Someone totaled my car; I'm getting screwed by her insurance company.
October 4, 2017 9:36 AM   Subscribe

I've never been through this before, so I don't know what to expect. (I didn't know Gap Insurance was a thing, so I don't have it.) The other driver was entirely at fault, and her insurance company admits this. But because my car's value has gone down in the 1.5 years we've owned it, by the time they pay off the lien holder, I'll be $4,000 short of my initial investment and car payments.

Many friends have confidently insisted the insurance company is trying to con me ("You're not being 'made whole'") and that I need to lawyer up. The one lawyer we talked to said my friends are wrong, and I'm getting exactly what I'm owed. She I just accept the settlement or should I talk to more lawyers? (I know you're not my lawyer.)
posted by grumblebee to Law & Government (48 answers total)
 
Is there a reason you're not working with your insurance on this? This is part of what you pay them for.

The other insurance company has no desire to pay you money, and will make it as difficult as possible to do so. Your insurance company is paid to cover your ass, and will do what they (legally) can.
posted by furnace.heart at 9:40 AM on October 4, 2017 [13 favorites]


But because my car's value has gone down in the 1.5 years we've owned it, by the time they pay off the lien holder, I'll be $4,000 short of my initial investment and car payments.

I'm not sure from the phrasing here: Is what they paid in total, including payments to the lien holder, equivalent to the current market value of your car? What you initially paid for it isn't really relevant, unfortunately. Being "made whole" refers to its value right before the accident, not when the original purchase was made.
posted by Sequence at 9:50 AM on October 4, 2017 [19 favorites]


I agree with furnace.heat that you should definitely get your own company involved. That said, it's possible that there is a big difference between what your car was worth to you and what it was worth on the open market, which is what the insurance company's payment will be based on. The fact that at least one lawyer sees it that way tends to confirm the point.
posted by ubiquity at 9:50 AM on October 4, 2017 [1 favorite]


Is your interpretation that being made whole is getting the value of your car, plus the lien, so you can buy another one with the replacement amount and not have a lien to pay off? If so, that’s much more than whole.
posted by notorious medium at 9:52 AM on October 4, 2017 [2 favorites]


When you bought your car, were you offered "gap insurance" through the dealer? That's what that is for: to cover the difference should your car ever become totaled at a point where there is a gap between the car's current assessed value and the amount you still owe. Many people (myself included at times) turn this coverage down to save money, but this is what it's there for. It's not always always the best investment, but in a case like this, it can save you.
posted by DirtyOldTown at 9:53 AM on October 4, 2017 [1 favorite]


By "made whole", do you mean you think the other driver's insurance should pay you all that you've invested in the last year and a half in your car? Because that's not true: ignoring the accident for a moment, your car isn't worth that full original selling price anymore, it started depreciating the second you first drove it off the sales lot and has continued depreciating for the last year and a half.

I wouldn't bother with a lawyer, I'd just go through my own insurance company for this --- as furnace.heart says, that's part of what you pay them for: to have your back in an accident.
posted by easily confused at 9:53 AM on October 4, 2017 [6 favorites]


In my experience, lawyers for accidents really only want cases where there is injury and a chance at a bigger pay out. So this lawyer is kinda giving you the brush off, not necessarily the full story. I believe the reason for this is because at $4k, what you might pry out of the insurance company and what it might cost you to pay an attorney are equivalent- and getting the proper value of your car out of an insurance company is notoriously difficult.

Talk to your insurance company. I agree you might be out of luck, and I know that sucks. Did you ask for "loss of use" compensation in writing if they are not paying for a rental?
posted by jbenben at 9:56 AM on October 4, 2017


If you bought from a dealer your car is worth less as soon as you drive it off the lot. So even if you buy it cash and someone destroys your car the next week, you might be out thousands of dollars.

As far as payments go, that will also include interest which isn't really anyone else's responsibility, even if they negligently destroyed your car. The amount they owe you depends on the value of the car before on the open market, regardless of how much extra you paid to finance.
posted by grouse at 9:56 AM on October 4, 2017


Response by poster: "Is there a reason you're not working with your insurance on this? This is part of what you pay them for."

My company suggested I not work with them, because, if I do, my premiums will go up. The accident was in no way my fault, and the other driver has insurance.

"Is what they paid in total, including payments to the lien holder, equivalent to the current market value of your car?"

That's what they're saying, and it sounds right. What I meant was that after they pay off the lien holder, we'll be left with $3,000. But we put down a $5,000 downpayment on the car and have so far paid $2,000 in monthly payments.
posted by grumblebee at 9:59 AM on October 4, 2017


My company suggested I not work with them, because, if I do, my premiums will go up.

