Auto Insurance Claims: Stolen Auto Claim/Value given less than what is owed, Total Loss Claim

Question
On 7/28 my vehicle was stolen, involved in a collision after a high speed chase by police, and vehicle was recovered. The next day, I contacted the insurance co. (State Farm), gave them the information, report numbers, and was issued a claim number. I was told I would be contacted by a claims agent asap. A week later, I was contacted, required to give a full statement and told I would be contacted with information from the adjuster reviewing the vehicle's damages. The vehicle is a 05 Saturn Vue, mint condition, with 44k miles. The est. damages were $8000.  When the claims agent re-contacted me, another week later, she stated due to the value of the vehicle they would offer me $9000. I asked if they would repair the vehicle, and was told no, due to the laws in Michigan and the safety of the vehicle. I owe 12000 on the vehicle to GMAC. I refused the initial offer of $9000. She stated I could look up comparable vehicles and submit them to here. I located four vehicles with similar miles selling for 11-14g. Over a week later, she re-contact me stating only one of those vehicles sold for the asking price and the others were still on the lot. My question is how do I get at least what I owe on the vehicle? I have paid my monthly premiums on time and I have done everything I've been asked to do by her. It is 8/27, nearly a month exactly to the day that this occurred and I still have no vehicle! I do not want to have to pay for the next year on a vehicle that I did not steal from myself, nor crash, nor have in my possession any longer.

Answer
Hi Michelle,

The insurance company is responsible for paying the actual cash value of your vehicle, not the remaining loan balance. In most cases the value of a vehicle will always be lower than the loan balance. This is why it is recommended to purchase GAP insurance when you finance a vehicle. GAP insurance pays the difference between what your insurance comapny pays and your loan balance. If you are not sure you should check with the dealer that you purchased the car from or your finance comapny to see if you have GAP insurance and do not know it.

If you do not have GAP insurance, then it is up to you to fight the insurance company. There is a clause in your policy called the "Appraisal Clause".

An appraisal clause is a clause or paragraph found your insurance policy. It is designed to be a way of reaching a settlement when there is a dispute over the amount of a loss between you and your insurance company and can be invoked by either party. The appraisal clause can be utilized when there is a dispute over the cost to repair your vehicle, the value of your vehicle in a total loss claim or the diminished value of your vehicle if you reside in a state where you can make a 1st party claim for diminished value. The appraisal clause is generally found in the "Damage to Your Auto" section of your policy.  Following are the basic steps involved in the execution of the appraisal clause of most policies.

Step 1: Invoking Your Appraisal Clause
You will write a letter to your insurance company telling them that as a result of your inability to reach a mutually agreeable settlement, you are invoking the appraisal clause of your policy. The letter should be sent by certified mail/return receipt requested.  

Step 2: Selection of Appraisers
In the appraisal clause process, each side will select a competent appraiser to assess the loss. Each side will be responsible for paying their chosen appraiser. You should select an appraiser who is knowledgeable in the specific area that is the subject of the dispute and who is familiar with the appraisal clause process. Your selected appraiser should be able to be objective and impartial.  Your appraiser should not do any work for the insurance company with whom you are having the dispute.

Step 3: Completion of The Process
Your selected appraiser as well as the appraiser selected by your insurance company will each independently appraise the loss. The two appraiser will then communicate and discuss their findings. During this process the two appraisers will attempt to reach a mutually agreeable figure. If the two appraisers are unable to reach an agreement then the two appraisers will mutually select and agree upon a third party Umpire appraiser who will review the positions and documentation of the two primary appraisers and may also do an inspection and assessment of his own. If an umpire appraiser becomes necessary, you and your insurance company will each pay half of the cost of the umpire.  Then an amount agreed upon by any two of the three appraisers will be final and binding on all parties.

For more information on the appraisal clause process and to find an appraiser visit www.collisionclaims.com .

I hope this helps
Richard Hixenbaugh