QuestionO.k. Short version. I dropped my car off at a nation wide car repair shop to
fix the clutch. After fixing the problem the technician took the car for a short
test drive and was involved in a collision. Although the technician was not at
fault for the accident, we have repairs that exceed the worth of the car. The
fact that the tech was not at fault is probably not a factor however since the
state I live in is a "no fault" accident state. The other driver was issued a
ticket for driving without a license. The damage to our car (front bumper,
right front headlamp, right front quarter-panel, and replacement of air bag
will far exceed what the other owner's insurance will cover. Can you please
tell me what responsibility the car repair shop has to fix the car. It would
seem to me that a repair shop is responsible for returning a car to a client in
the original condition that the car was in when it was dropped off.
The blue book value of our car does not come close to what it would cost to
fix the air bag and headlamp, let alone the body damage. We just put over
$4,000 worth of replacement parts into that car in Feb. of 2008 and this does
not get factored into the "value" of the car.
How much liability does the repair shop have in getting the car back to the
condition it was in when I left it there?
AnswerDear Shannon,
I empathize with your situation inasmuch as Dr. Settlement drives a Cadillac Fleetwood that is old, but I, too, have put a lot of money into it and I LOVE my ride just as it is. Problem is, if somebody totals it, I am not going to get my car restored, nor will I get much value for the money I have put into it. I will therefore go the extra mile for you to give you a full understanding of the law and some suggestions to get as much as possible out of this situation.
Here are my seven topics for you, Shannon:
1. Measure of damages same in contract law as for the tortfeasor.
2. Your rights to a rental car
3. Three alternatives for older cars that have been totaled
4. Fix with USED and/or NON-OEM PARTS
5. Buy salvage and repair, depending upon salvage price
6. Get maximum FMV and high percentage of payment for new parts installed
7. Final Topic: Communicate in Writing—“DEMAND”, Don’t ASK
Ready, Shannon? OK, here we go:
#1. Measure of damages same in contract law as for the tortfeasor.
The repair shop has the same duty as the tortfeasor, to-wit: to put you in the same position as you were before the accident, vis-à-vis the economic value of your asset.
I do understand that you want to make the repair shop follow a different set of payment for damages, and of course that is based upon your belief that contract law might require a higher standard for restoration than a tortfeasor. But in fact, that is not true.
Take for example a case wherein your vehicle had actual cash value (FMV) of $4,000, but it was destroyed so much that it would take $10,000 to repair it. There is no provision in the law to make either a tortfeasor or a contractor spend $10K when all the damage he did to you was only $4K.
Soooo. . . . . . .where does that leave us, Shannon?
I am going to give you three topics to consider in working this out to the best solution possible for you. But first, let’s consider your rental car rights.
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#2. Your rights to a rental car
Both the contractor and the tortfeasor have to provide a rental vehicle for only a reasonable time to allow for repair of the vehicle or after a fair offer to total the vehicle has been made.
REPAIRED VEHICLE. (This is NOT YOUR CASE, but I give this rule just for your information.) If the vehicle is going to be repaired, the shop will often just arrange for the rental via authority given by the adjuster. The authority will encompass all of the time the vehicle will be in the shop. Extensions of time are common when parts or repairs take longer than first thought.
TOTALED VEHILCE. This IS YOUR CASE. Rental allowances are due for a reasonable time after a fair offer to purchase has your vehicle been made. In this case, you have not told me when the adjuster offered the money.
First, maybe his money offer is NOT MARKET VALUE. So, we will fight that later on, or decide later on to go for the repairs for 60% of the auto body quote. But THAT topic of what to do next will be considered below.
First, we have to decide whether or not you get more time on any rental allowance. The first issue is usually decided in favor of the adjuster. Although his offer may not be what you and I think is full value, IT PROBABLY IS WITHIN THE BALLPARK OF A “FAIR” OFFER for the total value of the vehicle.
Thus, the rental allowance would start to run from the time of the accident until a couple of days after he gives you that offer. Most adjusters will give a few days after the offer to present data and negotiate something higher, plus time to get the agreed settlement check written and to buy new transportation.
