Your Rights When Your Vehicle Is Damaged
When your vehicle is damaged because of the negligence of another, you do have certain rights according to North Carolina law and the rules and regulations of the North Carolina Department of Insurance. In almost all instances our office will be dealing with the other person’s liability insurance company through their adjuster. Even if the personnel at the Law Offices of Hardee & Hardee assist you in the handling of your property damage claim, you may still need to have some contact with the insurance adjuster.
REMINDER: Always limit your conversation with the adjuster to property damage issues only. Do not give any statements to anyone about the facts of the collision or about your injuries!
CAN I DO IT MYSELF?
Because it is rarely cost effective for you to hire an attorney to pursue your property damage claim, this pamphlet has been prepared by the Attorneys at Hardee & Hardee to assist you in negotiating with the adjuster. We are unable to represent individuals for property damage claims when they are not a client of our office, unless otherwise agreed.
If you are a client of ours, we will help you handle your property damage claim as a courtesy. It is still always your duty to mitigate, or minimize your loss. For example, delaying settlement of the property damage can result in unnecessary storage fees, depreciating car values, and increasing repair costs which may give the insurance company an excuse not to pay for the entire vehicle damage claim.
WHERE DO WE START?
If your vehicle is damaged in a collision which is caused as a result of someone else’s negligence (fault), the first thing we try to do is contact the liability insurance company for the at fault party. Often it is difficult to find insurance information. If you have information that might aid our office, please contact us immediately. Once we have obtained sufficient information to report your claim and have done so, we must often wait for the insurance company to set up your claim and assign an adjuster.
Often there will be two adjusters, one to handle the property damage and one to deal with us on your personal injury claim. You can often help our office obtain the name of the liability insurance company from the “exchange slip” provided to you by the investigating officer at the scene of the collision. After we contact the liability carrier by telephone, we always follow up with a written notice of your claim. Once we send a written notice to the liability insurance carrier, the insurance company starts its investigation.
The adjuster assigned to your claim will have to complete their investigation of your claim before they accept or deny the claim. Unfortunately, our office often has limited control over the amount of time involved before the insurance company makes a liability decision.
If the property damage is accepted and your car is drivable, then you may be able to negotiate the settlement by yourself with the adjuster. Of course, we will be available to help you in that negotiation. If you are satisfied with the offer, then your property damage claim can be settled. Even though you are injured, you can settle the property damage claim. We will always leave open the personal injury claim for later settlement. In other words, the liability insurance company is prohibited from forcing you or us to settle your injury claim at the same time you settle the property damage claim.
If you do not agree with the settlement offered by the adjuster, you have the right to reject their offer, but this does not mean that we will necessarily be able to recover any more monies on your vehicle. We will always request that the adjuster tell us the specific details they are relying on in support of the offer.
WHEN IS A VEHICLE A TOTAL LOSS?
A motor vehicle is considered a total loss when the amount of the repairs (including supplemental claims such as projected rental during the period of repair) equals or exceeds 75% of the pre-accident cash value, which is sometimes referred to as the vehicle’s Fair Market Value (F.M.V.).
Generally speaking, the liability insurance company is required to pay the Fair Market Value (F.M.V.) or pre-accident cash value of the vehicle right before the collision occurred. In simple terms, the F.M.V. is the value a seller, not forced to sell, and a buyer, not forced to buy, would agree upon for the vehicle immediately before the collision giving rise to the property damage claim.
Insurance adjusters generally have a book value they use to arrive at F.M.V. They may have some “wiggle” room based on the condition of the vehicle, but there is generally little room for negotiation. Book value is supposedly F.M.V. and, as such, this gives both sides a little leeway to negotiate. Many insurance companies use the National Automobile Dealers Association (NADA) publication entitled “Official User Car Guide” which is published monthly. Our office has a current copy which we refer to when we negotiate on the value of your vehicle. Some liability insurance companies have their own methods to arrive at valuations. Some insurance companies consider their system superior to the NADA Book commonly used. Notwithstanding, no publication is completely accurate and they should be, and are indeed, only “guides”. As such, there is usually some basis to negotiate in most cases.