Wait, what? What company is this?
posted by amtho at 10:03 AM on October 4, 2017 [11 favorites]


Unfortunately, that sounds right. Their insurance company owes you the amount that your car is worth now (well, before it got hit) - the amount you'd have to pay to replace the car today. The fact that your lienholder was (functionally) willing to have you pay off the car's deprecation at a different rate than actual deprecation is not relevant. Your car is worth what it's worth, not what you owe on it.
posted by brainmouse at 10:05 AM on October 4, 2017 [1 favorite]


Response by poster: It's State Farm.
posted by grumblebee at 10:07 AM on October 4, 2017


Response by poster: State farm is my company. The company I'm dealing with is ACCC.
posted by grumblebee at 10:07 AM on October 4, 2017


Yeah, unfortunately, "made whole" only means that they will pay you the market value of what the car was worth just before the accident. How much you paid in terms of a downpayment or monthly payments is not really relevant. You had an asset worth $x, the accident destroyed the asset, the insurance company is paying you $x to make you whole again.

However, if anyone from your insurance company suggested that you should not work with them for an accident where the other party was at fault or your premiums would go up, that is seriously not right.
posted by peacheater at 10:07 AM on October 4, 2017 [1 favorite]


When you say you're left with $3,000; you mean that you are in the black $3k, and not that you're left oweing the lein holder $3,000 ? Then yes, that sounds approximately right for depreciation of a new car over 1.5 years, assuming it was over about $20k.

They're paying to replace a 1.5 year old (used) car; they're not paying to replace a brand new car.

It sucks to be in that position, but the most expensive years of owning are car are the first few where the car is depreciating fast and you have no repair work; rather than the last few where you're done with car payments, but getting the $500-1500 per year in unforseen repairs.
posted by nobeagle at 10:08 AM on October 4, 2017 [3 favorites]


I have State Farm, and I've been rear-ended before. The idea that subrogating with State Farm would raise my premiums did not come up.
posted by amtho at 10:14 AM on October 4, 2017 [3 favorites]


What do you send a check to State Farm every month for then?
posted by humboldt32 at 10:16 AM on October 4, 2017 [5 favorites]


When I got hit in Sept. 2016 and my car was totaled (by an idiot clearly at fault, as per the cops) I had my insurance, which is also State Farm, deal with the idiot's insurance company. State Farm gave me the option of doing it myself or them doing it; by having State Farm run interference for me, I had to pay my deductible at first, but in the long run I got that back. The only reason my policy premiums went up is because I replaced a fourteen-year-old car with a brand-new car which was worth somewhat more. It sounds to me more like your insurance agent doesn't want to bother to do the work, rather than the insurance company.

However, neither my insurance nor the idiot's would have done more than laugh their heads off at the concept of "making me whole" by paying for any or all of the money I'd spent over the last fourteen years: my car was worth what a fourteen-year-old PT Cruiser was worth, not what I paid for it lo those many years ago.

Your car is worth whatever it's worth now, not what you've spent on it nor what you paid for it --- get hold of a Kelly Blue Book or Edward's and see what they list as the value of similar cars. You've got to forget what you paid for it: that is totally immaterial to it's current value.
posted by easily confused at 10:19 AM on October 4, 2017 [3 favorites]


Please call a different State Farm agent or the central State Farm number (unless you've done this already). Maybe there's a chance your car could be valued slightly higher, but more than that, you might be able to find out if your agent is being a jerk.

State Farm is historically a very reputable company that treats its policy holders well. By this, I don't mean they're giving out free money all the time, but that if there's an incident where you need to call them, you should know that they're doing their best for you, and you should understand the reasons behind the amount you're receiving.

If this is no longer the case, if State Farm isn't automatically willing to be the intelligible intermediary between you and the other insurance company and to do their own adjusting in a case like this, I think a bunch of people would like to know now, before we need them.
posted by amtho at 10:28 AM on October 4, 2017 [2 favorites]


The reason your premium might go up isn't your insurer, it's an actuarial table. People who have an accident are statistically more likely to have another one, even if they're not at fault (statistics are weird). You should not allow the chance of an increased premium prevent you from using the insurance you pay for to handle this. If your insurance is going to go up because of an accident, it's going to go up regardless of whom you ask to handle it for you.

Shorter version: you should be using State Farm for this. NB: your agent sounds terrible, so maybe after this is done get a new agent?
posted by fedward at 10:30 AM on October 4, 2017 [2 favorites]


Response by poster: Thank you all for your answers. I was looking for consensus, and I got it. I can now politely tell my well-meaning friends to shut up.

