Help me... my car was totaled at the dealership!

August 3, 2011 3:26 PM

My car was totaled at the dealership, and I'm not sure if I need to lawyer up.

Here's the story:

I was driving my beloved 2005 Honda Accord when it started making a HORRIBLE scraping noise. I pulled over to the shoulder and determined that part of the undercarriage was dragging on the ground and that it was mostly likely sparking, rendering it not very safe to drive. So I arranged for a tow to the nearest Honda dealership, rented a car and went on my merry way.

The dealership calls, tells me something about the cover for the catalytic converter being loose, blah blah blah, and says that it would be ready the next day. I say 'great!', hang up and do my thing.

The next morning, before I can leave for the dealership, I get another call from them, saying that there's been an 'incident' with my car. When I get there, I open the door of my sweet Honda, only to be greeted with standing water. It turns out that car was flooded during a torrential (I'm talking 7" in a couple hours) downpour the night before.

ARGH. At this point I am totally upset, and the dealership is not helping - they're saying 'not our fault' and 'act of god' and whatever. So I called my insurance company and opened a claim.

An adjuster was finally able to examine my car yesterday (a week and a half after the damage occured) and determined that it is a total loss. I received a call today with an initial compensation offer of $10,000.

This is problematic for several reasons:

1. I still owe roughly $8,000 for the car. Before it was damaged, it was in really good condition and had a Blue Book value of about $9,500 for trade-in.

2. Buying an equivalent Accord (not even a newer and / or nicer one) is going to cost me at least $16,000 (at least according to my somewhat cursory internet research).

I had honestly planned on driving this car for another 10 years or until it hit 300,000 miles (whichever came first), and had also planned to have it paid off this year.

The idea of having to take out another car loan PAINS me. I can easily afford the payments, and have about $4,000 to put down, but I was SO looking forward to cutting ties with Wells Fargo Auto FInance for the time being.

I've tried to do some searching on people who have had their cars totaled while in the possession of the dealer - but it's not such a common occurence (or if it is, people aren't sharing their stories on the internet).

I feel that the dealership should give me a comparable replacement. Am I off base in thinking this? Does anyone have any advice? I don't want to have to get a lawyer involved, but I will if I have to.

(Other details that are probably relevant: I live in Illinois, am insured by Farmers', and have never had to make a claim before.)

posted by onceisnotenough to law & government (37 answers total)

Were there circumstances that caused your car to be flooded (in the downpour) at the dealership that would not have existed had it been, say, at your home, or on the street? Did they leave the sunroof or a window open, or was it in a low spot on the lot? How many other cars were similarly damaged in this storm - at the dealership and otherwise?

In other words, is it really the dealership's fault? Or did it just happen to occur at the same time as your car was there?
posted by attercoppe at 3:33 PM on August 3, 2011

You suffered a $9,500 loss, and have been offered $10,000 to cover it. It sucks to have to then spend more money, but it's not the dealer's fault you owed money on the car, so even if you could prove negligence on their part, the law isn't likely to give you any more than your insurance is already offering, and certainly not enough to cover the lawyer's cut, your payoff balance AND another $16,000 for a new car.
posted by nomisxid at 3:38 PM on August 3, 2011 [15 favorites]

A similar thing happened to a friend: His brand-new -- seriously, just finished signing the papers -- Toyota was being readied for him at the dealership, the door was open and a worker drove another car past and hit the door, literally ripping it off the frame. The dealer apologized and said they'd fix it, but my pal didn't want a brand-new car that had just had a major structural incident. He pushed and threatened a lawsuit, and they gave him a totally new car.

So I'd start by pushing back, hard, and asking for the amount of money you find reasonable. And then getting a lawyer if you need to. They shouldn't make you rich, but they should restore you to a similar condition that you were in before the incident.

But I'm basing this on the fact that they left your car open out in the rain.
posted by BlahLaLa at 3:39 PM on August 3, 2011

I'm not entire sure about this, but when an insurance company totals your car, they have to give you "replacement value." Which is to say, I think you're within your rights to say "Just find me a excellent 2005 accord with xx,xxx miles with all the options I had, and we're good." Or show them that it will cost you $16,000 to buy the same car.

