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    • Your Guide to Vehicle Damage

    How to Settle Insurance Claims for Property Damage from Motor Vehicle Collisions

    Can I do it myself?
    Because it is rarely cost effective for you to hire an attorney to pursue your property damage claim, this information has been prepared by Steven Defoe Law Office to assist you in negotiating with the adjustor. By following the steps in this guide, you will be better informed for your negotiations with the adjustor to resolve your vehicle collision claim.

    If you have suffered an injury as a result of your motor vehicle collision, you should always seek the advice of an attorney before providing any type of statement to an insurance adjustor or signing any documents.

    The information provided in this guide is for general information purposes and is not intended as specific legal advice for any specific legal claim. The purpose of this guide is to acquaint you with the basics of handling property damage claims arising out of motor vehicle collisions.

    Know Your Rights

    When your vehicle is damaged because of the negligence of another, you have certain rights according to Washington law and the rules and regulations of the Washington State Department of Insurance. These laws and rules are different based on whether you are making a claim against your own insurance policy or the negligent driver’s insurance policy. For example, if you are making a claim against the negligent driver’s policy, you will be entitled to a rental vehicle while your vehicle is being repaired. If you are making a claim against your own insurance policy, you are only entitled to a rental vehicle if you purchased that type of coverage.

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    Where do I start?

    If your vehicle is damaged in a collision that was caused by someone else’s negligence (fault), the first thing to do is contact the liability insurance company for the at-fault party. Often it is difficult to find insurance information. Once you have obtained sufficient information to report your claim and have done so, you must often wait for the insurance company to set up your claim and assign an adjustor.

    Most insurance companies require you to wait two to three days from the date you first contacted the liability company for an adjustor to be assigned to your claim. Often two adjustors will be assigned—one to handle the property damage and another to deal with your personal injury claim if you have been injured.

    The adjustor assigned to your claim will have to complete his or her investigation of your claim before accepting or denying the claim. If the claim is denied or it appears that the investigation phase is taking too long, you can file a claim under the collision coverage of your own policy. If you choose to do this, your payment will be subject to applicable deductibles on your policy. Your insurance company will eventually be repaid by the negligent driver’s insurance company. Then your insurance company will pay you back for the deductible it collected.

    If you are satisfied with the offer, then you can settle the property claim. Even though you may be injured, you can still settle the property damage claim. You should always leave open the personal injury claim for later settlement. In other words, the liability insurance company is prohibited from forcing you to settle your personal injury claim at the same time you settle the property damage claim. If you do not agree with the settlement offered by the adjustor, you have the right to reject the offer.

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    Towing and Storage of Your Vehicle

    If your vehicle can not be driven or you have been taken from the scene by ambulance, your vehicle will most likely be towed from the scene and taken to a storage facility. The storage facility will charge a daily rate as long as your vehicle is being kept there. If your vehicle has been towed, it is very important that you contact the insurance company of the negligent driver to notify the company of the location of your vehicle. If the negligent driver is 100 percent at fault for causing the collision, his or her insurance company will be responsible for 100 percent of the towing and storage charges. However, if it is determined that you are partially responsible for the collision, you will be liable for that percentage of the towing and storage charges.

    REMINDER: It is your duty to minimize your loss. Delaying settlement of the property damage or refusing to authorize repairs can result in the insurance company refusing to pay the entire storage charges.

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    When is a vehicle a total loss?

    A motor vehicle is considered a total loss when the insurance company has determined that your vehicle is no longer financially or structurally reasonable to repair. This is usually determined when the cost to repair your vehicle meets or exceeds a certain percentage (usually around 70 percent to 80 percent) of the preaccident cash value, which is referred to as Fair Market Value.

    For example, if the vehicle’s preaccident Fair Market Value is $8,000 and the estimates for the cost of repairs are less than $6,000, then the liability insurance company is obligated to pay only for the cost of repairs. However, if the estimated cost of repairs is $6,000 or more, then the liability insurance company has to pay the preaccident Fair Market Value of $8,000 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 the Fair Market Value is $8,000 and the cost of repairs is $9,000, then you will only recover $8,000. In other words, you can’t recover more than the Fair Market Value even when the cost of repairs exceeds the Fair Market Value. Unfortunately, this is true even if the Fair Market Value is less than what is still owed on a vehicle.

