Guide to Auto Accident Property Damage - Part 2 - Totaled Vehicle
Most personal injury cases we handle involve some problems with automobile property damage. Many clients come to Franklin and Franklin because of their unsatisfactory property damage claims experience with the negligent driver’s insurance company. These bad experiences usually take two forms: 1) the insurance company takes too long to get back with the injured party or 2) the insurance company offers a low dollar amount for repairs or for the totaled vehicle.
In Part 2 we’ll discuss what to do when you’ve been offered a low amount by the insurance company for your totaled vehicle and ways to combat low ball offers.
Why Companies are Making Lower Offers
Insurance companies are in the business to make money. Property damage claims increase yearly as vehicles become more expensive to repair or replace. When discussing why his GEICO stock was not performing as well as it had previously, billionaire investor Warren Buffett stated, “[L]ast year  both frequency, how often people had accidents, and severity, which is the cost per accident…both of those went up quite suddenly and substantially.” According to the risk assessment company Verisk, “Accident frequency is at its highest level in a decade based primarily on an increase in miles driven.” These factors have a substantial effect on insurance company profits (margins). In our experience at Franklin & Franklin, any time insurance company profits are negative affected, companies will raise rates, deny claims and make low-ball offers.
When is a Car Considered “Totaled?”
In Virginia, the total loss threshold, meaning the amount where the repair cost approaches or exceeds the actual cash value of the car, is 75%. (e.g. your car is worth $10,000 according to NADA and the repairs estimate will cost $7,500 or more, most insurance companies will “total” the vehicle (See Code of Virginia of 1950 - §46.2-1602.1).
What to Do When You Get a Low Offer on a Totaled Vehicle
In the event the negligent driver’s insurance company makes a low offer on a totaled vehicle, you will need to do some research. Virginia law states that an automobile’s value is presumed to be the “tabulated retail value” as set forth in the NADA books in effect on the date of the accident. (See www.nadaguides.com) However, either party may present evidence that the value of the automobile was either higher or lower than that presumed value, based on its condition and other pertinent factors. This is where the insurance company is going to tell you what is wrong with your car, why the condition is “fair” instead of “good” or “clean.” Be aware that the NADA guides always take mileage into account when calculating the retail price; the insurance company should not be able to use it to lower the price further. Another insurance company trick is to produce a report showing vehicles that are similar to yours for sale in the area. These reports are cherry-picked to show three or more “similar” vehicles that always have a lower value than the NADA retail price (See Code of Virginia of 1950 - §8.01-419.1).
In reviewing a report, some common questions you need to ask are:
1. Is the vehicle the same “trim” package as your vehicle.
2. Are there any add-ons that you have on your car that are in addition to the “trim” package?
3. Is the mileage substantially similar? If not, what does the NADA show for a mileage adjustment?
4. Is the listed car for sale in your geographic area (i.e. Hampton Roads/Tidewater) (We’ve seen them pulled from rural areas of North Carolina and Virginia).
5. Is the listed car for sale by a new or used dealership or is it a private sale?
You may also want to do your own online search for comparable vehicles for sale in the Hampton Roads area. Find vehicles that are substantially similar (and for “retail sale”) and use those asking prices to counter the insurance company’s “cherry-picked” vehicles.
What to do if you don’t like their offers?
If, after all you have done to try and resolve the totaled vehicle property damage claim, you cannot come to an agreement, you can contact one of our property damage attorneys at Franklin & Franklin to see what we can do for you. Depending on the value of your totaled vehicle we will have different recommendations under Virginia law.
See Part 3 of our Guide to Property Damages Series - Small Claims Court.