Auto Insurance Claims: Repair -v- total loss, bmw330i, kbb

Question
Hi Richard:

Appreciate you taking the time.

I used to drive a BMW330i in excellent condition - KBB of the car today is around $25K. I was rear ended a few days ago. Preliminary estimate from insurance company is that if the car were to be totaled they would have to pay me around $28K. Repair estimates (thorough inspection to be completed) is around $15K. It seemed to me that the car had transmission damage.

With such an expensive car, I feel that getting the car repaired leaves me with a raw deal. Repair guys would use after-market parts leaving me with a car with significantly reduced resale value.

Do I have any recourse? What should I do?

Thanks,
Pete

Answer
Hi Pete,

Most insurance companies will declare a vehicle a total loss if the claim total will exceed 75% of the value of the vehicle. The items that should be considered in the claim total are: the cost of repairs, the cost of a rental vehicle during repairs and the loss of value or diminished value of the vehicle after repairs.

So if your vehicle's value is $28,000.00 then the point at which it should be declared a total loss is around $21,000.00. With the repairs already totaling $15,000.00 it would take approximately 6 weeks to complete them. At a modest rental cost of $30.00 per day that would add $1260.00 and you vehicle'd diminished value will likely be in the neighborhood of $6,000.00. The claim total then is $15,000.00 + $1,260.00 + $6,000.00 = $22,260.00. And that does not include additional damage and costs that will not be known until the repairs are under way. That additional damage will increase the cost of repairs, add to the time to repair, which will add to the rental and also may increase the amount of diminished value.

If you have additional questions or would like to discuss this, feel free to call my office toll free at 1-866-438-6938.

I hope this helped.

Richard Hixenbaugh