An important part of my practice is helping injury clients negotiate and settle their claim for vehicle damage (often called “property damage claims” by the insurance companies.)
I usually do not take cases that involve only property damage claims – I’m an injury lawyer and there needs to be an injury before I can help. But I routinely counsel my injury clients about how to negotiate and settle vehicle claims. This post is for EVERYONE, whether you are my client or not, whether you are injured or not, whether you like lawyers or not. If you are looking for a DIY guide on how to negotiate and settle your vehicle damage claim, read on . . .
Caveat – I am licensed to practice law in the State of Georgia. If you plan to take my advice and apply it in some other State you really ought not to do that. Talk to an attorney in your area. The laws in other States are going to be pretty similar but they are not identical. Having said that, I realize it’s not always possible to talk to a local lawyer. So I hope you can benefit from what I share here.
You might think it will be simple to settle a vehicle damage claim. And sometimes it is. Sometimes the insurance company will treat you fair and pay more than you had hoped. But remember Murphy’s Law (anything that can go wrong will go wrong) may apply. I am going to talk about some pitfalls and nuances that can come up in the context of these claims and make your life difficult. Forewarned is forearmed.
WHICH INSURER TO PURSUE
First tip. Make sure you know which set of deep pockets to look to for compensation. Determine which insurance companies can be held responsible and then determine (if you have more than one option) which company is going to help you the most. For example, if you have collision coverage on your own automobile insurance policy and you have identified that the driver who caused the collision (the at-fault party) has liability insurance, you have two choices. In that happy event you can choose to look to the at-fault driver’s insurance company or look to your own automobile insurance company. Normally it will be most advantageous for you to look to the at-fault’s insurance first but if they low ball you, it may be in your best interest to use your own collision coverage.
(Speaking of collision coverage, let me talk for a moment about what that is and what it pays for. Collision coverage is what insurance insiders call “first party” coverage – it pays you in the event of an auto damage claim. So called “third-party” coverage differs from “first party” coverage in the following way: “third party” pays others in the event you cause damage to them or their property. A classic example of “third party” coverage is liability coverage – it pays people you accidently damage. Collision coverage protects you in the event your vehicle is damaged even if you were at fault. So if you look down to read a text message and look back up just in time to see the front of your car smashing into the rear of another car, you have a perfect opportunity to use your collision coverage.)
I have digressed. Back to my tip on what to do if you have a choice of deep pockets, again, many times you will have a choice to present your damage claim to your own insurance company (under your collision coverage) or present the claim to the at-fault driver’s insurance company (usually referred to as the “Liability Carrier”) under the other driver’s liability coverage. Let me offer a bit of guidance on the thought process you might use to determine which option will be the best.
Start by checking your policy information or calling your agent/insurance company to a) verify you were carrying collision coverage at the time of your wreck, and b) how high of a deductible was in effect. A common deductible is $500.00, but they can be lower or higher. The deductible is the amount of your auto damage claim for which you are personally responsible. (For example, assume your car is damaged in a wreck and the cost to repair it is going to total $10,000.00 and you have a $500.00 deductible. What this means is that your insurance company is responsible for $9,500.00 of the repairs and you will have to pay the remaining $500.00.)
Once you have checked on your policy information and know whether you have collision coverage and how high a deductible, call the at-fault driver’s insurance company (“Liability Carrier”) and ask them if they have a) accepted responsibility for the collision and b) how soon they can come out to appraise the damage to your car. If the Liability Carrier is responsive and prompt and their appraisal is at or near the appraisal of your own insurance company, you may be better off letting them handle your property damage claim because with the Liability Carrier there will be no deductible.
Sometimes, however, the Liability Carrier will tell you that they have not yet finished their investigation into who was responsible for the wreck or otherwise will not be able to promptly “adjust your loss” (that is insurance speak for handle your claim). If the Liability Carrier is being slow or unreasonable, you should present your claim to your own insurance company.
Also, if you present your claim to your own insurance company you sometimes will be able to recover your deductible later. The way that happens is through a process known as subrogation and at other times a process known as arbitration. Your insurance company, after it pays to repair your car, will go after the Liability Carrier for reimbursement. If your insurance company is successful in recovering the money it paid to fix your car, it will normally have recovered your deductible as well, and will then repay you your $500.00 (or whatever the amount of your deductible). If your insurance company only recovers a fraction of what they paid, they may only reimburse you a pro rata share of your deductible.
TOTAL LOSS VEHICLES
Next tip has to do with total loss vehicles. What do you do if it turns out your vehicle has been totaled? Essentially, you need to research the fair market value of your vehicle. You need to assess this independent from the insurance company. The insurance company, once it has determined that your vehicle is totaled, will make you an offer based on their assessment. You don’t want to depend on their assessment.