There are too many answers saying the same thing for me to choose best answers. They're all good.
posted by grumblebee at 10:34 AM on October 4, 2017


Response by poster: Life lesson: get gap insurance!!!

Otherwise, if someone totals your car, you will be out cash, even if it was in no way your fault.
posted by grumblebee at 10:45 AM on October 4, 2017 [3 favorites]


Looks like you’ve got the main question settled, but also gap insurance would not have helped in this situation since your follow-up implies you aren’t underwater on the loan. Gap insurance is for people who put nothing down when buying. It covers the negative equity in the loan only, not the total depreciation.

You weren’t offered it at buying because of your down payment. The finance salesman would never have missed an opportunity like that otherwise.
posted by hwyengr at 10:45 AM on October 4, 2017 [5 favorites]


Response by poster: So does that mean there's literally nothing you can do? When someone destroys your car, you simply are going to lose thousands of dollars?
posted by grumblebee at 10:48 AM on October 4, 2017


The theory is if you’re getting paid market value, you buy the exact same car with equivalent mileage and just carry on.
posted by hwyengr at 10:49 AM on October 4, 2017 [13 favorites]


So does that mean there's literally nothing you can do? When someone destroys your car, you simply are going to lose thousands of dollars?

If I am reading your question correctly you would have been "out" the cash anyway because the value of your car depreciated over the 18 months that you owned it? Totaled or not, your car was no longer worth what you originally paid for it.

If I understand correctly, your total cash outlay for this car has been $4,000 over 18 months, and in return you have gained the use of a car for those 18 months. $222/month is not an unreasonable cost for a car.
posted by lalex at 10:53 AM on October 4, 2017 [10 favorites]


The amount they paid you should be approximately enough to buy a 1.5-year-old car with a similar number of miles as you put on your own car. Not to get you another brand-new car.
posted by grouse at 11:00 AM on October 4, 2017 [4 favorites]


Anecdata: I had 18 months where I got hit by other people while my car was either fully and legally stopped or parked FOUR TIMES. (Three of those times were all at once due to icy road conditions and a multi-car pile-up.) My premiums did not go up, and I have Geico not some top shelf platinum coated insurance plan. Use your insurance company.
posted by soren_lorensen at 11:04 AM on October 4, 2017


If I understand correctly, your total cash outlay for this car has been $4,000 over 18 months, and in return you have gained the use of a car for those 18 months. $222/month is not an unreasonable cost for a car.

Looks like total cash outlay has actually been $7000 ($5000 down payment + $2000 in monthly payments), which is $388/month, which depending on the car might still be reasonable - you're also paying extra because you have a loan.

But either way, the insurance company is basically buying your totaled car at current market value. You still owe the lienholder money for that car, so you have to pay that out, and now you have whatever is leftover. In a technical sense, you haven't lost any money. In a real-life sense, yes, owning (and getting a loan on) a car is expensive, and when you are "forced" to sell it (which is how you can think about it here), you're probably going to be worse off than if that hadn't happened.
posted by brainmouse at 11:05 AM on October 4, 2017 [2 favorites]


The amount they paid you should be approximately enough to buy a 1.5-year-old car with a similar number of miles as you put on your own car.

Which is the exact same position you would have been in if the car hadn't been totaled and you had either 1) kept it and continued to drive a 1.5-year-old car with X miles on it or 2) sold the car for the amount of money a 1.5-year-old car with X miles on it can be sold for.

If you were repaid for your original investment then you would essentially profit from the accident, which is fine by me but not the way insurance companies work.
posted by lalex at 11:06 AM on October 4, 2017 [1 favorite]


Looks like total cash outlay has actually been $7000 ($5000 down payment + $2000 in monthly payments)

I think OP will be left with 3K cash after insurance settlement? But yes, still reasonable.
posted by lalex at 11:07 AM on October 4, 2017


Not only that, but the system encourages, actually pretty much mandates, that otherwise functional and repairable cars are totaled and sold for parts, because they are officially valued at less than the cost to repair them. Body panels are expensive, so if an older car that runs well gets enough cosmetic body damage, too bad. The car gets thrown out, and the unfortunate driver has to try to find another car that may or may not be as dependable.
posted by amtho at 11:07 AM on October 4, 2017


As mentioned above, gap insurance wouldn't have helped in your situation, but there is a concept of "new car replacement insurance" that you can get that I think would be the sort of thing you're expecting here.
https://www.nerdwallet.com/blog/insurance/new-car-replacement-car-insurance/
posted by disaster77 at 11:21 AM on October 4, 2017


When someone destroys your car, you simply are going to lose thousands of dollars?