The way you should approach this (unless the dealership offers to replace the car of their own recognizance) is to file the claim with your insurance company and let them worry about who, in the end, is going to compensate them, if anyone.

But, again, the insurance company can't just make up a number. However, if an average condition Accord goes for $10,000 from that year but yours was so exceptional that it was worth $16,000, be prepared for a bit of a fight to demonstrate that. Any documentation you have which shows the care you took and the outstanding condition would be key.
posted by maxwelton at 3:39 PM on August 3, 2011 [2 favorites]

Sorry, I may have misread a bit. If part of the issue here is that depreciation has left you where the payoff they offer (if fair) leaves you with nothing once your loan is paid off, that's unfortunately not their problem.

If you owe $9,000 on a car now worth $10,000, and you can buy another one for $10,000, you have $1,000 down and will have to re-finance that same $9,000. Likewise, if you owed $15,000 on a car worth $10,000, unfortunately that sucks but, again, the insurance company just needs to replace your car (with an equivalent pile of "fair market value" cash, in most cases), even if you now cannot get a $15,000 loan on a $10,000 car.
posted by maxwelton at 3:47 PM on August 3, 2011 [2 favorites]

IANAL, or an insurance agent, but as a consumer, unless you insured for "replacement value" with one of the few insurance companies that write that kind of comprehensive damage policy, what you've been offered, is about what you can expect. You can, if you elect, take the money from your insurance company, pay off your loan balance, get into another car through new financing (for convenience reasons), and pursue the dealership under some theory of civil negligence, I suppose. If you shop hard enough in these tough times for lawyers, you can probably even turn up a lawyer who might take your case on contingency.

If you'd be happy with an additional few thousand dollars of recovery, you might even pursue the dealer all by yourself, in small claims court. Many businesses tend to settle small claims cases quietly, out of court, rather than take the risk of judgement, and if you're firm, but polite, I suspect that you might get some cash recovery via that route, in exchange for signing a settlement letter and agreeing not to discuss it further. I'd view any recovery you might get from the dealership as a God send, use it to pay off/pay down any car loan you have to take out with it, and in the meantime, not lose much sleep.
posted by paulsc at 3:53 PM on August 3, 2011

I'm not sure why if you say the bluebook on your excellent car is $9,000, to purchase the same car will cost you $16,000, that doesn't make sense... why would you pay $16,000 for a car with a blue book value of $9,000.

Sounds to me like you're getting a fair deal. If anyone should "lawyer up" it is the Insurance Company to go after the dealer, if, in fact, the dealer was at fault.

Take the money and run, or, as they say... shit happens.
posted by tomswift at 3:53 PM on August 3, 2011 [4 favorites]

Odds are that your insurance policy contains a clause that states if you don't like their offer on the car you can go to Arbitration and their decision will be final. The dealership doesn't really owe you anything. You have insurance, they pay you and they'll collect from the dealership's insurance company. A total loss claim usually is somewhere between blue book trade-in and retail resale value. It sounds like that is what they are offering you.

It sucks, but you are not being screwed here. Life isn't fair.
posted by COD at 3:53 PM on August 3, 2011 [1 favorite]

(One other thing to consider...if this was a Honda dealer, and you haven't yet burned bridges, you might see if they'll give you a deal on a car off their lot, ie, a high trade allowance on your old (now worthless car), super-cheap financing, a big price discount, a hyper-extended warranty on a lightly used car, desirable options packages, or some combination of all of the above.

They may not care, but they have a lot of discretionary power to offer you a deal without a lot of cost on their part while avoiding bad publicity and gaining a loyal customer.)
posted by maxwelton at 4:03 PM on August 3, 2011 [7 favorites]

And how are you going to pay for the lawyer?