    Generally speaking, the liability insurance company is required to pay the Fair Market Value or preaccident cash value of the vehicle right before the collision occurred. In simple terms, the Fair Market Value is the value a seller who is not forced to sell and buyer who is not forced to buy would agree upon for the vehicle immediately before the collision giving rise to the property damage claim. This value is determined by surveying vehicles recently sold in the region or local market that are similar to your vehicle in make, model, mileage, and condition. The Kelley Blue Book or the National Automobile Dealers Association (NADA) publication entitled Official Used Car Guide should only be used as a guide, as these are not used by insurance companies to establish Fair Market Value.

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    How is Fair Market Value established?

    The process begins with the insurance adjustor performing a personal inspection of the vehicle. Don’t be surprised if the adjustor does not crawl under the vehicle to look for hidden damage. His or her job at this point is to determine an initial estimate of the damage and cost to repair. He or she will likely take pictures of the damage to your vehicle.

    Next, the adjustor will enter information about your vehicle into a computer database. The adjustor will enter the make, model, mileage, and condition. If the adjustor can not readily determine that the vehicle has been upgraded with an expensive stereo or engine compartment add-on, the upgrade won’t be included in the information entered into the database.

    The condition of the vehicle is the critical element in establishing the value of the vehicle. Components that are rated are interior, body, glass, tires, exterior, and mechanical condition of the vehicle. A condition category will be assigned to your vehicle. Although each computer valuation system varies, generally, they are below average, average, above average, and exceptional.

    After your vehicle information is entered, it is computed to a database maintained by the maker of the computer valuation system. The two most prominent companies for valuing damaged vehicles are CCC and ADP. These are companies hired by the insurance companies to provide them with valuations on total loss claims. The computer will then determine the value of your vehicle based on a comparison of your vehicle information and the database of similar vehicles for sale or sold in the region.

    Your vehicle is not worth more because you recently bought new tires or you just tuned up the engine. Usually such things are considered maintenance and do not enhance the value. Upkeep of your vehicle helps maintain the value not increase it. Sometimes a new paint job will be considered, but not always. If your vehicle was in better than average condition prior to the collision, the adjustor is required to give due consideration to this fact in arriving at a value. But if your vehicle was not in good condition, this will actually lower the value of your vehicle.

    Add-on items, such as expensive stereo systems or high-performance wheels, will add value, but you must provide documentation as to the price of these items when purchased.

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    What information do I get?

    If you intend to make a claim for the value of your vehicle that is different from the one provided by the insurance adjustor, you are required to provide documentation as to how you are establishing the value of your vehicle.

    The following steps should be taken in order to provide proper documentation to support your claim.

    • Take your own pictures of your vehicle from every angle. Include damaged as well as nondamaged areas. Take pictures of the inside as well.
    • Secure any pictures that you may have of your vehicle before it was damaged.
    • Note the mileage on the odometer and write that number down.
    • Gather any receipts for add-on items, such as expensive stereo systems, a new paint job, or high-performance wheels.
    • If you have purchased the vehicle within the last four months, secure the purchase documents.
    • Visit at least two (three is better) reputable used car dealers and ask for a written estimate of the “take” value of your vehicle before it was damaged. The take value is the amount the dealer would take for the vehicle, not the listed price or the Kelley Blue Book price.

    If you and the adjustor can not agree on a value for your vehicle, and the adjustor insists on using his or her “comparable” computer listings, you can insist that the adjustor disclose where and from whom a comparable vehicle can be purchased for the amount being offered. Since Washington rules require the adjustor to base his or her valuation on like vehicles sold in the local market, you should be able to purchase the vehicle from the owner or dealer for the amount offered by the adjustor. If the vehicles listed are no longer available, or if the dealer has the vehicle listed at a higher price, ask the adjustor to assist you in finding a comparable vehicle at the amount offered by the adjustor.

    IMPORTANT REMINDER: You should always continue making payments even if your vehicle is totaled. Generally, you are 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.

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    What is “salvage value?”

    If the vehicle is a total loss and you and the adjustor have agreed on the vehicle’s preaccident Fair Market Value, you must provide the liability insurance company with the title to the vehicle and possession of the vehicle in exchange for the check. In other words, the insurance company is not going to pay you full Fair Market Value and let you keep the vehicle. This is because there is usually some residual or leftover value in a totally damaged 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 adjustor pays the Fair Market Value you must sign over the title to the vehicle. If you wish to keep the vehicle, then the insurance company will pay you the Fair Market Value minus the salvage value.

    Usually the salvage value is between 10 percent and 25 percent 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. Sometimes if you and the adjustor are a few hundred dollars apart from agreement and you want to keep the vehicle, you can negotiate that you will take the offer and keep the vehicle with no reduction for salvage.

