The initial insult of having a negligent driver running into the back of your car is nearly always followed by the secondary insult of hearing how little the insurance company thinks your destroyed car is worth.
This article should help arm you with information and a strategy to get the insurance company's attention and potentially add recognized value to your property loss claim.
Here is how the dialogue usually goes:
Adjuster: Hello, Mr Smith?
Adjuster: This is Brian Jones from the insurance company. Sir, I went out to the tow yard to price out your vehicle. Based on the year, make, model and of course the extensive mileage, I can issue you a check for $4335.32.
Smith: That's it? But I only had the car a year and paid more than twice that for the car.
Adjuster: Well, sir, I priced it out. That is all we see it as being worth. Oh, and we will need you to sign over title before I can cut you that check.
Smith: But I owe more than that to the finance company.
Adjuster: Yes sir. However, we don't factor in how much financing is on the vehicle. We priced it out. That is the price we are prepared to pay.
Sound familiar? Colorado residents get this sort of bad news all the time.
What Can Be Done?
A. Know The Law:
Our adjuster in the sample dialogue really never told Mr. Smith the law. And that might not have been an accident.
The law states that if the at-fault driver is found responsible in a court of law for the accident, she is required to pay the replacement value of the property she destroyed. In fact, nothing in the law says what the at-fault party's insurance company must pay. The person with the final responsibility to pay for losses is the negligent driver.
The reason the insurance company for the negligent driver calls you out of the blue and offers you money is not out of kindness. In fact, the contract of insurance (called the insurance policy) entered into between the at-fault driver and her insurance company requires them to protect their driver from claims of negligence that could be brought against her. So the insurance company calls you and tries to get you to take some money because their agreement requires them to indemnify (legally protect) their insured (the at-fault driver).
If, however, you choose to take the matter to court, then the insurance company has to hire a lawyer for the driver. This is called the insurance company's obligation to defend. Therefore, after a car accident, the adjuster knows that his company is contractually obligated to the insured (the negligent driver) and therefore must either come to terms with you on property damage, and often, physical injury damage, or they will have to defend that driver in court.
Despite how confident the property damage adjuster sounds on the telephone when he tells you he "priced out your car," believe me, that confidence is typically just an act. That adjuster is trying hard to sound confident, exceedingly knowledgeable, and imply that you have no choice.
Understand that you do have a choice. You can tell him NO.
B) Your alternatives to taking the insurance company's first offer:
1). Get insurance Companies to Compete:
If you have "full coverage" on your vehicle, that typically includes "collision coverage."
Generally, collision coverage pays for your car even if you caused the accident yourself. However, this coverage is even applicable where the damage was caused by someone else. If you have this coverage, nothing requires you to simply deal with the adjuster or insurance company for the at-fault driver.
We recommend hearing the figure that the at-fault insurance company is willing to pay, do not accept that figure during this conversation, and then begin the process with your own insurance company. Consider taking whichever deal is better for you.
The only difference between the price your insurance company will offer you versus the at-fault insurance company's price is your deductible. Your insurance company will send their own adjuster out and "price out your vehicle." They will then call you and run through the same valuation process and then will say something like this: "so we value your car at $5600 minus your $500 deductible."
Some Specific Things to Consider with this option:
a. Your deductible is not a big deal.
If you decide to go with your own insurance company's valuation (minus the deductible), your next call can be back to the at-fault insurance company, you can tell them you are going with the price that your insurance company offered and that you want them to simply reimburse your deductible. They will do it-no questions asked. If for some reason they don't, your own insurance company will go after them on your behalf for it.
b. No insurance company will value your car exactly the same.
So, if you can get a couple insurance adjusters to valuate your car, you will end up often with sizable differences it what they offer you.
c. Your premiums will not change.
If you are not at fault for the accident, even if you go through your own insurance, your insurance rate should not go up, even if you choose to have your own insurance pay for your car. Your insurance will pay for your car and then demand that the at-fault driver's insurance pays them back. So it runs full circle and, in the end, this is an easy way to add value to your property damage claim.
2) Make the insurance company show you the basis of their property loss valuation.
