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Car Insurance Claim Question
Old 04-18-2011, 06:10 PM   #1
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Car Insurance Claim Question

I'm asking this for a friend.

His Honda was rear-ended, and there's very minimal damage. A medium dent, muffler loose, tailgate functional, but a little off, etc.

Talking with the rear-ender's insurance, they consider it totalled, and will give him $6,000 for the keys. He figures it would cost him about $9K to replace the car.

One other option is that they will give him $4,000, but the title will have to be changed to "salvage" and he will have to go through a lot of hassle with the DMV and inspections, etc.

He would prefer to get maybe $1,000 and have the muffler fixed, but it sounds like the insurance company won't work that way.

He's inclined to just forget about it, and eat the several hundred he figures it will cost to get the muffler rehung (he's put some wire on it, and it's working right now).

Does he have any other options? Do you think the insurance company would want to save themselves some money by just giving him a fraction of the totaled price? I think the company is hoping he'll withdraw the claim to avoid the hassles.

Thanks,
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Old 04-18-2011, 06:26 PM   #2
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I'd get a second opinion as to how much damage has been done. Sometimes in a unibody it is not obvious.
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Old 04-18-2011, 06:42 PM   #3
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Quote:
Originally Posted by TromboneAl View Post
I'm asking this for a friend.

His Honda was rear-ended, and there's very minimal damage. A medium dent, muffler loose, tailgate functional, but a little off, etc.

Talking with the rear-ender's insurance, they consider it totalled, and will give him $6,000 for the keys. He figures it would cost him about $9K to replace the car.

One other option is that they will give him $4,000, but the title will have to be changed to "salvage" and he will have to go through a lot of hassle with the DMV and inspections, etc.

He would prefer to get maybe $1,000 and have the muffler fixed, but it sounds like the insurance company won't work that way.

He's inclined to just forget about it, and eat the several hundred he figures it will cost to get the muffler rehung (he's put some wire on it, and it's working right now).

Does he have any other options? Do you think the insurance company would want to save themselves some money by just giving him a fraction of the totaled price? I think the company is hoping he'll withdraw the claim to avoid the hassles.

Thanks,
Tell your friend to remind the insurance company that he owns the car, not the insurance company. They have no right to the car itself as it is the legal property of the insured.

tell em' to pay up, or he will take them to small claims court.

I predict that this approach will take 6 months or more to settle but they will eventually pay up to get it off their books. they should pay all the damages less a small salvage value.

The car will be un-insurable after that though as it will then be a salvage car.
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Old 04-18-2011, 07:24 PM   #4
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Originally Posted by travelover View Post
I'd get a second opinion as to how much damage has been done. Sometimes in a unibody it is not obvious.
+1

Whose mechanic determined the cost to repair was so high it was deemed "totalled" ? On what basis?

Why is your friend speaking directly to the offending driver's insurance company? I would think your friend's own insurance agent would be handling this damage inspection and claim negotiation with your friend's final OK before any settlement is finalized.
I smell something rotten...
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Old 04-18-2011, 07:59 PM   #5
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Originally Posted by TromboneAl View Post
He's inclined to just forget about it, and eat the several hundred he figures it will cost to get the muffler rehung (he's put some wire on it, and it's working right now).
Does he have any other options? Do you think the insurance company would want to save themselves some money by just giving him a fraction of the totaled price? I think the company is hoping he'll withdraw the claim to avoid the hassles.
As I understand the pronouns, your friend is negotiating with someone else's insurance company and not his own, correct? They don't want to waste their time on this and they're lowballing.

One option would be to ask his own insurance company to get involved. But if he doesn't have collision insurance with his own company then he could hire his own claims adjuster (perhaps one that his own insurance company might use) and turn them loose on the other insurance company.

It's really hard to determine frame misalignment without paying big bucks to the mechanic who has the proper gear. But if the car doesn't behave differently at 30-60 MPH than it did before the collision then he'll probably be OK. He could run it up on a couple ramps or jack stands to see how bad the tailpipe really is, but all he might need is a sledgehammer and some RTV. Hangars are usually carried pretty cheaply by auto-parts stores, too.

Spouse's '97 Altima was attacked by a guard rail in 2005 and ended up with both rear tires off the ground. When we pulled it off, a stabilizer bar had been bent pretty badly and the muffler had been removed. We were able to ignore the former and fix the latter on our own, and the car still handles fine.
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Old 04-18-2011, 08:36 PM   #6
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Sounds weird to me too. If they are totalling the car he should be getting market cost for the car enough to replace it with the same make and model (unless it's been customized in some way?). That should be the $9k unless they can find a better deal somewhere else.

I don't think they'd total the car if the damage was just a few hundred bucks. Nor would a salvage title be necessary. He might want to check out the damage assesment, or call them back and find out why they what to do that.
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Old 04-18-2011, 10:54 PM   #7
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A few years ago our old car was hit. The other driver's car insurance called it totalled it but it was still drivable (with dents) and we wanted to keep it. We got a check for the fair market value and set the money aside until my son was really done with the car a few years later. No effect on the title. Our own insurance was never involved.