    If you decide to keep your vehicle after it has been declared as totaled, you must notify the Department of Licensing by writing on your title that the vehicle was “TOTALED” and send it back to the state. Once repairs are complete, you must have your vehicle inspected and pay the fees associated with inspection. If you have any questions, contact the Washington State Department of Licensing Customer Service Unit.

    If your vehicle is being financed, you may not have the choice of keeping the vehicle without working out an arrangement with the finance company.

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    Who gets the total loss check?

    If your vehicle is financed, you will need to determine the pay-off to the finance company. The liability insurance company is required by law to pay the finance company. If there is any money left after the pay-off, the liability insurance company 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. Usually you will need to endorse 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 purchased gap insurance. Gap insurance is insurance you can purchase when you buy the vehicle. Sometimes it’s required on leased vehicles and is provided in financed purchases. Another type of optional insurance you might have purchased is repair or replacement coverage. Repair and 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 (meaning 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 from whom you purchased your vehicle if he or she would be willing to do substitution of collateral.

    What happens in this situation is that the insurance company sends the check for the Fair Market Value 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 you 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 he or she 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 choose to get the vehicle repaired.

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    Am I entitled to a rental vehicle when I have a total loss?

    If your vehicle is considered a total loss, you are entitled to a rental vehicle from the time of the collision until you receive an offer from the liability insurance carrier. If you are making a claim against your own policy, you will only be provided a rental vehicle if you purchased this coverage. The moment the offer is made (assuming the offer is reasonable) the liability insurance company is not technically responsible for a rental vehicle. Sometimes a liability insurance company will allow you a few more days if you have had trouble buying a replacement vehicle or allow you to receive the check. But if that occurs, it is purely voluntary on the insurance company’s part, as the company is not required to provide you with a rental vehicle after this time. You are always required to mitigate your damage.

    Generally, you should be provided with a vehicle comparable to the vehicle that was damaged. However, some insurance companies may attempt to tell you that the insurance policy only pays for a modest passenger vehicle. Washington law does not support this policy. A consumer who drove a Ford 350 long bed is entitled to a comparable vehicle. A Ford Focus is not a comparable vehicle. Some insurance companies have arrangements with automobile rental companies whereby a call from the liability company to the rental company will produce a vehicle for you at a fairly modest cost, which the liability insurance company will pay for. This arrangement (Direct Billing) with rental agencies is the reason why you should contact the liability insurance company as soon as possible. Some insurance companies require that you pay for the rental vehicle, and then they will reimburse you.

    Mileage and gas are not paid for by the liability insurance company; only the daily rental costs of the vehicle are covered. Moreover, if you do not have collision coverage on your own policy, you will be required to purchase this coverage prior to obtaining a rental vehicle. The liability company is not required to pay for this expense. If you have collision, generally you should decline additional coverage because your vehicle’s collision coverage will usually cover the rental vehicle.

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    What if my vehicle can be repaired?

    If your vehicle is drivable, take it to at least one reputable repair facility to get an estimate for the cost of repairs. The estimates provided by the repair facility and the insurance adjustor will likely be lower than the actual cost to repair your vehicle. The insurance company is only responsible for the damage its insured caused. If there is any question whether or not the damage was caused by the negligent driver, you will have to pay for the initial tear down fee to prove the damage was related to the collision.

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    Must I use the drive-in facility of the insurance company?

    Many insurance companies have drive-in claim service facilities. However, no insurance company can require you to use a drive-in claim service that it operates. If you choose to use the drive-in service, this will usually speed up your claim. If you voluntarily use the drive-in claim service for an appraisal, this will not prejudice your right to obtain independent appraisals and negotiate settlement on the basis of such appraisals.

    Do not be concerned if the estimate provided by the adjustor is lower than the independent estimates you have obtained. The adjustor’s estimate usually will be lower. Notwithstanding, you can still choose where you wish to have the vehicle repaired. If you have a different estimate from the adjustor, give this estimate to the repair shop where you want your vehicle repaired. The shop will then contact the adjustor and reach an agreement for the cost of repairs. You should not be concerned as long as the vehicle is repaired back to the condition it was prior to the accident. Generally the adjustor must see the vehicle before any repairs are authorized.

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    What is diminished value?

    Diminished value is the sum of money that accounts for the decrease in the Fair Market Value of your motor vehicle as the direct result of having been damaged in a collision, even taking into consideration that your vehicle is repairable or is repaired. It is recognition that a vehicle that has been in a collision and is repaired is of less value than a similar vehicle that has never been damaged.

