QuestionQUESTION: I am trying to negociate a fair value of my car with both insurance companies in an accident were I am not at fault. Both have offered mid blue book prices per KBB. The problem is that I can not find my type of vehicle in my area to replace it with. Both insurance companies comps of comparable vehicles (6 total)are 3-5 driving hours away and are priced higher. I have explained that in my research, and even based on their comps, that I will lose money excepting their offer. I have asked to be paid the retail price because I must travel to find a replacement car and will probably have to use a dealer to ensure I get a clean title.
Is this a reasonable request? Is there any consideration given to my location?
Thank you
ANSWER: Hello Don,
If you bought your car from a dealer, you are entitled to replace at dealer price. However you are also always entitled to what you had and the expense to locate it. Most states laws that say you are entitled to the fair market value of a car in your local area, not 5 hours away. If local comps are not available, there are other ways to value your car. For the best detailed information on how to settle your total loss auto claim, consider one of the eBooks at UClaim.com entitled Total Loss Auto, probably the one for claimants. They are on sale for around $12.00 with a money back guarantee.
---------- FOLLOW-UP ----------
QUESTION: I bought my car from a private party not a dealer. The adjusters were quoting a CA law (Section 2695.7 Standards for Prompt, Fair and Equitable Settlements) that allows them to use comps from vehicles out of my local market area when there are no local comps. I read the section and it seems to me to be very vague. It doesn't clearly state what distances are considered local. Do you feel that this law applies?
Section 2695.7 Standards for Prompt, Fair and Equitable Settlements
(a) No insurer shall discriminate in its claims settlement practices based
upon the claimant's age, race, gender, income, religion, language, sexual
orientation, ancestry, national origin, or physical disability, or upon the
territory of the property or person insured.
Section 2695.8 Additional Standards Applicable to Automobile Insurance
(a) This section enumerates standards, which apply to adjustment and
settlement of automobile insurance claims.
(1) The words "automobile" and " vehicle " are used synonymously
(b) In evaluating automobile total loss claims the following standards
shall apply:
(1) The insurer may elect a cash settlement that shall be based upon the
actual cost of a "comparable automobile" less any deductible provided in
the policy. This cash settlement amount shall include all applicable taxes
and one-time fees incident to transfer of evidence of ownership of a
comparable automobile. This amount shall also include the license fee and
other annual fees to be computed based upon the remaining term of the loss
vehicle's current registration. This procedure shall apply whether or not a
replacement automobile is purchased.
(A) If the insured chooses to retain the loss vehicle or if the third party
claimant retains the loss vehicle, the cash settlement amount shall include
the sales tax associated with the cost of a comparable automobile,
discounted by the amount of sales tax attributed to the salvage value of
the loss vehicle. The cash settlement amount shall also include all fees
incident to transfer of the claimant's vehicle to salvage status. The
salvage value may be deducted from the settlement amount and shall be
determined by the amount for which a salvage pool or a licensed salvage
dealer, wholesale motor vehicle auction or dismantler will purchase the
salvage. If requested by the claimant, the insurer shall provide the name,
address and telephone number of the salvage dealer, salvage pool, motor
vehicle auction or dismantler who will purchase the salvage. The insurer
shall disclose in writing to the claimant that notice of the salvage
retention by the claimant must be provided to the Department of Motor
Vehicles and that this notice may affect the loss vehicle's future resale
and/or insured value. The disclosure must also inform the claimant of his
or her right to seek a refund of the unused license fees from the
Department of Motor Vehicles.
(2) A "comparable automobile" is one of like kind and quality, made by the
same manufacturer, of the same or newer model year, of the same model type,
of a similar body type, with options and mileage similar to the insured
vehicle. Newer model year automobiles may not be used as comparableautomobiles unless there are not sufficient comparable automobiles of the
same model year to make a determination as set forth in Section 2695.8
(b)(3), below. In determining the cost of a comparable automobile, the
insurer may use either the asking price or actual sale price of that
automobile . Any differences between the comparable automobile and the
insured vehicle shall be permitted only if the insurer fairly adjusts for
such differences. Any adjustments from the cost of a comparable automobile
must be discernible, measurable, itemized, and specified as well as
appropriate in dollar amount and so documented in the claim file.
Deductions taken from the cost of a comparable automobile that cannot be
supported shall not be used. The actual cost of a comparable automobile
shall not include any deduction for the condition of a loss vehicle unless
the documented condition of the loss vehicle is below average for that
particular year, make and model of vehicle. This subsection shall not
preclude deduction for prior and/or unrelated damage to the loss vehicle. A
comparable automobile must have been available for retail purchase by the
general public in the local market area within ninety (90) calendar days of
the final settlement offer. The comparable automobiles used to calculate
the cost shall be identified by the vehicle identification number (VIN),
the stock or order number of the vehicle from a licensed dealer, or the
license plate number of that comparable vehicle if this information is
available. The identification shall also include the telephone number
(including area code) or street address of the seller of the comparable
automobile.
(3) Notwithstanding subsection (2), above, upon approval by the Department
of Insurance, an insurer may use private sales data from the Department of
Motor Vehicles, or other approved sources, which does not contain the
seller's telephone number or street address. Approval by the Department of
Insurance shall be contingent on the Department's determination that
reasonable steps have been taken to limit the use of private sales data
that may be inaccurately reported to the Department of Motor Vehicles, or
other approved sources.