When you buy a car, you are going to lose thousands of dollars.

A house usually holds its value, because people need someplace to live, they aren’t making any more land, and the house itself will last many years. A stock holds its value because it is ownership of a company that is trying to make money.

A car is actively losing value at all times. The car companies make 16 million new cars every year, each of which is more valuable than the cars on the market. The second you drive your car off the lot, it becomes a used car forever. Even if it stays on the lot, last year’s car is worth less than this year’s car is worth less than next year’s car.

My iPhone 7 is worth less than it was when I bought it, and it took another dip in value the day Apple released the iPhone 8 and the X. Consumer products have a finite life, and depreciate continuously.

Buying a car is dropping a knife, and hoping you don’t have to catch it before it hits the bottom in 7-12 years or so.
posted by Huffy Puffy at 11:27 AM on October 4, 2017 [8 favorites]


First things first.

Do you independently know the value of your car prior to the accident? I thought not.

Go to kbb.com and honestly put in options and condition and look at the ‘private party sale’ value.

That should be a fair approximation of the value of your car.

If the insurance company is offering you close to that number then they are acting in good faith and you probably do not need a lawyer or to get your own insurance carrier involved

What you owe on the car never comes into the equation.

Going through your carrier means you will be out your deductible until it is recovered by your carrier.

Getting a lawyer means you are out her fee typically for ever.
posted by prk60091 at 11:37 AM on October 4, 2017 [4 favorites]


You probably have the option to insist, "$X will not replace my car; I need an amount that will get me an equivalent car, not some abstract market-value amount." You may need to do some research - check craigslist and used-car dealers and come up with examples of what your make-model-year combo is currently selling for.

You aren't owed your original value of car, but if your car is totaled, you are owed enough for an equivalent replacement. You may have to do some legwork to prove how much that is, though.
posted by ErisLordFreedom at 11:39 AM on October 4, 2017 [4 favorites]


My brother has had two financed trucks (one 2 years old, one literally TWO WEEKS old) TOTALED in not-his-fault rear endings in the last month and a half (yes, he's having shit luck) and has had his insurance handle both claims and his premiums have not gone up at all.

It is very very easy to get screwed when your depreciated car is totaled in an accident, especially if you're over your head on the loan and you don't have gap insurance. Unfortunately that seems correct to me. But your insurance should absolutely be handling this for you, this is literally why you HAVE insurance, and if State Farm raises your rates on you, you should 100% find a new insurer after this. Because that's some shady ass crap. Call them again and demand that they step in on this and handle things with the at fault driver's insurance.
posted by phunniemee at 11:39 AM on October 4, 2017 [4 favorites]


The only legitimate reason for an insurer to raise your premium after you've made a claim is that the circumstances leading up to the claim show that the risk associated with your policy is higher than was first assessed. That doesn't apply to claims made as a result of events to which your negligence or incompetence did not contribute. If you work with your insurer on this claim, and they raise your premium as a result, find a better insurer.
posted by flabdablet at 12:04 PM on October 4, 2017 [1 favorite]


When someone destroys your car, you simply are going to lose thousands of dollars?

Seconding that, when you buy a car and keep it for 18 months, you're going to be losing money over that time to depreciation. That's why cars are not good investments etc.
posted by craven_morhead at 12:15 PM on October 4, 2017 [1 favorite]


The one argument you could make, if they're paying the fair market value for your car, is to show that the market value they're proposing is not accurate. That would involve finding listings for a car of the same make/model/year for sale in your own area, show that they're selling for significantly more than what you were offered, and asking for something in that range, instead. Market value estimates tend to be pretty reliable unless you're in an area where your particular car is prized and scarce.

Otherwise, it's as everyone else has said: your insurance covers the value of your car. Not how much of a stake the different title holders have in it, but how much it'd cost to buy a comparable replacement.
posted by mikeh at 12:15 PM on October 4, 2017


For what it's worth, this is how most personal property insurance works, too. If I have homeowners insurance with personal property coverage, and I submit a claim for replacement of my furniture, appliances (television, etc) I'm not going to be given the amount of money my television was worth the day I bought it. I'd be given an amount scaled by a depreciation factor or determined by an estimate of current worth. It's why home insurance policies often have optional (paid for) additional riders for items that hold value or appreciate, like collectibles, jewelry, etc.
posted by mikeh at 12:27 PM on October 4, 2017


You can possibly make up the difference that you owe via your pain and suffering settlement if you need that cash. When they are offering you a settlement amount, make sure that it includes 1. the current value of your car (before the accident) like everyone is saying above; AND 2. Covering any and all of your medical bills resulting from the accident (ER visit, PCP visit for pain meds, etc); AND 3. Pain and suffering payment based on your injuries, missing work, etc.

