Question: I was recently in a car accident in Dallas. My car was totaled. The insurance company made me a offer which is way below the market value for a similar car in this area. They even used comparables in other cities. What options do I have?
Robert’s Answer: It depends on whether you are dealing with your own insurance company or the other driver’s insurance company. If you are dealing with the other driver’s insurance company, your are entitled to the “fair market value” of the vehicle at the time and place of the accident. So, if you were involved in a car accident in Dallas, Tx, then the value of your car depends on what the market would bring in the Dallas area at the time of the accident.
If you are dealing with your own insurance company, then most policies provide for the “actual cash value.” This is a little different than the “fair market value” since it is based upon the value on a strictly cash basis for a similar car in the area. This is because your insurance company will assume that if they pay you cash for your car, then your will take that cash and buy a similar car. Usually, the actual cash value is a little less than the fair market value.
Even though there may be a difference in the valuation process, many times your own insurance company will treat you better with your evaluation than the other driver’s insurance company. The reason is that your insurance company has a duty to handle your claim in good faith. Likewise, they tend to resolve any reasonable differences in your favor when arriving to a fair evaluation.
If you are dealing with the other driver’s insurance company, you are considered a “third-party claim” and the insurance company owes no legal duty to provide you with a fair evaluation. Their duty is simply to protect their negligent driver from any potential claims your may have. Likewise, there goal is to manage your claim in such a way that they can minimize payments while still providing a defense to their driver in the event you choose to sue.
Most of the time, you will not be required to sign a release in exchange for the insurance payment on your car. Likewise, you will still have the right to sue for the difference if you think you have been grossly under-paid. Be very careful! Sometimes the insurance company will sneak that release language into the body of the check or some other correspondence that accompanies the check. If that happens, and you endorse the check, you may be deemed to have released your claims. So, don’t ask or mention anything about a release or else the insurance company might think your are going to file suit and insist on a getting a release from you. The best thing to do is to stay quiet about a release and see if any release comes up during the finalization process. If not, then you still have the right to file a lawsuit.
Although there may be some room for negotiation of the vehicle valuation, there usually isn’t much. In my experience, you might be able to negotiate within a 5-10% range. If your vehicle had major upgrades or recent repairs, then you can certainly use that to try and negotiate a better pay-off.
If you decide to use your own insurance, your claim will be reduced because of your deductible. However, your insurance company will most likely go after the other insurance company for reimbursement. If they are able to get any reimbursement, then they will refund your deductible back to you.
One other thing people forget is that the final payout must also include the tax, title and license (TT&L) fees. Since your car was totaled, you would be entitled to TT&L since you will have to pay these fees when you buy another car.