UNDERSTANDING PROPERTY DAMAGE

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Your vehicle has been damaged in a crash and now you need to know what to do.  For most people, a motor vehicle is a major investment and an absolute necessity. It is what you use to get back and forth to work and to attend to all the important matters that modern living requires.  You need to get your vehicle repaired or replaced and the sooner the better.

One of the first questions you will have is:  Will I need an attorney to handle the property damage portion of my claim?

You definitely should consult with an attorney before discussing any personal injuries that you  or someone else may have received in the crash. Any attorney you hire for a personal injury claim should be able and willing to help you handle the portion of your claim dealing with damage to your vehicle.  This is generally called a property damage claim.

But, you say, what if I haven’t been injured?  I still need to get my vehicle repaired or replaced and none of the attorneys I have called will take my case.  What do I do now?

This guide will give you some practical advice for dealing with the insurance adjuster who will be handling your claim.

IT IS NOT LEGAL ADVICE AND DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP.  IF YOU NEED LEGAL ADVICE YOU SHOULD CONSULT AN ATTORNEY.  AN ATTORNEY-RELATIONSHIP WILL ONLY BE ESTABLISHED THROUGH A WRITTEN RETAINER AGREEMENT WITH THIS FIRM.

WHOSE FAULT IS IT?

This is an important question because it will tell you where to start.  If you or someone you let drive your vehicle is clearly at fault, you need to deal with your own insurance company.  But be aware that your insurance company will not help you if you do not have collision coverage.  If you have a really old car and only bought PL and PD insurance then you assumed the risk of smashing your car up in a crash. PL and PD stand for Personal Liability and Property Damage. These coverages insure the other parties in a crash. PL and PD insurance is the basic coverage required by law that protects other drivers and car owners from YOUR wrongful acts whether those acts involve your own negligence or allowing someone else to drive your vehicle and that person’s negligence caused the crash.  If PL and PD is all you have and you are at fault, you are out of luck. You gambled and you lost. This guide will be of no further use to you.

If the driver of your vehicle (you or someone else) was at fault AND you have purchased collision coverage, then you need to contact the agent who sold you your policy and ask them to set up a claim for you.  They should contact the company or give you a telephone number to set up a claim. Once a claim is set up, an adjuster will be assigned to handle your claim. Your insurance premium will probably increase with the next billing but you will get your claim taken care of and, after all, that is why you purchased collision insurance.  If the cost does go up, you can always take your business to another insurance company.

If the other driver was at fault and caused the crash, you need to set up a claim with the company that insured the at-fault vehicle.  You should have received the name of that insurance company and policy number before you left the crash scene.  If you did not get it, it will be on the police report.  Get a copy of the police report from the police department whose officer or deputy investigated the crash.  The insurance information is listed just below items 43 and 44 of the standard crash report used in North Carolina.

Now call the insurance company.  You can get the telephone number from the North Carolina Department of Insurance.  The website is http://www.ncdoi.com/  or you can call their Consumer Services Division at 800-546-5664.

You should understand that the insurance company for the at-fault party is obligated to do what the law requires of their insured driver and nothing more.  Insurance companies are in business to make money, not to make you happy.  While property damage adjusters are generally fair, it is only because property damage claims are usually straight forward. Unlike the effects of personal injuries, there is usually not much disagreement about the costs of repair or the fair market value of a vehicle. And the range of any disagreement is usually small compared to the range of disagreement over the value of a personal injury claim.  However, that does not mean that the property damage adjuster will agree to give you exactly what you want.  He or she will be only as fair as they have to be. And they might be rude.  You should always speak in a professional or business tone to the adjuster and they should speak the same way to you; but beware, now and then you may get a grumpy one.  Do not let that put you off.  Remember, your goal is to get your car repaired or paid for in a timely manner.