You should be negotiating the property payment and the pain and suffering settlement separately. Decide on the worth of the car (and yes, for a car 2 years old you won't come out ahead), and then decide on the pain and suffering payment. Beware any paperwork they send you to sign...read carefully and determine the amount of each. Many adjusters want to close the case as soon as possible so quickly toss out an amount that covers the car, and gets you to sign paperwork that lists that amount but says it is the total settlement for the wreck (including any pain and suffering or medical bill payments).
posted by MultiFaceted at 1:24 PM on October 4, 2017


Since we're talking insurance, another LPT: Please make sure you have Comprehensive AND Collision. Somehow our new truck ended up with Comprehensive ONLY, and Comprehensive is NOT... comprehensive. i.e. it doesn't cover my dumbass piloting said truck backwards into a telephone pole.
posted by joecacti at 1:31 PM on October 4, 2017


There are a lot of good answers here, but if you want some specific dollars and cents analysis, you could share the following info with the group:

- Vehicle year, make, model, and current mileage
- Your total purchase price (including your down payment and the amount you financed)
- Amount of the original loan
- Amount you still owe on the loan
- Value of the car according to the insurance company

With that info, we can give you some really specific ideas if anything doesn't seem right.
posted by reeddavid at 1:31 PM on October 4, 2017


Part of your feelings might come from the fact that you used the word "investment" in relation to buying a new car. It's a degrading consumer item. Maybe one could "invest" by buying a junked classic car and putting in time, effort and money/parts to make it useful to resell but that's a whole other ball of wax. You lose (google says ~11%) of the value of your car the second you buy it; that's a horrible investment.

In theory, now that you're "whole", you should be able to (with some searching) find a private party with a 1.5 year old similar car with similar mileage, put down a $3k down payment, and have the same approximate payments over the same timespan of time remaining with the original loan, assuming you can get the same interest rate for a loan of this very specific time period.

Yes, you lose the time to search for this car, and if you don't get the "best" price, you're going to lose some on the actual transaction itself. - perhaps your insurance, or a lawyer, might be able to get more from the other insurance for the likely transactional loses (assuming it's not in the insurance company's offer), but the latter costs money (likely much more money than you'd gain); the former is worth considering if you really do think you aren't anywhere close to whole according to my 2nd parahraph.

Unfortunately you didn't win the lottery by getting in the accident, where a 1.5 year old (used) car was suddenly transformed into a new car. Under ideal (well, less unideal) situations one is made whole by having one's car actually and properly repaired at no cost to you and there's a rental for the time waiting for the repairs to be done.
posted by nobeagle at 1:54 PM on October 4, 2017 [2 favorites]


The only thing I'd add is that you pay a significant premium to buy a used car through a dealer. In theory, you're supposed to get the current (depreciated) value of the same car from a dealer, so if you buy from a private party, you can almost always get more bang for your buck. You don't get the value of any warranty, etc., but it can be cost effective.
posted by wnissen at 3:14 PM on October 4, 2017


>My company suggested I not work with them, because, if I do, my premiums will go up. The accident was in no way my fault, and the other driver has insurance.

Your company suggested that because then it would not have to pay. It has to pay at a certain level. The other guy's coverage has to pay at a lower rate if that is the direction you choose to go.

You paid for the coverage, and you're entitled to it.
posted by megatherium at 3:22 PM on October 5, 2017


First, make sure that you only have basic comprehensive and collision. You may have rental car coverage that will pay anything the other party's insurance refuses to pay, or maybe your agent upsold you on new car replacement or something, in which case you definitely need to file a claim with your insurer.

Otherwise, the other advice that you should be getting the cost of a suitable replacement of the same year, same features, and similar miles, plus reimbursement for a rental car while they were adjusting the claim. That's at bare minimum, assuming you have no other costs whatsoever arising from the crash.

Where this can be tough to negotiate is when there are literally no cars of the same make, model year, and feature set, as happened to Georgia. The payment was higher than for the standard version, but wasn't enough to cover the full cost of a replacement due to regional pricing variation making the value here + submodel adjustment not enough to cover a car in markets where the specific type is available, but have generally higher prices than here. It was a small enough difference I couldn't find the motivation to argue much.
posted by wierdo at 8:28 PM on October 5, 2017


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