Almost 3 years later I sold the car on Craigslist.
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Old 04-18-2011, 10:58 PM   #8
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The process for salvage to 'restored salvage' in arizona and ny is fairly routine. i convert cars as a side hobby. In NY they have high theft/chop shops so they wil ask for receipts on replacemnt parts. In AZ they simply poke around looking for roadworthiness, glass in place, safety ligting (brake turn lamps work) it's hard for them to go much further. i think the 4k or negotiated extra 1k woudl be a decent cash out. its harder to sell a salvage title if youre honest - but if you have 2-5 years left in driving it just do it.
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Old 04-19-2011, 07:58 AM   #9
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I do salvage car repair on the side also. I am in iowa. you can't believe the cars you see at salvage auctions, some barely if scratched at all , some burnt clear to the ground. In my experience the insurance adjuster will low ball you and try to save his company some money, but if you hold out they will pay you the book price for your car minus the salvage value of the one that you want to keep. insurance companies work on the premiss, in my opinion, that people in general want to get past this type of thing and will try to wait you out.

Where I live we just had a large amount of hail, the insurance companies brought in motor homes with adjusters to large parking lots to do bulk claim work. what happened was the adjusters looked at the hail damage and paid all the claims with a price set by paintless dent repair or storm chasers. and if you wanted more you had to take it to a body shop and have the shop do a supplement claim.. basically if you wanted to get rid of the car with damage the insurance company paid little, and if you wanted to keep the car the insurance company paid for the repair but required extra paperwork from the body shop. it used to be when you had hail damage, the insurance companies would pay for the actual damage and you could trade your car or get it fixed. insurance companies are in it for the money and to heck with the customer.
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Old 04-19-2011, 08:25 AM   #10
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Quote:
Originally Posted by freebird5825 View Post

Whose mechanic determined the cost to repair was so high it was deemed "totalled" ? On what basis?
It was the insurance adjuster. The damage is really quite minimal. It's "totalled" because to fix it the right way, would truly costs about $6. That is, replace this panel, that part, perhaps even the whole tailgate, etc.

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Originally Posted by freebird5825 View Post
Why is your friend speaking directly to the offending driver's insurance company? I would think your friend's own insurance agent would be handling this damage inspection and claim negotiation with your friend's final OK before any settlement is finalized.
He said it's because he has AAA insurance, and no agent(?)

Quote:
A few years ago our old car was hit. The other driver's car insurance called it totalled it but it was still drivable (with dents) and we wanted to keep it. We got a check for the fair market value and set the money aside until my son was really done with the car a few years later. No effect on the title. Our own insurance was never involved.
That would be what my friend (my bass player) would like to do. But they only give you the money if you give them the keys.

Quote:
The car will be un-insurable after that though as it will then be a salvage car.
Are you sure? We once bought a car that had "salvage" on the title, and drove it for many years, then sold it. No problems.

He plans to drive this car into the ground. He likes it.

The $6K is probably fair market value. He figures it would cost more to replace it because it's harder to find cars here in the boonies. He doesn't want to spend the time finding a new car.

Quote:
tell em' to pay up, or he will take them to small claims court.

I predict that this approach will take 6 months or more to settle but they will eventually pay up to get it off their books. they should pay all the damages less a small salvage value.
Yes, but that's the kind of hassle that he wants to avoid.

Thanks for the advice.
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Old 04-24-2011, 09:21 AM   #11
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Update: He found that he had less choice than he thought. The insurance company had already sent the "salvage" paperwork to the DMV, so he has no choice but to take the $4,000 and get the inspections.

The estimate for fixing the muffler was $200. I told him that he should look at the whole thing as a gift of about $3,500. He said "Oh, no, I'm going to bank that money to compensate me for the loss when I eventually sell the car with 'salvage' on the title."
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Old 04-24-2011, 01:12 PM   #12
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Originally Posted by TromboneAl View Post
Update: He found that he had less choice than he thought. The insurance company had already sent the "salvage" paperwork to the DMV, so he has no choice but to take the $4,000 and get the inspections.
I know nothing about car titles, but how can a third party change the status of my car's title without my consent? Surely he must have signed something with the insurance company? Or maybe it was a condition he agreed to by cashing the check?

I find it hard to believe that some random insurance company could decide that my car is "totalled" and change the title without any involvment of the owner. I think they are pushing your friend around and trying to get a quick, cheap settlement for themselves. If he doesn't like it, he should call the DMV and tell them that the paperwork was sent in by mistake, I'm sure it wouldn't be the first time.
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Old 04-24-2011, 01:22 PM   #13
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My background is insurance claims (alas, NOT auto claims). Something doesn't sound right here. A damaged auto is damaged property. The at-fault driver is responsible to make your friend whole - whole being defined as repairing the car or paying what the car is worth (=book value). There's some negotiating room in determining book value but it's generally a cut and dried process.
But what the insurance company cannot do is make a unilateral decision as you describe in your update. His hand is not forced, yet (unless he agreed to this and forgot to mention it to you).
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