    This comes from the facts that people place less value on a vehicle that has been wrecked and many used car dealers will not take wrecked vehicles in trade. According to Washington law, vehicles lose value after substantial repairs and the loss is recoverable. The amount of this loss can be documented through an appraiser. If you decide to hire an appraiser to establish the amount of diminished value, be sure to have the appraiser assume, for the purposes of the appraisal, that all repairs were properly completed. If not, the insurance company can blame the lower value on shoddy repairs.

    It is not important that the estimator indicate an actual amount. Industry standards usually allow 5 percent to 10 percent of the repairs. Unfortunately, some companies think because the vehicle is back in its prior condition, the vehicle has not diminished in value. This position is not supported under Washington law.

    Oftentimes, people don’t want to have their vehicles repaired if the damage is significant. They are afraid the vehicle won’t be safe to drive or will be difficult to trade in. However, the insurance company is entitled to take the least expensive route to settling the claim. If the combined cost of the repair plus the diminished value after repairs is less than paying for a total loss, the insurance company will take that route.

    NEGOTIATION TIP: If the amount to total the vehicle is close to the amount to repair plus diminished value, add in the value of renting a comparable vehicle for the period the vehicle is in the shop. Doing this might convince the adjustor to go ahead and total the damaged vehicle.

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    Do I have a choice of repair facilities?

    Often adjustors will recommend that you use a particular repair service. However, the adjustor is obligated to tell you that you do not have to use the repair service recommended and that you may use the repair service of your choice.

    While you do have a choice of repair shops, you usually will not be able to designate the parts that are used. Generally, you are entitled to a condition as good as just before the accident. Bear in mind that unless your vehicle is brand new, it’s made up of used parts. This may mean that “like, kind, and quality” parts may be used in the repair of your vehicle.

    The insurance company usually will not pay to have your entire vehicle painted. If only a part of your vehicle was damaged, you are not owed an entire paint job. Most body shops can match the color of your vehicle accurately, even if the paint has faded.

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    Suppose something goes wrong after the repairs are made. What then?

    If you sign a release involving a repair to your vehicle, that release does not bar you from later asserting a claim for damage that was unknown to you or the adjustor at the time you signed the release if the discovered damage was caused by the collision and could not have been determined or known until the repair or attempted repair of your vehicle.

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    Who gets the repair check?

    Usually, the insurance company will pay the repair facility directly. If your vehicle 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 vehicle, 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.

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    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 adjustor 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 vehicle 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.

    In those instances when an insurance company will not provide a rental vehicle because the insured has not reported the claim or the claim is still being investigated, you can rent a vehicle at prevailing market prices. Then, if the liability company accepts liability, it 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 if insurance rates were available at another company. Mileage and gas are not paid for by the liability insurance company, just the daily rental costs of the vehicle.

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    Loss of Use

    You are entitled to recover for damages associated with the loss of the use of your vehicle. This loss is usually handled by the insurance company of the negligent driver paying for a rental vehicle until your damaged vehicle is repaired or replaced. (Your own insurance company may cover this if you purchased rental vehicle coverage.) However, you are entitled to recover damages for the loss of use of your vehicle, even if you do not rent a vehicle.

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    Damaged Personal Property

    The insurance company for the negligent driver is liable for damages to personal property you were carrying in your vehicle. However, you must prove that the property was damaged during the motor vehicle collision. Also, you will need to document the cost to repair or replace the property to its condition at the time of the collision.

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    Baby Seats Should Be Replaced

    The warranties of most manufacturers of baby seats require the baby seat to be replaced if it has been involved in a collision. This is a cost that should be paid by the insurance company of the at-fault driver. You will need to obtain the receipt you received when you purchased the baby seat. If you purchased the baby seat from a friend or relative, he or she will need to provide a statement about when the seat was originally purchased and the cost.

    Free Consultation

    Have you or a loved one been injured in a Washington state auto accident? If so, let the Steven Defoe Law Office help you fight for your rights and get answers to your questions. Steven Defoe Law Office is conveniently located in Kennewick, allowing Steven Defoe to serve clients throughout Kennewick, Richland, Pasco, and other Washington cities. If you’re suffering injuries from a Washington state auto accident, simply complete a free consultation request form online or call 734-8787.

    Washington state personal injury lawyer Steven Defoe practices law in the following areas: auto accident, bicycle collision, boat injury, dog bite, vehicle damages, and slip and fall accident. To request a free consultation, click here and complete our short online form.

     

    STEVEN DEFOE LAW OFFICE
    830 N. Columbia Center Blvd.
    Suite G
    Kennewick, Washington 99336