QuestionQUESTION: I was driving my friend's car with permission for personal use in LA. I totaled the car. She only had liability insurance, which covered the minor damage to the other vehicle. My insurance includes collision, so State Farm settled with her for $4407 (actual cash value + taxes + unused license fees - my deductible). She is arguing that I owe her the $1000 deductible, and is preparing to take me to small claims court. This doesn't feel right on multiple levels, but what is the best legal defense in my case?
One other thing is the vehicle had been totaled a year ago and has a Salvage title (it was rebuilt to the satisfaction of Geiko, who agreed to cover the vehicle liability-only). But for some reason the adjuster did not take this into account when valuing the vehicle; there was no VIN attached to the valuation. (Is this normal?). Anyway, my argument is that any fair value for the vehicle that we might come up with privately would be below $4407, especially taking the salvage title into consideration. For example, the KBB Private Party value of the vehicle is $3400 assuming good condition (which is giving the car the benefit of the doubt).
ANSWER: Had the car not been a former total loss, you would be liable for he deductible subtracted from the settlement. However, with the total loss history at work, the value of the vehicle could be diminished by as much as 50% of the value of a clean car without such a history. Even in good conditon, the car was not worth the $4407 she got paid.
If you get dragged into court, you owe her the cost to replace the vehicle with one of like kind and quality, so do your homework beforehand and try to find the same type of car for sale.
---------- FOLLOW-UP ----------
QUESTION: I cannot find a similar vehicle with a salvage title
(except on Craig's List). I assume finding the same type of
car for sale would mean through a dealership? How can I
factor the salvage title into the price? Is that definitely
a factor? How can I "prove" this?
AnswerIt is, in fact, difficult to find a car on which the title history is disclosed and one that was a former total loss. However, you need to make a good faith effort to locate one just the same. Dealers don't usually sell former totals, particularly honest ones. And among the car dealers that do sell a car like that, you'd be hard pressed to get one to admit it.
I once wrote an aricle on diminished value for Body Shop Business (www.bodyshopbusiness.com) and in my research found a person at Edmunds who would say on the record that a car with a total loss history is usually worth 50% less.
Follow this link to read a copy of the article: http://www.bodyshopbusiness.com/Article/3302/whats_diminished_value_mean_to_you.