EXAMPLE: If the vehicle’s pre-accident F.M.V. is $8,000.00 and the estimates for the cost of repairs are less than $6,000.00 then the liability insurance carrier is obligated to only pay for the cost of repairs. However, if the estimated cost of repairs if $6,000.00 or more, then the liability insurance company has to pay the pre-accident F.M.V. of $8,000.00 because the vehicle is considered a Total Loss. Frequently, problems arise when claimants fail to understand that the law does not require liability insurers to pay more than the Fair Market Value. If F.M.V. is $8,000.00 and the cost of repairs is $9,000.00 then you will only recover $8,000.00. In other words, you can’t recover more than the F.M.V. even when the cost of repairs exceeds the F.M.V.. Unfortunately, this is true even if the F.M.V. is less than what is still owed on a vehicle.
You should always continue making car payments even if the car it totaled. You are generally contractually obligated to continue making payments, notwithstanding the condition of your vehicle. If you are behind on your loan payments, this will only make the negotiation on your total loss much more difficult.
WHAT HAPPENS IF WE CAN’T AGREE ON AN EVALUATION?
If you, or we, are unable to reach an agreement as to F.M.V. then the adjuster will usually base any further settlement offer, not only on published regional average values of similar vehicles, but also on the value of the vehicle in the local market. Local F.M.V. must be determined by using either the local market price of a comparable vehicle or, if no comparable vehicle can be found, quotations from at least two qualified dealers within the local market area.
Your vehicle is not worth more because you recently bought new tires or replaced the engine. Usually, these items are considered maintenance and they do not enhance the value. Upkeep of your vehicle helps to maintain the value, not increase it. Sometimes, a new paint job will be considered, but usually not. Still, be sure to advise our office of any recent major expenses and be sure to provide us with the applicable receipts.
If your vehicle was in better than average condition prior to the collision, the adjuster is required to give due consideration to this fact in arriving at a value, but if you vehicle was not in good condition, this will actually lower the value of your vehicle.
The adjuster will usually provide substantiation for the F.M.V. of your vehicle (when it is a total loss), including estimates, evaluations, and deductions used in calculating the payment, as well as stating the source of these values.
WHAT DOES “SALVAGE VALUE” MEAN?
If the vehicle is a total loss and we agree on the vehicle’s pre-accident F.M.V., and the adjuster is willing to pay the F.M.V., in exchange for a check we must provide the liability insurance company with the Title to the vehicle and possession of the vehicle. In other words, the insurance company is not going to pay you F.M.V. and let you keep the vehicle. At the very least, the vehicle can be stripped and some of the parts sold. The value of what is left of the “total loss” vehicle is referred to as the “salvage value”. When the adjuster pays the F.M.V. then you must sign over the Title to the vehicle. If you wish to keep the vehicle, then the insurance company will pay you F.M.V. minus the “salvage value”.
Usually the “salvage value” is between 10% – 25% of the Total Loss Value. In other words, if you wish to keep the vehicle, then you have the right to do so, but they will offer less money to allow you to keep the salvage. We generally will ask the adjuster to give us two offers, one if the insurance company takes the vehicle and one if the client keeps the vehicle. The liability insurance company usually will have the salvage dealer who will purchase the salvage for the amount claimed as salvage value by the adjuster.
WHO GETS THE TOTAL LOSS CHECK?
If your vehicle is financed, we will need to determine the pay-off to the finance company. The liability insurance company must pay the finance company. They are required to do this by law. If there is any money left after the pay-off, they will write you a check for the difference. Sometimes the check from the insurance company may have your name and the name of the finance company on the check and turn it over to the finance company. The finance company will pay off the loan and refund the difference to you as your equity in the vehicle.