(4) The insurer shall take reasonable steps to verify that the
determination of the cost of a comparable vehicle is accurate and
representative of the market value of a comparable automobile in the local
market area. Upon its request, the department shall have access to all
records, data, computer programs, or any other information used by the
insurer or any other source to determine market value. The cost of a
comparable automobile shall be determined as follows and, once determined,
shall be fully itemized and explained in writing for the claimant at the
time the settlement offer is made:
(A) when comparable automobiles are available or were available in the
local market area in the last 90 days, the average cost of two or more such
comparable automobiles; or,
(B) when comparable automobiles are not available or were not available inthe local market area in the last 90 days, the average of two or more
quotations from two or more licensed dealers in the local market area; or,
(C) the cost of a comparable automobile as determined by a computerized
automobile valuation service that produces statistically valid fair market
values within the local market area; or
(D) if it is not possible to determine the cost of a comparable automobile
by using one of the methods described in subsections Name of Document:
California (CA) – State Regulations Last Updated: 7/18/08
Last Updated by: Tracy Wood Update Requested by: Carol Stiffler Document
Owner: TL Training Manager
(b)(3)(A), (b)(3)(B) and (b)(3)(C) of this section, the cost of a
comparable automobile shall otherwise be supported by documentation and
fully explained to the claimant. Any adjustments to the cost of a
comparable automobile shall be discernible, measurable, itemized, and
specified as well as appropriate in dollar amount and so documented in the
claims file. Deductions taken from the cost of a comparable automobile that
cannot be supported shall not be used
(5) In first party automobile total loss claims, the insurer may elect to
offer a replacement automobile which is a specified comparable automobile
available to the insured with all applicable taxes, license fees and other
fees incident to transfer of evidence of ownership of the automobile paid
by the insurer at no cost other than any deductible provided in the policy.
The offer and any rejection thereof must be documented in the insurer's
claim file. A replacement automobile must be in as good or better overall
condition than the insured vehicle and available for inspection within a
reasonable distance of the insured's residence.
(6) Subsection 2695.8(b) applies to the evaluation of third party
automobile total loss claims, but does not change existing law with respect
to the obligations of an insurer in settling such claims with a third
party.
(c) In first party automobile total loss claims, every insurer shall
provide notice to the insured at the time the settlement payment is sent or
final settlement offer is made that if notified by the insured within
thirty-five (35) calendar days after the insured receives the claim payment
or final settlement offer that he or she cannot purchase a comparable
automobile for the gross settlement amount, the insurer will reopen its
claim file. If subsequently notified by the insured the insurer shall
reopen its claim file and utilize the following procedures:
(1) The insurer shall locate a comparable automobile for the gross
settlement amount determined by the company at the time of settlement and
shall provide the insured with the information required in (c)(4), below,
or offer a replacement vehicle in accordance with section 2695.8(b)(4). Any
such vehicle must be available in the local market area; or,
(2) The insurer shall either pay the insured the difference between the
amount of the gross settlement and the cost of the comparable automobilewhich the insured has located, or negotiate and purchase this vehicle for
the insured; or,
(3) The insurer shall invoke the appraisal provision of the insurance
policy.
(4) No insurer is required to take action under this subsection if its
documentation to the insured at the time of final settlement offer included
written notification of the identity of a specified comparable automobile
which was available for purchase at the time of final settlement offer for
the gross settlement amount determined by the insurer. The documentation
shall include the telephone number (including
Name of Document: California (CA) – State Regulations Last Updated: 7/18/08
Last Updated by: Tracy Wood Update Requested by: Carol Stiffler Document
Owner: TL Training Manager
area code) or street address of the seller of the comparable automobile
and:
(A) the vehicle identification number (VIN) or, (B) the stock or order
number of the vehicle from a licensed dealer, or (C) the license plate
number of such comparable vehicle. (d) No insurer shall, where liability
and damages are reasonably clear, recommend that the third party claimant
make a claim under his or her own policy to avoid paying the claim under
the policy issued by that insurer.
(e) No insurer shall: (3) require a claimant to travel an unreasonable
distance either to inspect a replacement automobile, to conduct an
inspection of the vehicle, to obtain a repair estimate or to have the
automobile repaired at a specific repair shop (i) When the amount claimed
is adjusted because of betterment or depreciation, all justification shall
be contained in the claim file. Any adjustments shall be discernable,
measurable, itemized, and specified as to dollar amount, and shall
accurately reflect the value of the betterment or depreciation. This
subsection shall not preclude deduction for prior and/or unrelated damage
to the loss vehicle. The basis for any adjustment shall be fully explained
to the claimant in writing and shall: (1) reflect a measurable difference
in market value attributable to the condition and age of the vehicle, and
(2) apply only to parts normally subject to repair and replacement during
the useful life of the vehicle such as, but not limited to, tires,
batteries, et cetera. (k) After a covered loss under a policy of automobile
collision coverage or automobile physical damage coverage as defined in
California Insurance Code Section 660, where towing and storage are
reasonably necessary to protect the vehicle from further loss, the insurer
shall pay reasonable towing and storage charges incurred by the claimant.
The insurer shall provide reasonable notice to the claimant before
terminating payment for storage charges, so that the claimant has time to
remove the vehicle from storage. This subsection shall also apply to a
third party claim filed under automobile liability coverage as defined in
California Insurance Code section 660, however, payment to a third
AnswerDon,
Since the law does not specify how many miles is "local" then that magic word and concept in the law takes over: "Reasonable" or "what is reasonable". In your case what is "reasonable" would be how far you drove to purchase your private party car. So if you drove 20 miles to buy your car, then thats what is fair, however if you drove 500 miles, then that is reasonable. Thats what you argue now, and in court, if it goes that far.
If there are no comps in your 20 mile radius, then you go to the "dealer quote" method. That technique is outlined in the uclaim.com ebooks on Total Loss Automobile. It will tell you how to handle all the options discussed in Insurance Code 2695.7(b)(4) in plain english.
