Property Damage in a Motor Vehicle Accident (MVA)
What is "totaling" a vehicle?
If you look at your auto insurance contract, you will notice a provision that if your car is damaged in an accident, your insurer does not have to pay you more than your auto is worth. If it would cost more to fix the car than a certain percentage of the car's value, your insurer will consider the car a total loss, i.e., "total" it. All you will be able to get is a check for the value of the car. This can be bad -- because it usually will not be enough to replace your car and it will not be enough to fix it. Plus, if you do get your car back and use the money to fix the car, many insurers will refuse to provide more than basic liability coverage on it.
How do insurers decide what a car is worth?
Insurers keep proprietary databases on car prices, similar to the Blue Book or the National Auto Dealers Association (NADA) Official Used Car Guide. The insurer's valuation of your car is mostly based on its age. So, your car might be totaled if it is 13 years old and receives only minor damage. On the other hand, an expensive newer car, say a Porsche, may not be totaled even though it has been in a devastating collision.
What can I do if I disagree with the insurer's valuation?
Valuation problems arise in two ways. The most common problem is that the insurer's valuation is not anywhere near enough to actually buy an equivalent car in the marketplace. For example: if a driver's 6-year-old Toyota Corolla is totaled, the driver will understandably want enough money to buy another 6-year-old Toyota Corolla with comparable options. The less common problem is where an older, more valuable car has been kept in mint condition and has only a small fraction of the expected mileage on the odometer. Such a car will be worth much more than the run-of-the-mill cars of its age on the road. If you don't agree with an insurer's estimate of your car's cash value, your best bet is to pay an independent appraiser to provide an estimate. You may need to bring in more than one appraiser -- so the car will have to be fairly valuable to make this process worthwhile.
What happens to a totaled car?
When a car is severely damaged, it is usually taken to a salvage yard, auctioned off and chopped up for parts. The insurance company will keep the money it gets at the auction.
If you decide you want to keep your car and repair it, you should be able to do so. Many insurers will usually return the car to you if you request it. Certain insurers will not return a car if it is rare or newer and the insurer believes it will get a substatial sum at auction. Unfortunately, this is a bad time to find out whether your insurance company is policy-holder friendly or not.
If your car is returned, the insurer will have to pay the car's actual cash value, minus your deductible and the amount the insurance company would have received at auction. Then you are going to have to pay for repairs. That is where the next problem arises -- insurers can refuse coverage for a totaled car beyond basic liability insurance unless the car passes a Department of Motor Vehicles inspection. If you want complete coverage on your totaled car again, you will have to have it repaired completely.
Do I need to get a lawyer involved?
If negotiation doesn't bring any results, you can try to resolve the matter either through arbitration or litigation. But, before doing that, it may be worth asking a lawyer if he or she can help get a more favorable settlement informally. Arbitration, which is less of a hassle and less expensive than going to court, will usually result in a decision favorable to the insurance company. Insurance companies are practiced at arbitration, and arbitrators have to deal with them all of the time. Some arbitrators don't want to get the insurance companies upset. Having an attorney at arbitration will increase your odds. However, if your going to try arbitration, the best bet is to see if nonbinding arbitration is an option. That way you can still take the matter to court if you are not satisfied. Keep in mind that going to court is rarely a cost-effective option. Unless the car was extremely valuable and the insurance comapny's offer is a tiny fraction of what you believe the vehicle was worth, you may spend more in attorneys fees and costs than the amount you may recover.
What can I do to protect myself when I buy car insurance?
Buying insurance from a customer-friendly company is your strongest protection against hassles after an accident happens. When shopping for insurance, ask what percentage of the vehicle's worth a company will total a car. Some will total a car when the damage exceeds 51% of its worth, while others will total a car when damage exceeds 80% of its worth. Also, ask about the company's policies for returning a totaled car. If the company won't return totaled cars or decides whether to do so on a mysterious "case by case" basis, you may want to keep looking for a comapny that puts a higher priority on its customers' needs. |