Let’s talk for a minute about just what the law requires of an at-fault party, because that tells you what the insurance adjuster must do. They may be responsible for the following:

* Reasonable towing and storage charges

* Repair costs or the pre-crash value of your vehicle

* Loss of use

* Diminished value of your vehicle

You may hear the term “contributory negligence”.  If you do, be wary.  The adjuster is looking for a way to avoid paying anything.  Contributory negligence is an ancient and out-dated legal doctrine that is still the law in North Carolina and a few other states.  It means that a person (driver) who was only slightly at fault for the crash cannot recover.  So, if the adjuster can justify a claim that the driver of your vehicle contributed to the crash in even the smallest way, he or she will refuse to pay you.  Some adjusters will accept a statement from the at-fault driver (their insured) that the driver of your vehicle did something wrong, even if such a statement directly contradicts the police report of the crash.

If the adjuster feels there is a chance that the insurance company can avoid paying, they will take several days or even weeks to “investigate” the claim. If this is the case and you have collision insurance it is generally best to contact your own insurance company and have them take care of your property insurance.  It will be much faster and your insurance company will then make efforts to get the money they spend from the other insurance company.

REPAIR COSTS:

The law actually requires the at-fault party to pay the difference between the pre-crash fair market value of your vehicle and the fair market value after the crash. To simplify things this is almost always interpreted by insurance companies to be the cost of repairing your vehicle. Once the adjuster has accepted liability for the claim, your vehicle will have to be appraised to determine how much it will cost to repair the damage.  North Carolina requires the insurance company to “total loss” your vehicle if the cost to repair equals or exceeds 75% of the pre-crash value.

There are generally three ways a repair cost is determined.  The most common is for the adjuster to send an appraiser or “estimator” out to look at the vehicle and write up a repair estimate.  Also, the adjuster can ask you to take your vehicle to their “drive-in” facility.  Be aware that you do not have to agree to do this although it is generally a good way to handle very minor damage claims.  They will frequently write you a check on the spot.  The third way is to ask you to provide some repair estimates.  This is how many out-of-state and commercial insurers handle claims because they do not have appraisers on staff to handle repair estimates. Just remember that they cannot require more than two estimates unless they pay for the additional estimates. You can insist upon a personal inspection by the insurance company and Department of Insurance rules provide that the insurance company cannot refuse but they can satisfy the personal inspection requirement by having a competent local appraiser inspect the vehicle.  I personally think that it is better to get your own appraisals from dealerships or body shops that you are comfortable with.

Many body shops will do estimates for you at no charge because they are hoping to get your business.  I frequently recommend that my clients go to a dealership that sells the make of vehicle that was damaged to get an estimate.  A dealer estimate is generally free and they will be higher than other estimates because they will only use parts made by the vehicle manufacturer.  I like my clients to have a dealer repair estimate available when an insurance appraiser comes to look at a damaged vehicle.  I tell them to give a copy to the appraiser so they know that my client has a good idea what it will cost to repair the vehicle.  It helps keep the appraiser honest.

If your vehicle is not a total loss, the adjuster will probably agree to settle the claim based on the repair estimate or estimates.  You are entitled to a copy of any estimate the adjuster uses for the basis of a settlement.  Just ask for it.

Any settlement agreement you reach with the adjuster to repair your car should include payment by the insurance company of the towing and storage bill, if the vehicle was towed to a junk yard.  It should also include a payment for loss of use, unless the adjuster has provided a rental car. If you request that the agreement be confirmed in writing, the rules require the adjuster to do so.  I recommend that you get written confirmation so there are no misunderstandings.

You are entitled to a copy of the estimate and all supplements that an insurance company uses to offer a settlement. The copy shall be front and back copies and must be legible.  If the insurance company is claiming that your vehicle had pre-existing damage, the extent of the damage shall be clearly stated in the estimate.

UNSEEN DAMAGE:

In more serious crashes, much of the damage cannot be seen or appraised until the body shop starts taking the outer parts of the vehicle (such as fenders and rocker panels) off.  As the body shop gets farther into repairs, additional damage is often discovered.  Even if you have signed a release or a “full payment of claim”, you still have the right to claim the additionally damage if done promptly.  The rules provide that an additional claim is prompt if made within 30 days after repairs. This is usually not a problem.  It is common practice for reputable body shops to stop work on a vehicle when they spot additional damage and call the insurance company.  Most companies will send their appraiser to the body shop to view the damage and agree with the body shop on the cost of additional repairs. Often, the appraiser has authority to issue the body shop a check for the amount agreed on the spot.

