fair market value" is to what you're objecting. So, I'll use their words of baseline value and actual cash value. Their settlement offer was the same dollar amount after each of those phrases, and we believe it's $800 too low BEFORE they deduct another $458 for lost salvage income.

 

[moburkes]

So, provide them with proof of vehicles in similar condition that are worth what you believe yours is worth.

 

[curious100]

So, provide them with proof of vehicles in similar condition that are worth what you believe yours is worth.

Thanks, moburkes. That has always been the plan, as I mentioned in my first post

I was merely trying to address some of the points mentioned in others' responses, as well as question something regarding the small claims issue.

Again, I appreciate everyone's help.

 

[ecmst12]

The number isn't pulled out of thin air, it's based on sales of similar vehicles in your area. They should send you a copy of the report that they got the FMV number from, so you can see it's not just made up.

If you went to court with the driver who hit you, the judge would tell you the same thing. When a car is totalled out, the insurance company is buying it from you for fair market value. If you want to keep it, you have to buy it back, for the same price that they could get if they sold it for salvage.

 

[curious100]

The number isn't pulled out of thin air, it's based on sales of similar vehicles in your area. They should send you a copy of the report that they got the FMV number from, so you can see it's not just made up.

If you went to court with the driver who hit you, the judge would tell you the same thing. When a car is totalled out, the insurance company is buying it from you for fair market value. If you want to keep it, you have to buy it back, for the same price that they could get if they sold it for salvage.

Thanks for your response, ecmst12. Yes, I know the number isn't pulled out of thin air, I was just responding to another poster's comments about there being no law requiring we receive fair market value. I guess I should have used the term actual cash value. I'm not sure what the correct term is. But, no, I didn't think they just made the figure up.

No, they haven't sent us a copy of the report they got the FMV number from, so I will ask for it. I would like to see it and compare it to the data we've found this past week. They just gave us the figure as actual cash value with no explanation. They did the same thing with the salvage figure they want to deduct, too, btw. Do they have to show us how they came up with that figure, too? Thanks for that info.

I'm still confused about going to small claims court, though. Are you saying that even though the other driver, and not the insurance company, will be appearing in small claims court, the judge will still order it totaled? Would he/she do that if there were no insurance companies involved?

This is info provided by a local attorney regarding going to small claims court when you cannot come to terms with an insurance company:

Small claims court is easy and inexpensive. In my experience, the insurance companies hate it when you sue their insured in small claims court. The insurance company can not come in and defend their insured, the negligent driver. No attorneys are allowed in small claims court. I have never heard of an insurance company having their insured bring expert witnesses into trial.

Usually the insured/negligent driver wants nothing to do with the case and wants their insurance company to make the case go away. Suing in small court is one of the tactics I suggest to people who are not getting a fair offer to settle. Let a small claim court judge tell you what is fair, if you feel the insurance company is taking advantage of you. After all, you'll get your day in court. And yes, the insurance company is likely to make a better offer to keep their insured from having to go in front of a judge.

If you are awarded monetary damages, the insurance company is obligated to pay but the judgment is against the other driver. The insurance company has no standing, so they can not appeal. The other driver can appeal however.

Right now, we're collecting all the info we can to prove what we believe is FMV. If we cannot agree, then I think we will file with small claims and let the judge decide.

I thank you very much for your advice.