QuestionQUESTION: I have a 2003 Pontiac Vibe AWD that was in an accident where both side-fronts were damaged, no other cars involved. My insurance company is State Farm and they forced me to have the car towed to one of their approved body shops. The body shop gave an estimate that is well over the retail value of the car so they considered the car totaled. They are offering me NADA retail value plus tax (required by state law) minus my deductible. This is fine but I want to keep the car so they want me to pay them $1200 because that is what they can get from auction. Why should I pay them for a car that I already own? They are saying that when they pay retail value for the car then they own the car. They also said that if I keep the car I have to have the title marked as salvage even though I currently possess the title and can repair the car for less than 75% of the NADA retail value. So far they cannot show me where they can charge me for my car if I decide to keep it. Can they legally do this?
ANSWER: Hi Scot,
I'm afraid that you have a slight misconception of how your policy benefits apply.
State Farm is supposedly offering you the fair market value of your car. This means that by adding the amount of your deductible to the amount of the offer, you should be able to purchase a 2003 Vibe with similar equipment and in similar condition for the total of the money.
By paying you the full value, they have the right to collect the car and ownership papers from you and sell the car at a closed auction to wrecking yards by bid. These wrecking yards will then part out the vehicle and sell parts to body shops that are repairing a 2003 Vibe and need a specific part (or multiple parts). By selling the car at auction, State Farm will be able to recover a small portion of their costs.
I don't know the value of your vehicle. I would need your zip code, the exact mileage and equipment to learn.
Let's assume for a moment that you are being offered a $11,000 settlement for your car. That represents it's full value. The salvage value is what State Farm can expect to receive at auction.
If you desire to keep the damaged car, they must lower their offer to $9,800 which is the full value less the salvage value.
Anytime that an insurance company totals a car, they must process the ownership papers and have the title marked as 'SALVAGE'. This is required by both state and federal law, because in many cases, whatever wrecking yard that may purchase your car will decide to repair it and resell it. This 'SALVAGE' marking on the title is so that future owners will know that the car was once so seriously damaged that it was considered a total. Also, a 'SALVAGE' statement on the title reduces the value of the vehicle by approximately 50%.
If it is your plan to do all the repair work yourself, the car will have to go through at least two state safety inspections (at your cost) before it is allowed to be licensed to be back on the road.
If you know a body shop that will repair the vehicle for less than 75% of NADA retail, then discuss this with State Farm. If you really want to 'save' the car and have found a shop that will do that, then State Farm should be willing to work with you to save the car.
I hope this information is found to be helpful.
Your feedback by rating my answer will be appreciated.
Sincerely,
Bennie
San Francisco Bay Area
---------- FOLLOW-UP ----------
QUESTION: Thank you for taking the time to answer my question.
"By paying you the full value, they have the right to collect the car and ownership papers from you and sell the car at a closed auction to wrecking yards by bid." Actually they do not. According to my KY policy "We have the right to settle a loss with you or the owner of the property in one of the following ways: 1. pay up to the actual cash value; 2. pay to repair or replace the property or part with like kind and quality. If the repair or replacement results in better than like kind and quality, you must pay for the amount of betterment; 3. return the stolen property and pay for any damage due to theft; or 4. take the property at an agreed value; but it cannot be abandoned to us. If we pay the loss under either comprehensive or collision, we will pay under the coverage where you collect the most." The actual cash value is an agreed upon value which we have agreed on 11650 minus the 1000 deductible. We have elected to keep the car that we currently own. They say we owe them 1200 but there is nowhere in the policy that states they can charge us for keeping our car. Also the commonwealth of Kentucky has a statute that forces the owner of the car to have a salvage certificate placed on the title but the insurance company is requiring proof of this before they send us a check, this is also not in the policy and not in the state statute. "Anytime that an insurance company totals a car, they must process the ownership papers and have the title marked as 'SALVAGE'." This is also not true. Again in KY we have to salvage the title but the insurance company does not claim ownership of the vahicle. Also our policy states "We will pay for loss to your car caused by collision but only for the amount of each such loss in excess of the deductible amount." Again nowhere does it state that the salvage value will de deducted if we keep possession of the vehicle.
AnswerHi Scot,
Since your insurance company is paying you under "1. pay up to the actual cash value;", I can't see how you justify that it's your right to accept the full $11,650 and retain the damaged car worth $1,200 for a total of $12,850.
I can't quote the legal wording in every state regarding the method of applying the SALVAGE statement to the title, except to state that it is the law in all states.
Since you have such firm preconceived ideas as to the method of settling this claim, I don't think that there is anything that more that I can say to convince you of the proper method of handling this claim.
I feel that it would be a good idea for you to contact your state department of insurance for guidance in this matter.
They can be reached at http://doi.ppr.ky.gov/kentucky/
There you will find telephone numbers and e-mail addresses to enable you to handle this matter either way.
I hope the claim is resolved to your satisfaction.
Sincerely,
Bennie