Thus, four days of rental allowance beyond the date he made the offer is probably the industry standard for rental allowance. That would give the victim time to settle, to get the check, and to buy new transportation. You are NOT ALLOWED more than one week since the victim is expected to make his counter offer and to settle within two or three days and then get the check and buy a car within the remaining four or five days. The victim should already have all of her evidence to present for negotiations. You are not allowed to think about it or to go and take a week getting evidence of higher prices back to the adjuster. That is work that you are expected to have completed by the time he make his offer.
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#3. Three Ideas When Adjuster Undervalues Your Vehicle
• First, consider lowering the repair cost by repairing with USED and/or NON-Original Manufactures' Equipment (OEM) PARTS and stipulating to ignore some cosmetic damage; that will allow the insurance company to do the repairs within the percentage of allowance of actual cash value that it has already specified; OR
• Second, buy back the car from the insurance company as salvage, repair it, re-title it, re-license it, and KEEP YOUR CAR; OR
• Third, fight the actual cash valuation with your own research and communicate in writing.
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#4. Lower Repair Costs With USED and/or NON-OEM Parts
SAVE YOUR CAR FROM BEING TOTALED BY REPAIRING WITH USED and/or NON-OEM PARTS and STIPULATING TO IGNORE SOME COSMETIC DAMAGE.
Before we get started, have you thought about keeping your car? Many times people have put a lot of money into maintenance OR EXPENSIVE REPAIRS (i.e. new transmission) in a high mileage vehicle, and they KNOW what they have will work as reliable transportation for them.
Have you considered whether or not YOU want your car "totaled"? Do you know whether or not the money you will receive will buy you anywhere near the same quality of transportation that you enjoy with your present vehicle?
It sounds like your vehicle is a good one to keep, Shannon. It may have higher miles, but it is in good shape. If you allow them to total it and you are forced to buy a replacement vehicle, will you have to incur a loan payment to get adequate transportation?
You have put $4,000 in repairs in the past three months. You will not get that money back in cash value of the car, but the repairs may have made your vehicle desirable to continue operating.
Rather than taking the low offer of cash and trying to find a vehicle that will be reliable, many people put the money into fixing the wreck with used parts, leaving aside cosmetic damage (who cares if you drive an eleven year old car with some bumps and bruises -- especially when that will reduce the repair bill a ton??).
So the first thing, if you are happy with the performance of your car, or if you have put a lot of money into maintenance or repair, would be to explore ways to keep the car.
Ask what the body shop would charge to repair your vehicle with USED and/or NON-OEM parts. You can negotiate to leave some cosmetic damage showing to save money. I would not be surprised to see up to 45% come off their repair bill in that case. If you have a car that was running fine, why not keep it, even if you have to drive around with some dents showing?
Find out the maximum amount that the insurance company will pay for repairs before they elect to total your vehicle. Then arrange for your repairs to be done within that limit. This is my first choice and better if you can make it happen. If the adjuster still wants to total your car, then you have to go to the next step.
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#5. Buy salvage and repair, depending upon salvage price
BUY BACK CAR FROM INSURANCE COMPANY, REPAIR IT, RE-TITLE AND RE-LICENSE IT, AND KEEP IT. YOU GET YOUR EQUITY, LESS THE SALVAGE VALUE THAT YOU PAY TO BUY IT BACK AND THE COST OF REPAIRS PLUS INSPECTION AND RE-LICENSING COSTS.
Here is one way to get the insurance adjuster at her own game. Let's say that you value your car at $4,500, but the insurance adjuster, after considering the latest documentation you have to offer, values it at only $3,000. Don't forget, that is her value BEFORE THE ACCIDENT. Her salvage value, the amount that the insurance company expects to get when they sell your car, will be around 15% of that amount, or only $450.
NOW, if you were to pay that amount and then to set up the repairs to be done with USED and/or NON-OEM PARTS, and perhaps forgoing some of the strictly beauty finishing items, you could get repairs done for a lot less than the estimate given to the insurance company. I am guessing that the repairs quoted are $4,500. As I said, deduct 45% of that for these reduced repairs, and your repair costs will be around $2,475.