You have two options: 1) contingency; or, 2) per hour. Either way, you're money ahead to take a settlement now that's more than the amount you owe on the car (which is irrelevant to what it's worth). The cost of an attorney is going to come out of your pocket, which is why people generally do not "lawyer up" in property damage claims to automobiles. And the insurance company knows this.
posted by webhund at 4:09 PM on August 3, 2011

1. Before it was damaged, it... had a Blue Book value of about $9,500 for trade-in.

2. Buying an equivalent Accord (not even a newer and / or nicer one) is going to cost me at least $16,000.

These two things can't both be right. Dealer markups are considerable, but not $6500 on a six year old Accord.
posted by jon1270 at 4:10 PM on August 3, 2011 [6 favorites]

Your position is the same as anyone who has suffered the loss of a vehicle -- the compensation often doesn't fulfill one's expectations, and often can force you into a buying decision that isn't optimal.

The wrinkle you think you have is the dealer's fault. But it's no different than if you'd suffered the loss due to another driver's glaringly stupid error before he slammed into your car. The insurance money is what you are owed, subject to your bargaining with them, which sometimes can make a marginal difference.

Shorter: you are, indeed, off base. Sorry.
posted by Clyde Mnestra at 4:18 PM on August 3, 2011

Yeah, the numbers aren't adding up. If the Blue Book on your car was $9,500, you ought to be able to find another used 2005 Accord for about the same price. A quick skim of vehix.com shows that to be about right. Where are you getting your figure of $16,000? Is that on a newer car? 'Cause, that's not replacing your damaged 2005, that's upgrading it.

It sucks, but as others have said, it's not the dealer's fault that you owe $8,000 on a 7-year-old car with a blue book of $9,500. Take the insurance offer, pay off your loan, and use the balance as a down payment on another 2005 Accord. At the end of the day, you'll have... a 2005 Accord that you owe roughly $8,000 on; exactly where you started from before this all happened. Where's the big problem?
posted by xedrik at 4:19 PM on August 3, 2011

Okay, what I wrote is a little screwy. Let me clarify:

1. I realize that the fact that I still owe money on the car is not the dealership's or the insurance company's problem.

2. I am resigned to the fact that I will be taking another car loan because I will have to pay off the totaled car with some of the money I receive from the insurance company.

3. I do not think that this is the end of the world.

4. I guess what I am really asking about is replacement value. Even though KBB puts the value of my car at $9,500, I have not been able to find one at that price during my internet searching (which doesn't mean that it's not possible). Is it possible that the majority of Hondas are being sold at above-market prices? And if so, should the insurance company give me enough to actually replace the car if the previous sentence is true?
posted by onceisnotenough at 4:24 PM on August 3, 2011

You suffered a $9,500 loss, and have been offered $10,000 to cover it.

Sweet. Free $500. That's what you should think about this. (Yeah, having to find another car is a big pain. Maybe more than a $500 pain, but at least you aren't out any cash.)

I was SO looking forward to cutting ties with Wells Fargo Auto FInance for the time being.

So finance your next car through someone else.
posted by grouse at 4:24 PM on August 3, 2011 [1 favorite]

Also - the car flooded because the dealer's parking lot is like a giant bowl and they parked my Accord at the bottom. The dealership is located in Des Plaines (which is an area notrious for its flooding), next to a river - there is no way they weren't aware of the possibility that this could happen.
posted by onceisnotenough at 4:27 PM on August 3, 2011

@onceisnotenough

4. Yes, in Houston, at least, any economical car is going for well above book value because of gas prices. On the other hand, I just purchased a mid 2000s BMW 525i wagon (I love wagons!) for about 60% of book value. If you're dead set on getting another Honda, just be prepared to pay the price. I can't answer your question about what the insurance should give you, but I'm assuming that they're going to be pretty firm on or right at book value.
posted by chrisfromthelc at 4:28 PM on August 3, 2011

If you think that they are really undervaluing your car, then it might be worth it to talk to a lawyer about your options, and have them write your insurers a letter for a few hundred bucks.
posted by grouse at 4:34 PM on August 3, 2011 [1 favorite]

Des Plains, Illinois, I hope?