Note this: the insurance company’s offer usually includes the fair market value (FMV) of your vehicle (before it was totaled) plus sales tax and tags. Be forewarned that determining FMV is a bit of a guessing game. FMV in the context of a vehicle damage claim means what a willing buyer would pay a willing seller for a vehicle like yours (before it was totaled). To determine FMV insurance companies use a variety of methods, most based on research of the used car/truck market in your area. They may gather used car/truck ads for comparable vehicles and average them to arrive at FMV for your vehicle. The databases most insurance companies use to calculate FMV are proprietary (meaning they own the rights to use them and you and I are not going to be allowed access to them).
When the insurance company makes you an offer ask them if you can see the data that supports their determination of FMV. Sometimes they will share this with you. If not, ask a lot of questions about how they reached their number. Focus on whether they have included all your vehicle’s options and accessories. If they have failed to include a custom sound system or new tires in their evaluation that can dramatically decrease the FMV calculation. Remember – you know your car better than they do.
Once you know how the insurance company has arrived at its number – do your own research. For ballpark values, go to websites like Edmunds, Kelley Blue Book, AutoTrader, and the National Automobile Dealership Association (NADA). These sites will help you research vehicle values. The websites I mention are sometimes helpful for getting a general idea what your vehicle is worth but beware of putting too much reliance on the figures you obtain from those sources because they tend to vary.
To get a more precise value on your vehicle check out resources like the Atlanta Journal Constitution car listings or your local paper’s classified section. Keep in mind that the values that matter are local values. It won’t do you much good to find a vehicle from New York City that is priced higher than what the insurance has offered on your totaled vehicle. The issue is what are comparable vehicles worth in your area.
If you can find ads for local vehicles that are comparable to yours – call and find out if the owners have made a sale. If they have, ask them about the final sale price. That number is going to be a lot more helpful to you than the asking price listed in the ad. FMV is calculated using the selling price, not the asking price.
If you talk to several owners and find the average selling price was higher than what the insurance company has offered you, ask the insurance company to verify your research by talking to the owners themselves. This could be an effective negotiating tactic.
In the end it comes down to negotiating. Often when an insurance company makes a first offer on a totaled vehicle they hold a little back. So never take the first offer if it seems unfair.
VEHICLES THAT CAN BE REPAIRED
So I’ve talked so far about a situation where your car is deemed a total loss. Next I want to share some tips and strategies you can use to maximize your recovery if your car is repairable.
First issue – who are you going to trust with the repairs of your vehicle? If you let the insurance company be your guide they may lead you to one of their “authorized” repair centers. In my opinion that course of action is not always in your best interest, for two reasons.
Reason # 1, the facilities that appear on an insurance company’s “approved” list are probably either a) owned by the insurance company or b) eat out of the insurance company’s hand regularly and therefore are loyal to them.
Reason # 2, you lose much of your ability to negotiate.
Let me explain that second reason. If the body man who is repairing your vehicle is truly independent from the insurance company that is footing the bill, he is your ally in any negotiation with that company. And he is an ally with expertise that you lack!
For instance, normally the insurance company will prepare an estimate of how much the repairs are going to cost. Let’s assume that your body man tears apart your vehicle and finds hidden damage that is going to mean the estimate needs to be adjusted upward. Who do you want calling the insurance company to tell them that news? Someone on their “approved” list? Or someone who is truly independent? Who do you think is going to be the most loyal to you?
For these reasons, I recommend that you find a good independent body shop who will be your ally during the negotiation process. Let them call the insurance company and explain why the initial estimate was too low. Let them educate you about your car and the damage to it.
And by the way – you should expect hidden damage to show up after the initial estimate. This is routine. The process is called a “supplemental” – the body shop will contact the insurance company with a “supplemental” estimate that details the additional damage they found as they took your car apart to start repairs.
So, how do you find an independent body shop? It ain’t easy. One that I recommend and that has served some of my client’s well is:
Gwinnett Collision Center
305 Sharon Industrial Way
Suwanee, GA 30024
Here is another tip that has helped a number of my clients over the years. Consider handling your damage claim in this way –
STEP ONE – drive (or tow) your damaged to an independent body shop. Have them prepare a written estimate of the cost of repairs.
STEP TWO – Send the estimate to the insurance company. They will verify it by sending out an appraiser to inspect your vehicle.
STEP THREE – Negotiate a settlement on your vehicle damage claim. But before you finalize it, go to STEP FOUR.
STEP FOUR – Negotiate a deal with the body shop. Start by showing them what the insurance company is willing to pay. Ask the body shop if they will agree to do the repairs for less. Offer to let them used after-market parts or skip certain repairs all together (that is your choice and perfectly appropriate). Cosmetic repairs are a good choice for electing to use after-market parts.
STEP FIVE – Settle the property damage claim, collect the settlement check, deposit it in your account, bring your vehicle in for repairs, when those repairs are complete, pay the body shop, and keep the difference between what you received from the insurance company and what you paid the body shop.
