QuestionI had a local shop in Louisiana replace the engine in my truck and on the final test drive before giving the truck back to me the shops employee totaled the truck. The insurance company gave me a decent offer for the truck but by the time I pay off the truck and pay the shop for the repair work performed there will be nothing left over. What is my responsibility for paying the shop for the repair work done since I never received the truck back before it was totaled. I am willing to sign the truck over to the shop so the can remove the new parts that were put on the truck.
AnswerHi Shannon,
I intended to hit the "reject" button on this question since it has nothing to do with personal injury claims, or even insurance claims. It is a CONTRACTS & BAILMENTS & INSURANCE question. Hence, you will need to find an attorney who has experience in contracts. Your good ole Dr. Settlement is just a personal injury lawyer, and we never get such claims in our practice, since we deal with insurance claims on injuries.
So do not shoot the messenger for my lack of knowledge on this issue, but I am going to give you my two-bits worth NOW since it might not be until well after the 4th of July that you can get any kind of answer from a contracts expert. Thus, I will take a shot at this for you, but hope you will not punish me in the feedback if you are not happy with what I have to say I am going to analyze your statement so you can see how to change it in the event you do decide to find a contract law expert. BTW, Doctor Settlement is not entirely ignorant on these topics: too many years ago to count, I won top prize in the law school for Contracts. And, the first ten years of practice involved contracts. So, I may be a bit rusty, but the foundation is firm enuf to give it a go with your issues.
Let me see if I can phrase your issues in terms of the confluence of contract law and bailment law and insurance law.
1. You owned a truck that had value above what was owed on it.
2. You hired work to be done, to-wit: install a replacement engine.
3. The shop thus was your bailee, charged with the duty to exercise due care to return your property in the same good condition as when you brought it to them, engine work excepted.
4. The shop apparently and allegedly completed the engine replacement, but you have no evidence of this, let alone whether there were any residual problems with their work.
5. The shop thinks that they finished the job and wants to be paid for their work.
6. BEFORE the shop returned the truck to you, they wrecked it.
7. You have not received your truck back, NOR have you IN ANY WAY enjoyed the benefit or use of the work done by the shop. The reason you have been denied the benefit of your bargain IS SOLELY DUE TO THE NEGLIGENCE OF THE SHOP.
8. The bailee failed in its duty to return your property, and hence will be responsible for the VALUE of your property. The issue is at what time: BEFORE the engine was installed or AFTER the work was done?
9. Their insurer determined that the Actual Cash Value (ACV) was in an amount that you believe to be A "DECENT OFFER". HOWEVER, that ACV was done with consideration given to the new engine, NOT before the work commenced.
10. However, once one adds the amount of costs to install the replacement engine, the "decent offer" is insufficient to pay off the repair shop and still have anything in-hand to buy a replacement truck. "There will be nothing left over" are your words
Is that a fair summary of your situation? If so, may I suggest two divergent courses of action?
FIRST CHOICE: total t.he truck, but DO NOT PAY the engine shop
1. You do not owe the shop one dime. Do not pay them anything. They did NOT complete their contract due to their own negligence. Hence, you never received the benefit of the bargain, to-wit: a replacement engine that runs.
2. Get the shop, or their insurer to pay you the ACV before the replacement engine work was done. FIGHT UNFAIR ACV OFFERS—see next-to-last paragraph I am going to give you, below.
3. This is the true BAILMENT solution: you left the shop with property of a certain value, and since they destroyed that property before you had a chance to enjoy any of the work they did, you owe them nothing, BUT they owe you the ACV of the property that you left in their custody.
4. If you cannot get satisfaction, then use your own insurer, and THEY, in turn will recover your deductible for you when they go after the shop's insurer.
5. You will be signing the truck over to the insurance company. What happens to the new engine is none of your business since you have not paid one dime toward their work.
6. If the shop wants to remove parts or whatever, that is between them and the insurer.
SECOND CHOICE: Do NOT total the truck, save it, and you DO pay the engine shop.
If you have reason to believe that your truck would be a good investment with its replacement engine, and you can make some deals with the shop regarding a reduced bill, and with the insurer, and you either owe nothing or can get the bank to cooperate, THEN—and only then—you have this alternate solution.
This would REALLY be a good choice for many, depending upon the circumstances, including the reliability and condition of the truck before the engine work and the fact that no adjuster is going to give you a fair ACV. Ready then, Shannon? Here we go on a wild adventure (both of these choices I have seen done successfully).
#1. The deal to be reached with the shop MUST be negotiated ONLY AFTER you present option FIRST above, wherein they will not get one dime. Let them chew on that for a bit since their insurance will not make them whole on this repair bill. They stand to lose A LOT of money that they put into repairs. MAKE THEM REALIZE HOW MUCH THEY STAND TO LOSE BEFORE NEGOTIATING TO RETAIN THE TRUCK.
My guess, if you present the ACV you will get, and the repair bill from the auto body shop, you can negotiate with the engine repair shop to pay no more than 60 cents on the dollar. HENCE, their bill, perhaps around $4,000, would be no more than $2,400. You would pay that from the $$$ payout you get from their insurer.
#2. Stop the totaling process and retain the vehicle.
As you will see below, these can be pretty dicey solutions to getting a satisfactory payout on having a totaled vehicle, and many times the cash received by the victim is insufficient to go and buy a like vehicle. For example, it is all too common that the victim who just lost her car will try to buy a used vehicle using the totaled car payout cash, only to discover that she would have faced a NEW monthly payment even for a used vehicle. Hence, she has a strong desire to retain the vehicle.
