Question I live in Md. and my car was rear ended and the drivers insurance, Farmers, has accepted liability and made an offer. The offer will total my car, which I don't want to accept, because I'm upside down on loan.
I had read the answer to a previous question you gave,
to get an estimate lower than the insurance's estimate by using used parts and deferring repairs on some of the cosmetic issues. I have gotten an estimate low enough to make this work but the insurance company insists that the estimate include the words "full and final, no supplements". The estimator won't put this on the estimate even though I told him I would put in writing I don't need most of the cosmetic repairs to be done, I just want the car driveable.
My question is twofold. Can the original insurance estimator be required to adjust their estimate based on the fact I don't need new parts or cosmetic repairs done? The other is can the insurance company require "full and final no supplements" to be on the other body shops estimate even though it wasn't even on their own? Am I stuck or do I have another means out of total loss?
AnswerHi Everett,
I hope that you can make this work out for your vehicle. BTW, a side note before we get started, if you have a similar loan in the future, be sure to buy GAP Insurance: The Solution to Upside-Down Status With Your Loan Versus the Vehicle Actual Cash Value.
Now, on to your situation. Your post here brings up two topics that I did not fully develop in my previous answers, and so will do so here. But first let me say that since I got you into this concept, I will FINISH by giving you an actual written agreement if you in fact reach a verbal agreement among the adjuster and the auto body shop owner. I will give you instructions below to contact me if you make such an agreement and I will then prepare and send you the agreement.
Thanks for reading and doing your research—that shows a good claimant. You probably read that this procedure is available only with the blessing of the adjuster, and the bank, if there is a loan outstanding.
I should have advised people, as I am advising you, to try to keep the bank out of it. Here is why, and this is ESPECIALLY TRUE in an upside down situation. The bank wants to be sure that its security for the loan is sufficient to pay off the balance owing PLUS its costs of repossession and sale.
So if their asset is really valued less than the balance owing now, what do you think they will do if they find out that you will not repair it so as to restore it to pre-accident condition? You are right: they are going to want it totaled and for you to pay off the loan.
Hence, try to keep them out of the picture, OK?
As for the second troublesome topic: how to get the blessing of the adjuster on this deal. Consider his position. If he allows you to fix with substandard parts and ignore some repair work that "should" be done, then he has to protect his company from anyone—you or a subsequent owner—from coming back at him because the vehicle is unsafe or does not work right. Does that make sense? It is what I had implied when I mentioned that the adjuster would have to sign on to this idea.
So, here is the problem: how can the adjuster protect his company from later complaints that the repairs were not done properly while at the same time allowing you to come back if the repairs that WERE done have a warranty? Also, what about repair items that have not been discovered and pop up later? Who should bear the risk of those?
For discussions with the adjuster and the shop, I would suggest discussing those three topics, and reach an agreement as to the auto body shop owner, you, and the adjuster, and reduce it to writing. I will now list some factors to be included in the agreement, and if you actually get consensus among the three of you, then you have my permission to write to me at the site for insurance settlement information www.SettlementCentral.Com
Use the "contact us" button and be sure to mention that you are following up on my invitation from allexperts.com, otherwise the staff will send back a nonresponsive form e-mail since we get dozens of e-mail inquires daily.
Here are the topics to discuss:
# 1. The approach to both adjuster and auto body shop owner has to be that you understand your rights, but any right also carries with it the right to waive part of the remedy that is owed to you. So express to them that you are willing to waive high standard repair rights just to retain your vehicle.
#2. You first need to get the adjuster to disclose how much lower you will have to make the estimate in order to avoid the vehicle being totaled. He may have some wiggle room here inasmuch as the decision is usually based upon a percentage of what he believes to be the actual cash value (ACV).
#3. Hypothetical example. Let's say that your vehicle has $20,000 still owing to the bank on the loan, but its ACV range is only $14K to $16K. So you would still owe between $4K to $6K, depending upon your proof of ACV. Now, the decision to total a vehicle is going to be a percentage of what the adjuster believes to be the ACV. So if he selects the lower ACV, and if his percentage threshold is around 75% of value, that means his "limit" of repair costs will be $10,500 ($14,000 times 75%).
#4. The first thing to do is to get his empathy and try to convince him that your ACV is at the high end. For every $1,000 you can convince him to increase the value of the vehicle, you get an additional $750 in repair costs ($1,000 times 75%).
Use ACTUAL market research, and fight his use of the CCC valuation report. Research that company and learn that their "comparables" (1) do not actually exist at this time; and (2) were calculated by asking dealers what the "take price" of the vehicle is (research that term). Hence, his report is BS!.
Discuss the good condition of your vehicle, and all the work you have done to it and the add-ons and new tires, etc. Fight and scrap for a higher ACV from the adjuster.
Once you have that, try to get him to nudge the percentage a bit.
So, in our example, let's say you got him to agree that the ACV could be closer to $15,500. That means you just increased the amount of his threshold for repairs from $10,500 to $11,625. And you just earned an additional $1,125 in repair work!
#5. Get the auto body shop owner interested. Point out that if he does not play ball, he will miss out on this work since the vehicle will be totaled. Make sure he knows that you will waive the rights to a "proper" repair in writing.
Tell him that you have $11,625 to work with and let him make an estimate for that value. Let him pick and choose which are more essential for safety and which parts can be substituted and what work can be ignored.
#6. Once you have that alternate estimate, then present it to the adjuster and let him know that you will make an agreement that will reflect your waiver and the obligations of the parties as to the work that is actually done and any undiscovered defects once the work is started.
#7. As to the work that is actually done, the auto body shop must agree to stand behind the work for workmanship. As to parts, some acknowledgement will have to be made depending upon whether the parts are used or just new NON-OEM.
As to the work that is not to be done, the agreement will cite the first estimate as the one to which the vehicle should be repaired. You will then recite that you waive that right and elect to have the work done as per the alternative estimate.
#8. As to the need for any repairs that are not discovered until the work is underway, that will have to be at your risk. Why? Because if they had been discovered then added to the original estimate it would be even higher. AND vehicles that have been given the OK for repair—let's say from the example above the original estimate was only $9,500—they still are subject to being totaled if expensive repairs are discovered once the repairs are started. Hence, if they found a need for a $1,500 repair once the work was started, the adjuster could then see that the total would be $11K and elect then to total the vehicle.
So you will have to speak with the auto body shop owner and see what the risk is of discovering defects that are latent (not obvious at this time).
Given all of this, Everett, it might appear a lot easier to just sign off on the "full and final no supplements" simple statement, as opposed to preparing a written agreement. After all, once the vehicle is repaired to the lesser standard, you have no rights versus the insurance company, do you? If the alternate estimate repairs fail, your right, as in most cases, is versus the auto body shop owner. Does that make sense?
You ask:"Can the adjuster be required to adjust their estimate?" Based upon what we have said above, the answer is no. BUT, in my opinion, you DO ALWAYS have the right to waive any rights to repair, so long as you are willing to absolve the insurance company of any problems due to the lesser standard you are willing to accept.
That is about it, Everett. 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