"Well, we priced it out." What does that mean exactly? Possibly nothing.
With an understanding from the "know the law section" of this article, you now understand that the at-fault insurance company is making an offer they hope you take and sign away your rights to sue the at-fault driver.
Alternatively, were you to sue, you would be asking for replacement value of the vehicle. Is that Blue Book? No. Replacement value is basically what a Colorado resident would have to pay, including dealer handling, tax, possibly shipping for a pretend vehicle that is as similar as possible to the vehicle destroyed.
If you have ever bought or sold a house, you know that the single largest consideration for an appraisal is the "available comps" (available comparisons).
In other words, you cannot know the value of something without examining what others have paid for similar things. The adjuster who says "we priced it out" should be asked "based on what?" That question alone could result in the adjuster re-working his figures and netting you thousands of additional dollars on your property damage loss.
Property damage adjusters, like others in the workforce, will cut corners to save time. The only true way to price out the current replacement value of a vehicle to compare the prices of vehicles sold is by researching "comps." This is regularly done by insurance companies by using figures maintained by the Colorado Department of Motor Vehicles.
If an adjuster is doing his job he should be able to send you current data on perhaps 20-30 comparable vehicles sold in Colorado-some older, some newer, some with higher mileage, some with lower. On the weight of these comps, you will see that at best, "we priced it out" is really just a "loosy-goosy" approximate range. Even if the adjuster did a thorough job in obtaining comps, you can nearly always make a solid argument based on his own data that a higher settlement figure should be considered.
If the adjuster tells you he won't show you his comps, be polite, but hang up and consider your other options including suing the driver who caused your property damage. Under no circumstances should you do business with an insurance company who won't be transparent.
3) Hire your own property damage appraiser:
Sounds expensive, huh? Actually, it's quite affordable.
For $150-$250, you can locate an appraiser in the local phone book or on the internet. Like appraisers in other fields, if they are working for you, their figures can give you some benefit of the doubt, instead of giving it to the insurance company. If there truly appears to be thousands of dollars difference between the insurance company and what you know to be the true replacement value, you should strongly consider this approach.
Once you send your appraiser report to the insurance adjuster, you will find that the adjuster is no longer all that confident in his position. In fact, while you now have a certified expert who could come to court and prove your property loss, the adjuster is suddenly just a non-expert like the rest of us.
This is a bonafide way to add value to an insurance company's property valuation.
4) Send your own Comps to the Insurance Company
If you do not think that the insurance company's evaluation of your property damage is thousands, but simply hundreds, off the mark, you might consider clipping comps for similar vehicles from the classified ads in the newspaper.
In response, the adjuster will generally tell you that asking prices for vehicle in newspapers are not very accurate. They will tell you that selling prices, such as the Motor Vehicle Department records they used, are more accurate. However, the classified ads are some evidence of fair market value.
If the insurance adjuster is convinced that you will not settle the property claim unless they move to a certain figure, they may eventually move to that figure and use your newspaper comps as the basis for justifying their decision to a supervisor.
Cars are a depreciating asset.
Take the car off the sales lot and it plummets in value. Often, despite our best efforts, people end up with less for their property loss than they would have hoped. However, understand that regardless of how confident the adjuster sounds, you are in a position to bargain. Often times these insurance companies have a range in which they can settle your total loss.
- Ask lots of questions: always make them document how they got to their figure,
- Don't be afraid to challenge their figures - or their assumptions about your vehicle.
- Whereever possible, get two insurance companies competing for the resolution of your claim.
One last point-though cars are a depreciating asset - People are not.
While the insurance company might have the upper hand when it comes to the value of your car, the value of your personal injury case can often be another story. Even if you already got less than you had hoped for your car, please do not assume the insurance company holds all the cards when it comes to your physical injuries, your future medical needs, and your wage loss claims related to your car accident.
Even if you have never consulted a lawyer before for anything, with these sorts of claims you should take advantage of a free consultation and review your particular case with a well-qualified trial lawyer.
At Anderson Hemmat & McQuinn, we are more than happy to spend the time necessary with you in person to help you determine whether your claim could benefit from our services.