Here's the relevant page on your state insurer's site. Start reading at "Right of Recourse".
posted by Orb2069 at 4:35 PM on August 3, 2011 [1 favorite]

IAAL. IANYL. TINLA. You may wish to consult with an attorney about the meaning of the word "bailment." This may be very important to your future insurance rates. Remember, if your insurance company pays your claim, they will assuredly raise your rates as much as they think they can get away with so that they can recover their payment from you as quickly as possible.
posted by spacewrench at 4:37 PM on August 3, 2011 [5 favorites]

You need a lawyer. This claim should be on THEIR insurance - not yours.

Even if you get the greatest possible settlement from your insurance, your rates are going way up. You have totaled a car - you are a greater risk to insurance.

But wait, YOU did NOT total a car - the dealership did.
The dealers claim of no responsibility is non-sense.
posted by Flood at 4:38 PM on August 3, 2011 [9 favorites]

Is it possible that the majority of Hondas are being sold at above-market prices?

No. The typical prices at which these cars are being sold is the market price by definition. It *is* possible that these cars are selling at higher prices than the most recently published blue book prices, but in that case the trade-in values would also have gone up.
posted by jon1270 at 4:57 PM on August 3, 2011

My recent experience with some car buying/selling is that KBB is way, way off in regard to used hondas. Makes me suspect otherones also. I use this site: clearbook for what cars like mine are buying/selling for around the country. Good luck and remember it is all negotiable.
posted by bartonlong at 5:02 PM on August 3, 2011 [1 favorite]

I do agree that the dealership's insurance might be the one that needs to be dinged, here, but there is always the possibility that you signed something that said any damage your car suffered in their care that wasn't actively caused by them (ie, act of god) wasn't their problem.

I'm not convinced if you have a clean record and having been in any accidents that this claim is going to raise your insurance rates.
posted by maxwelton at 5:03 PM on August 3, 2011

Of course the dealer is going to try to deny responsibility. But the fact remains that they had possession of your car when the damage occurred. Do not proceed with your claim with your own insurer without considering spacewrench's excellent answer above.
posted by ambrosia at 5:04 PM on August 3, 2011

You could pursue the dealership for some quantity of money to make up for your hassle. If nothing else you are being compensated for the average value of an identical-aged used car that you don't know the history of. Anyone who has ever taken care of an older car knows the value of this.

The problem is that civil court exists to make right an injury. This may not even be an injury. You could well go out and buy an identical car and it'll be on average in better shape. So how do you get restitution for this nebulous maybe-harm?

My suggestion would be that you reach out to the dealership and propose they do the right thing by helping you overcome this uncertainty. Either they offer to provide a warranty on your purchased vehicle for the term of a year or they pay for a 3rd party one or something. If they have any damned sense they'll want to avoid bad publicity and keep a customer happy.
posted by phearlez at 5:04 PM on August 3, 2011

Flood: You need a lawyer. This claim should be on THEIR insurance - not yours.

This.

Seems like almost everybody is missing this point in their answers. You should not have to use your insurance to cover this and, as a result, have to eat higher rates in the future.
If the car was in their care then they and/or their insurance company have to pay for the damage.
posted by Hairy Lobster at 5:36 PM on August 3, 2011

I would have spoken to a lawyer before filing the insurance claim.

I've had a lawyer for an accident, and let me tell you, a good one can work WONDERS.

Internet opinions don't count. Talk to a lawyer or several to get an opinion. It's free for the consult (usually 10 minutes on the phone) and for this type of case, they work contingency.

I'm hoping this is negligence and that Honda owes you, not your insurance company. Or, I'm hoping you can sue the dealership for whatever the difference in interest payments will cost you over X number of years. You are right, you are getting screwed here. I don't know if the law is on your side, but I know someone who will....