If the pay-off on the loan is greater than the check from the insurance company, then the finance company gets the entire check and you will still owe the finance company the difference unless you had purchased “gap” insurance. (Gap insurance is insurance you purchase when you buy the vehicle. It is sometimes required by the lessors for leased vehicles and sometimes provided in financed purchase. Another type of optional insurance you might have purchased is “repair or replacement” coverage. “Repair or replacement” coverage provides that if your vehicle is damaged, your automobile insurance company will pay either the reasonable cost of repairs or the cost of a new auto, whichever is less). If there is insufficient money to pay off the loan and you do not have any supplemental insurance, you may be able to use substitution of collateral to get another vehicle and continue making loan payments. Generally, if you are “Top-heavy” on a vehicle (in other words, you owe more than the vehicle is worth), you would normally be at a standstill. Notwithstanding, if this situation arises, you can ask the dealer where you purchased your vehicle if they would be willing to do a substitution of collateral.
What happens in this situation is that the insurance company sends the check for the F.M.V. to the finance company, which in turn sends the Title to the liability insurance company and transfers what you owe on your vehicle to a new loan on another vehicle selected by and the dealer. This procedure allows you to settle the property damage claim as well as provide you with a replacement vehicle. Moreover, usually you will not be required to make another down payment on the subsequent purchase.
You will usually be required to purchase the subsequent vehicle from the same dealer because they must agree to this procedure. If your vehicle is not financed, then the liability insurance company will write you a check and you may or may not, at your choice, get the vehicle repaired.
SUPPOSE SOMETHING GOES WRONG AFTER THE REPAIRS ARE MADE…
If you sign a release involving a repair to a vehicle, that release does not bar you from later asserting a claim for the damage to the vehicle which was unknown to you or the adjuster at the time you signed the release, if the discovered damage was caused by the collision and which damage could not be determined or known until the repair or attempted repair of your vehicle. You have up to thirty (30) days after repair to make claim for diminished value.
WHO GETS THE REPAIR CHECK?
If your car is financed, the insurance company will write the check in your name and the name of the repair facility. This is because the damage to the vehicle reduces the value of the car which means the finance company’s lien rights are also diminished. Therefore, the finance company will always require that the damaged vehicle be repaired so its interest in the vehicle remains protected. If your vehicle is not financed, you get the entire check.
WHEN AM I ENTITLED TO A RENTAL VEHICLE DURING REPAIRS?
You are entitled to a rental vehicle from the time of the collision if the vehicle is disabled until the repairs are finished. If your vehicle is not disabled, you are entitled to a rental vehicle starting on the day that the body shop actually begins repairs. It is important to remember that the adjuster for the insurance company knows how many days it will take to repair the vehicle and will generally not allow any additional days for the rental vehicle. If the body shop is slow in completing the repairs, the insurance company will not pay for any more time for a rental than was reasonably necessary to repair your vehicle. It is always important to pick a reputable body shop that not only stands by its repairs, but also will be responsible for any delays.
Generally, you should be provided with a rental vehicle comparable to the vehicle which was damaged. Some insurance companies have arrangements with automobile rental companies whereby a call from the liability company to the rental company will produce a vehicle to you at fairly modest costs which the liability insurance company will either pay directly or reimburse you later.
In those instances when an insurance company will not provide a rental vehicle because the insured has not reported the claim or they are still investigating the claim, you can rent a vehicle at prevailing market prices and then if the liability company accepts liability they should ultimately pay for the vehicle and possibly allow you to continue renting. If you rent a vehicle on your own, you do take a chance that the insurance company will not accept responsibility. Moreover, always rent from the contract rental agencies that charge insurance rates. If not, often the liability insurance company will refuse to be liable for the initial rental costs at the higher rates of insurance if rates were available at another company. Mileage and gas are not paid for by the liability insurance company, just the daily rental cost of the vehicle.
WHAT IF I HAVE ADDITIONAL QUESTIONS REGARDING MY PROPERTY DAMAGE CLAIM?
If you have additional questions after you have read this post, please do not hesitate to contact our office at 252-355-1998. This post answers some of the most commonly asked questions about property damage claims. Again, if you are our client, we are here to help you with this portion of your case and will try to offer alternatives if possible.