Towing and storage charges should be relatively simple. If these charges are paid to you, the adjuster will include the towing and storage facility as a payee on the check unless you have already paid the charges. If you have paid, provide a copy of your receipt to the adjuster.  Most of the time, the adjuster will just issue a check directly to the towing and storage facility (junk yard). But be aware that storage charges can be a problem if you cannot reach an agreement to settle your claim.  The adjuster will send a letter to you and the storage facility that the insurance will no longer be responsible for storage charges. Once the letter has been mailed, the insurance company’s responsibility to pay storage charges will end 3 days later.  You will be responsible to have the vehicle towed to a place where you do not have to pay storage or you will be responsible for any additional storage charges.  Either way, you will be paying something.

Rentals are sometimes a source of friction. If you go to court, the judge will instruct the jury that you are entitled to a reasonable amount for the loss of use of your vehicle.  This does not mean that you are entitled to a rental vehicle. Some insurance companies routinely provide rental vehicles for the owners of damaged vehicles that are undriveable, although they are not required to do so. They usually send the owner to a rental agency and will pay the bill.  They will not necessarily pay for a vehicle exactly like your vehicle and you will be required to provide a valid driver’s license and proof of insurance.  This is a good reason to continue your insurance until the claim is fully settled, even if your vehicle is obviously a total loss.  Most insurance policies with collision insurance cover rental vehicles.  If you do not have this coverage, the rental company may require you to purchase collision insurance through them in case you are involved in a crash with their car.  The rental will be limited to a reasonable number of days and the insurance company will cut it off if they cannot reach an agreement with you to settle your property damage claim.

Loss of use is another area of friction.  There is no legal definition of the reasonable amount of money for loss of use. Some insurance companies will agree to $25.00 per day from the date of the crash until you have the settlement check, others will only agree to $15.00 per day.  If your vehicle was driveable during the period from the crash until settlement, you should still negotiate an amount for loss of use during the period of time your vehicle will be in the body shop actually getting repaired and most adjusters will agree to this.  They likely will not agree your vehicle should be at the body shop for three weeks while the shop is waiting for parts to be delivered.  You should make arrangements with the body shop to have all of the parts they will need before you give them your vehicle.

Diminished value is another interesting issue.  Adjusters hate this and will not pay it without proof. This means that you must pay for a diminished value appraisal to pursue this portion of a property damage claim. A rule of the Department of Insurance states that settlement of your claim against the at-fault party’s insurance company does not bar your right to promptly make a claim for diminished value if the diminished value was caused by the crash and if the diminished value could not be determined or known until after the repair or attempted of the vehicle.  As a practical matter, diminished value cannot be determined until after the repairs are made because any loss of value is dependent, at least in part, on the quality of the repairs.  The person I use to determine loss of value will not even look at a vehicle for diminished value if the vehicle is more than 5 years old. The Department of Insurance rule states that “Claims asserted within 30 days after repair for diminished value shall be promptly asserted.”  So, if you feel the crash has left you with a vehicle that is worth less than it would have been but for the crash, you need to act very quickly after the repairs are finished to get a diminished value appraisal and to present it to the adjuster.  If your vehicle is more than 5 years old, it is probably not even worth making such a claim.

TOTAL LOSS:

If the insurance company determines that the cost of repair equals or exceeds 75% of the value of your vehicle they are required to offer to buy it from you for its pre-accident value.  Like any other sale, they also have to pay sales tax and the cost of title transfer. If you and the insurance company cannot reach an agreement as to the pre-crash value of your vehicle, the Department of Insurance rules governing total losses require the insurance company to base any further offer not only on published regional average values of similar vehicles, but also on the value of the vehicle in the local market. This means the local market price of a comparable vehicle or, if no comparable vehicle can be found, quotations from at least 2 qualified dealers within the local market area. If you claim that your vehicle was in better than average condition, the insurance company must give due consideration to the condition of your vehicle prior to the accident.  However, you should be prepared to prove the condition of your vehicle before the accident if you claim better than average condition.