This strategy is effective because you are entitled to full compensation for the fair market value of the cost of repairs to your vehicle but are free to choose to not repair your vehicle.
This strategy can be a life saver if you are in a situation where you have a deductible but don’t have the cash on hand to pay it. By negotiating with the body shop you can effectively reduce your deductible to little or nothing.
DIMINSHED VALUE (DIMUNITION IN VALUE)
One thing I haven’t talked about until now is “diminished value.” Sometimes you will hear it referred to as “diminution in value.” This is an important detail and can increase your net recovery on your property damage claim.
Diminished value is the decrease in the overall value of a vehicle that has been damaged, even after it has been repaired. It has to do with the percentage of your car’s value that is lost due to the fact it has been wrecked and repaired.
The classic example of diminished value is what happens when it comes time for you to sell your vehicle. People pay less for a vehicle that has had body damage, no matter how skillfully it is repaired. The resale value of your vehicle is diminished because people know that once a vehicle has been damaged it is never the same.
So how do you calculate diminished value? Follow these steps –
ONE. Get your vehicle repaired. No diminished value calculation can be done until your vehicle is repaired.
TWO. Get the responsible insurance carrier on the phone and ask them to send out an appraiser to calculate your diminished value. Sometimes they will send out an appraiser to look at your vehicle, sometimes they will make the calculation based on information they already have.
THREE. Once you have a figure from the insurance carrier, do your own research. You might call a used car lot and ask them how much they think they get for a vehicle like yours. Then ask them how much that number would go down if you told them your car had been wrecked and repaired.
FOUR. Negotiate with the insurance company and draw out their top offer. If you can live with that offer, take it. If not, proceed to Step FIVE.
FIVE. Hire a private adjuster to prepare a formal evaluation of your diminished value. I know of two private adjusters who can help you with this (I’m sure there are more) –
Dempsey Appraisal Service
3651 Peachtree Parkway
Consumer Collision Services, Inc.
P.O Box 2343
McDonough, Ga 30252
Once you have a report from one of these gentlemen in hand you can share it with the insurance company and negotiate a better deal.
There is no specific “formula” for determining diminished value. The Office of Insurance and Fire Safety Commissioner clarified this in a directive sent to all insurance companies doing business in the State of Georgia. If you are talking to an insurance company about diminished value and they tell you they are relying on a formula that has been approved by the Insurance Commissioner, they are either in error or being tricky.
Watch out for used parts! After you receive a copy of your property damage estimate and BEFORE you authorize anyone to lay a finger on your vehicle, study the estimate carefully for signs they intend to fix it with used parts. If your vehicle is new, you are entitled to new parts. It can be tricky identifying used parts on an estimate. They are often labeled “replacement” parts or “after market” or LKQ (like kind and quality) or QRP (quality replacement) parts. Ask what the abbreviations mean; ask if all new parts will be used.
Supplemental repairs. Who pays if after your repairs are completed you discover more problems? You pay unless the insurance company puts something in writing agreeing to pay for supplemental repairs. Don’t authorize repairs to start and don’t sign anything (including any checks) until the insurance company promises in writing that they will take care of all supplemental repairs.
The “full release” trick. Sometimes you will be asked to sign a release of claims when you settle your property damage claim. Be very careful what you sign. If the release specifically and clearly limits the claim being released to the property damage claim ONLY, you are safe. But I have seen an insurance company slip language in that releases ALL claims, including any bodily injury claim. If you sign a “full release” you are settling both your property damage and bodily injury claims.
Don’t indorse (sign) a check until your claim is totally over. I handled a case recently where my client was tricked by Allstate Insurance Company into settling his property damage claim. Here is how they did it. My client accepted what he believed was a partial payment on his vehicle damage claim. He only accepted partial payment from Allstate because the Allstate employee who handed him the check told my client that accepting the check would not end the negotiation process. Later, Allstate contended that when my client signed and deposited the check from Allstate he entered into an “accord and satisfaction” and therefore was barred from recovering anything further. My client did not sign a release – all he did was sign a check.
Unfortunately by the time I got involved it was too late to fix my client’s problem. We sued but the Judge sided with Allstate. Don’t ever sign anything no matter what the insurance company tells you unless you have an attorney review and approve what you are going to sign.
So ends this rather long post on how to settle your Georgia property damage claim without hiring an attorney. I hope some of this information is a help to some one!
Attorney Pete Pearson has been working for injury victims for 18 years right here in the Metro Atlanta Area. Located in the Greater Atlanta Metro Area, he serves clients all over the State of Georgia. He has a sub-specialty in child injury law. You can talk to Attorney Pearson for a free initial consultation by clicking here or by calling him at Six-Seven-Eight 358-2564.