Lawyer
posted by jbenben at 5:36 PM on August 3, 2011

I work in insurance. Dealerships have something called a garage liability policy that may cover this, depending upon whether there are any exclusions for flooding. The first thing you should try is talking to a manager at the dealership and asking who their insurance company is, and file the claim yourself by calling the insurance company's 800 number. If the dealer won't tell you, you should write to the manager a "demand letter" via certified mail saying that you wish to "make a claim" and put their insurance carrier on notice. This letter should lay out the facts and state that "to avoid future litigation" you want $x in 15 days. The dealer will most likely pass this along to their insurance company, who will contact you (and if the dealer doesn't pass it along, follow through on your threat). Assuming the insurance company does call you, get the phone number and email address of the claim handler assigned to the case, and check in with them regularly to get status reports until you get paid, or get a hard "no" in writing. If you do get a "no" in writing, you are free to get a lawyer involved, but it is most likely that the insurance company's justification is sound -- they are not allowed to pull denials of coverage out of thin air, and consider them very carefully, given the danger of lawsuit.

So, see if you get anywhere before involving a lawyer. If any step along the way you are not getting the response you want from the dealership and/or the insurance company, feel free to contact your state's department of insurance. Even if the dealer's insurance justifiably doesn't cover it, you can still sue the dealership for negligence, and they will likely offer you a settlement -- which will be money on top of whatever your own insurance pays.
posted by blargerz at 6:24 PM on August 3, 2011 [7 favorites]

It's very unclear why you think this should be on your insurance. The dealer has their own insurance. You presumably left the car in their care officially, with paperwork and all. This would be just like your car rolling off a lift while getting an oil change. Not your fault, not remotely your responsibility.
posted by odinsdream at 6:59 PM on August 3, 2011 [1 favorite]

Remember that the Kelly Blue Book value varies quite a bit, depending on the model of your Accord, the engine and transmission, the options, the condition, and your zip code. You can go here and enter all this info to get the value of your car, in its before-flood condition, in your location. See how that stacks up against the insurer's offer.
posted by exphysicist345 at 7:20 PM on August 3, 2011

To tag along with the answers saying that this should be on the dealer's insurance, consider that your car was probably not the only one flooded. There must be other claims being made -- yours shouldn't be a surprise.
posted by msittig at 7:59 PM on August 3, 2011

1. Receiving compensation from your insurer does not mean that the dealer is getting off scot-free; it likely means the insurer will go after the dealer in subrogation.

2. Receiving compensation from your insurer does not mean it's "on" your insurance in the sense of affecting your rates, though it might. You can ask your insurer.

3. Contrary to some of the advice above, going after the dealer additionally may get you more money, but you will not be able to recover twice for the same damages. If you had a car with a replacement value of 10K, you are unlikely to recover a lot more by pursuing a negligence claim; it's not like they are going to give you punitive damages, or let you recover for two cars.

4. Part of the service the insurer provides you is dealing with this crap. Certainly making some inquiries won't hurt. But remember that suing someone in your own right is costly and full of hassles, and that even when you succeed, collecting isn't always a cakewalk. Compared to that, the quick check from the insurer isn't too shabby.
posted by Clyde Mnestra at 8:17 PM on August 3, 2011

At the end of the day, if you want the money now, you accept the payout from your insurance company and they'll go recoup that money by suing/negotiating with the dealership. Again, assuming you want the money now, your job is to show that the replacement cost of your car (that is, if you were going to attempt to purchase an equivalent model with equivalent mileage and options from the same year, and in roughly the same condition) is higher than what they're offering.

So, you do the research. Find cars at CarMax that meet your criteria. Find ones on eBay motors. Find ones at your local dealership. Spend one to two hours, and collect three or four solid examples. Then bring these to the insurance company, and let them know they need to raise the amount to allow you to replace the car (assuming your coverage is for replacement cost.)

If you're willing to wait for the money from the dealership's insurance, you can do that, and your insurance company should help you get that money -- they'll just do the same suing/negotiation before paying you that they would have done after paying you. But then you won't have to worry about the deductible. You still have to convince them (honestly) that your replacement cost is higher than they're estimating.