Most insurance companies use a database from a company called CCC and the values are usually reasonable.  I recommend checking the value of your vehicle with at least one of the free on-line service.  Websites that I use are:

NADA:  http://www.nada.com/

Kelley Blue Book: http://www.kbb.com/

Edmunds: http://www.edmunds.com/used-cars/

Values on these websites will vary, but checking will at least give you an idea if the insurance company’s offer is fair.  If it seems low, I recommend finding an independent appraiser for a report of the value of your vehicle.  It will probably cost between $100.00 and $150.00.  I have used this approach on the few occasions that I thought the insurance company was too low on their offer.  Each time that I have submitted the report of an independent appraiser, the insurance company immediately increased their offer to a number very close to that of the independent appraiser.

Procedure:

Once you have agreed on a value, you sign over title (or power of attorney) to the insurance company and they give you a check for the agreed upon value plus tax and title fee.  After the “sale”, the insurance company will typically sell what is left of your car to a junkyard for “salvage value”.  This is what the junkyard will pay the insurance company for your car.  You might not want to sell your car to the insurance company because it still runs and has been a very reliable vehicle.

If keeping your car is an option, ask the adjuster how much the insurance company will pay you if you want to keep it.  The insurance company will have already contacted a junkyard to get the “salvage value” of your car.  The adjuster will give you a number that is the value of your car minus the “salvage value.”  If you ask, the adjuster will give you the name and address of the salvage dealer who will purchase for the vehicle for “salvage value”.  You should also ask for the telephone number. If you agree to keep the vehicle for value of the car minus the “salvage value”, the adjuster will require you to sign an OWNER RETAINED VEHICLE form that will be filed with the Division of Motor Vehicles.  This means that your title to the vehicle will become what is referred to as a “salvage title”.  This alerts any future purchaser that the vehicle has been in a serious accident.

In total loss situations, the adjuster will probably contact you after the appraiser has inspected your car at the junkyard and ask your permission to have it towed to a yard where the insurance company will not have to pay storage charges.  Unless there is some good reason to keep the car at a local junk yard, I recommend that you agree to this arrangement, especially if you have agreed on a price for your vehicle.  There is nothing to gain by requiring the insurance company to continue to incur storage charges while the paperwork is being finalized.  The only reason to disagree would be the need to have your own experts to look at the vehicle for independent appraisal purposes or for accident reconstruction purposes if there were serious injuries caused by the crash.

BEFORE the vehicle is towed away, make sure that you get all of your personal belongings out of the car.  Most importantly, you want to take the license tag off the car. This has to be turned into the Division of Motor Vehicles.  Failure to do this will result in charges that you will not want to pay.  Most junkyards or salvage yards will not let you in to take anything from your vehicle until the insurance adjuster has told them that they have accepted liability for towing and storage charges or until you pay the charges yourself. So the best time to go is usually after you and the adjuster have reached an agreement.  Tell the adjuster to let the salvage yard people know that you will be coming for your tag and personal belongings.

On occasion clients have told me that personal belongings have been missing from their vehicle when they went to the salvage yard.  There is almost nothing that can be done about this.  The salvage yard will deny that their employees had anything to do with it and you will have no way to prove otherwise.  The insurance company is not responsible because they have had no control over the towing or storage.  If you have anything of value, you should get to the salvage yard even before contacting the insurance company; pay the towing and current storage charges and get what you can from your car.  You can seek reimbursement of the towing and storage charges later.

You may run into a situation where your vehicle has been hit by a hit-and-run vehicle or an uninsured vehicle.  In this situation, your only recourse is through your own insurance company. North Carolina insurance policies are required to include uninsured motorist coverage for personal injuries and property damage.  Do not let your insurance company put you off by saying you have no collision coverage in this situation.  Tell them you are making an uninsured property damage claim.  The procedures are generally the same as those for dealing with an at-fault driver’s insurance company.

If you are injured in a motor vehicle crash, please contact an attorney to ensure that your rights are protected.  Here at Dewey, Ramsay & Hunt, we offer a free consultation and can address your concerns and questions directly.