Try to avoid having the title being reported as totaled since that will require you to get the car re-titled. If it is reported as totaled, you will have to take it to the state patrol to be inspected as a salvaged vehicle. You will need paperwork from both the insurance company and the auto body shop that confirms both the amount you paid for the salvage, the fact that you are authorized to title the vehicle, and a receipt for the work and parts from the auto body shop. You pay for the inspection and then the re-licensing through the Department of Licensing. So leave aside around $100 for the state inspection, plus the cost to get new title, license plates, and tabs. The cost for the latter will be the same for any other vehicle of the same price as your salvage buy-back price.
In summary, you got $3,000 cash for the car, and you paid out $450 to buy it back and $2,475 to get it repaired and ready for inspection and licensing, which are $100 and $160, respectively. Thus, your total out-of pocket outlay will be the $450 plus the $2,475 plus the $100 plus the $160, for a grand total of $3,185.
So, you will lose $185, BUT YOU WILL GAIN THE VALUE OF THE $4,000 RECENT REPAIRS AND NEW PARTS THAT OTHERWISE YOU WILL NOT HAVE IF YOU JUST TOOK THE $3,000 AND BOUGHT A USED CAR WITH UNKNOWN RELIABILITY. Does that make sense?
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#6. Get maximum FMV and high percentage of payment for new parts installed
Fight Actual Cash Value and Present Your Own Research, and COMMUNICATE IN WRITING.
Now, changing topics back to how to get that value up for the insurance adjuster, let's get started for you. The first tasks are to get at the actual cash value and next throw out whatever outrageous offer that they made you.
My favorite sites for valuation are www.Edmunds.com and www.autotrader.com. They want to know your zip code, and then they ask for a range in miles to search. Don't limit yourself to your city: it is reasonable that someone could go up to 300 miles to pick up a used car. That way you will get a lot more information. Be aware that you should pick the option "any distance" from your zip code.
The best local sources are to use information from local papers, advertising flyers, car dealerships, and the Internet. Again, use 300 miles to check online newspaper classifieds and dealer asking prices.
Be aware that the prices shown are the "asking" price, not the actual cash value. But also be aware that the insurance adjusters have used a computer scan of sales that were at the trade-in value, NOT the actual cash value.
What about getting some of that $4,000 you spent on the car added to the value? You have to show that the work or new parts INCREASED the ACTUAL CASH VALUE (aka FMV). Normal maintenance might add a little value, but replaced parts (alternator, etc.) can make a small increase in value. Just itemize each and add some value for each expenditure you made.
In your case, if you have made major item replacements, above and beyond normal maintenance, then you need to document them and ask for a review of those extras. For example, a rebuilt transmission or the like will add value to a used car. How about new tires or a new stereo system? The issue is: how much (if any) did they increase the FMV or actual cash value of the car. See this link and scroll to the bottom for more information on that topic. Car Accidents: Totaled, Repair, Valuation, Your Rights http://www.settlementcentral.com/page0007.htm
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#7. Final Topic: Communicate in Writing—“DEMAND”, Don’t ASK
Effective communication with insurance claims adjusters. Establish Firm, Professional, and Positive Relationships With the Insurance Injury Claims Adjuster http://www.settlementcentral.com/page0059.htm maximum insurance settlements.
Always communicate with the adjuster in writing, showing your own analysis of value. It is OK I guess to have one call or so, but no more. Always have your information and ammunition in writing to give to the adjuster.
Let him know that you are FIRM IN YOUR RESOLVE to get what you are demanding (NOT "asking", since that invites a counter-offer, but instead "demanding" as fair and reasonable compensation) by asking him what the options are to resolve the matter fairly should he not agree to a reasonable claim value. In other words, let him know that you will go through with a court filing if need be.
Remember these tips, do your homework, print out your evidence, show resolve to get your fair settlement, and you will DO JUST FINE.
I trust that my extra time here has produced some information that has been of value to you, and thus I would respectfully request that you take the time to locate the FEEDBACK FORM on this site and leave some feedback for me.
Best Wishes,
Dr. Settlement, J.D. (Juris Doctor)
http://www.SettlementCentral.Com