Have you considered whether or not YOU want your truck "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? If you know the mechanical soundness of your own vehicle because of your good maintenance record, why take a chance on some unknown vehicle?
Another reason for holding onto an older vehicle was that the owners had repairs and additions that they would never be paid for in totaling, so they retained the vehicle. You put in a new engine, and other examples to demonstrate this point might be if the owner put in a new transmission or paid for a head gasket job or had the air conditioning system completely rebuilt. These are big expenses for which the owner will NEVER be repaid even one-third in terms of valuing the asset.
Given all of these factors, should you decide to keep the truck, here is one way to do that. Naturally, one needs the bank to sign off on this.
Lower Repair Costs With USED and/or NON-OEM Parts
SAVE YOUR TRUCK FROM BEING TOTALED BY REPAIRING WITH USED and/or NON-OEM PARTS and STIPULATING TO IGNORE SOME COSMETIC DAMAGE.
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 a six year old truck 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 truck, or if you have put a lot of money into maintenance or repair, would be to explore ways to keep the vehicle.
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 truck 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. This will be a percentage of the vehicle's ACV, e.g. 70%. 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 truck, then you have to go to the next step.
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#3. Buy back the truck from the insurance company as salvage, repair it, re-title it, re-license it, and KEEP YOUR vehicle. Once again, you will have to pay the repair shop for the replacement engine. But you can negotiate this down by 60% if they know that they would get closer to zero otherwise. Plus you have to get a good warranty on the parts and workmanship.
As for the amount you pay to the insurer for the salvage, it should be around 15% to 20% of the ACV. Hence, if the adjuster said that the ACV after the engine was installed was something like $7,000, one would think that the salvage value would be around $1,100 to $1,400. BUT the kicker here is that the adjuster will want to play a double game with you. She will say that the new replacement engine itself is worth $1,500!! WELL, if that were true, you could ask, then why did you not include that in your ACV for the truck to begin with?? See where she is going with this, Shannon? Just be prepared with some dollar amounts from the engine repair shop when you negotiate the salvage value.
YOU GET YOUR EQUITY (as of the day you left the vehicle at the repair shop for the new engine), LESS THE SALVAGE VALUE THAT YOU PAY TO BUY IT BACK, and plus the amount you negotiate with the engine repair shop to pay for the new engine, and plus THE COST OF body repairs, PLUS INSPECTION AND RE-TITLING AND RE-LICENSING COSTS.
Try to avoid having the title being reported as totaled since that will require you to get the truck 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 AFTER the repairs are completed. 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 plus cost of repairs.
If the repair costs are higher, you will lose some money, BUT YOU WILL GAIN THE VALUE of the replacement engine plus any recent repairs you had done before the accident, and any add-ons you had added. For many people, getting these advantages means something since if they just took the ACV cash payout since they would then have had to go to the market to buy a used vehicle WITH UNKNOWN RELIABILITY. Does that make sense?
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#4. Fight Actual Cash Value and Present Your Own Research, and COMMUNICATE IN WRITING.
You seem shocked that your truck should have lost so much value. In any event, you can expect that the adjuster will always come in UNDER blue book, so get ready for a fight on actual cash value. Know this from me: do NOT become intimidated if the adjuster produces a number of pages of computer analysis of the market price of your vehicle because it is MOSTLY PURE B.S.
This is the product of a service called CCC that makes up fake reports of "like vehicles for sale" in your market. As the links I am going to give you below will show, the inquiry of any particular dealer is made asking about a price that YOU AND I CANNOT HAVE. They ask the dealer for its "take price" for a vehicle. This is a heck of a lot lower than that vehicle will sell for on the market.
PLUS, the "actual" vehicle does not exist at this time. It was a compilation of inquiries that produced the price. Chances are GREATER than 60% that you cannot simply go to the dealership and see the vehicle. And if it was sold, chances are you can never find out what it was sold for, but IMHO, it will almost ALWAYS be a lot more than the so-called market price that appears in the CCC report.
So what should you do? WORK. You have to do some work to overcome their deceptive techniques.
You can fight the actual cash valuation with your own research and communicate in writing. 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 150 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 in hopes of finding a higher asking price..
BUT NOTE: to the contrary, if the adjuster's comparables are at a long distance, then you should add mileage and motel costs if necessary. SO, is this being duplicitous? Yeah, you busted me. But what the heck? If they want to show lower value vehicles a long ways from your home and you have no high priced vehicles at a distance, then, by ALL MEANS, feel free to dispute the distances.
You can add mileage and motel costs and some $$$ for your time to drive the vehicle from the longer distances.
You can use information from local papers, advertising flyers, car dealerships, and the Internet. Call around to dealers. For sure, contact the dealers that list any version of your van.
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.
This is a report the adjuster will present to you with apparently FIRM values from local dealers. NO SUCH VEHICLES EXIST. Do your research on three of her examples and you will find that what they have done is to ask the dealers what their "take price" would be. This is NOT THE ACTUAL CASH VALUE. It is a made-up price that you cannot get.
Spend the time to read these articles by an excellent attorney on how the adjusters abuse the total valuations system.
http://www.stephencryanpc.com/Articles.shtml
http://www.theplan.com/documents/Ryanarticle.htm
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#5. Learn how to communicate with the insurance adjuster: FINAL TOPIC—COMMUNICATE IN WRITING AND "DEMAND" NOT "ASK"
FINAL TOPIC, Shannon: Effective communication with insurance claims adjusters. Establish Firm, Professional, and Positive Relationships With the Insurance Injury Claims Adjuster http://www.settlementcentral.com/page0059.htm
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 her 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