At the end of the day, though, your insurance company works for you. You should be having this conversation with them: "The money you're offering isn't sufficient to purchase a replacement¹, and here are local equivalent models and their retail costs to demonstrate this." "If I wait for you to get the dealer to cover the cost, will I be able to avoid the deductible? How long might I have to wait for that to happen?" And so on.

Also: people/companies often wave their hands around and say "act of god", "not our responsibility" etc., and when those people are professional salespeople, they'll be good at sounding convincing. From their point of view, even if it is a blatant lie, it's the efficient thing to do: worst case, they have to take responsibility but suffer no harm from having lied to you, and best case, you believe them or get sick of dealing with them and you give up.

¹"purchase a replacement" doesn't mean outright; if you have a loan, it should be sufficient for you to settle the existing loan and, if you take out an equivalent loan for an equivalent car, you're no worse off financially than you were before. You shouldn't be looking for enough to pay off the loan AND buy a new car outright. THey have to make you whole, not make you happy.
posted by davejay at 9:20 PM on August 3, 2011

Oh, and like people who don't want to take responsibility, insurance companies will lowball you on replacement cost, because the best case is you accept the lower payout, and the worst case is they have to pay what they should have offered in the first place. That's why you document the replacement cost and bring it to them, so they know that if they continue to lowball, you'll likely sue...and bring the same paperwork with you to court. Not worth their time and legal fees.

For example, I once had an extremely minor accident with damage below the deductible, so the insurance company had no intention of paying out. However, I determined that legally they had to replace the children's baby seats because they had been in the vehicle during the accident. The first time I brought this to their attention, I simply asked if the baby seats needed to be replaced, and they said no; the second time, I asked them if they were aware of their legal obligation to pay for seat replacement, and I named the relevant statute. Suddenly they were very eager to pay for the replacement, putting me over the deductible. You get the idea.
posted by davejay at 9:25 PM on August 3, 2011

Oh, yeah, one more thing:

I guess what I am really asking about is replacement value. Even though KBB puts the value of my car at $9,500, I have not been able to find one at that price during my internet searching (which doesn't mean that it's not possible). Is it possible that the majority of Hondas are being sold at above-market prices?

Used car prices are in a bubble right now, so yes, it is possible. Don't just check KBB, also check Edmunds.com, and keep in mind that the dealership is not only going to sell at a ridiculous markup, but they're going to mark up from blue book value in "excellent" condition.

That's why you need to gather actual retail costs for equivalent models in your area.
posted by davejay at 9:29 PM on August 3, 2011

Thinking about auto insurance (and absurdly over valued used Hondas) makes me throw up in my mouth a little.

Having said that, I can tell you that unless you have a shady company your rates should not go up, even if your insurance pays it. You weren't driving, so there is no way to attribute partial or complete fault on you.

Last year my wife's '00 Civic was hit and totaled in front of our house by a hit and run driver.
Our insurance premium is actually lower this year, by quite a bit.

As for the ridiculousness that is current Honda used car value, I can say this; My wife's car was in excellent condition, with 20 thousand miles less on it than a car of that year was said to have on average. The insurance company cut us a check for 5,400 dollars, which looking at the various vehicle value resources was right where it should have been money wise. I couldn't find an equivalently maintained Civic with anywhere near the mileage ours had for less than 10K. Most of the time these had 30, 40, or 50K miles more on them (ours had 105K and was a '00) and were visibly in inferior condition. I looked from Connecticut to North Carolina. Quite often buying a new Honda would have been the better deal.

As for the dealer where you had your car, some fool probably left a window open the night of the storm and then covered it up when they saw what they did. If it happened while in their possession they should be paying for at least part of the damage. That's why they have insurance too, just like you; In case shit happens.

Good luck, and at least you can feel good about actually being in a place financially to get whatever replacement vehicle you want. A lot of people get stuck with a check from a totaled car that won't completely cover a replacement, and don't have the additional finances needed to cover the gap.
posted by chosemerveilleux at 4:54 AM on August 4, 2011