Is this car insurance company scamming us?
February 3, 2020 12:06 PM Subscribe
Our car had minor damage in an accident. The driver's insurance company declared it a total loss, and says we need to provide a salvage title to them in order to get the second check. Does this sound right?
Our car was rear-ended a few weeks back. It was the last in a chain of 3 parked cars, so it only sustained minor bumper damage (we even had this confirmed by a local garage - no structural or frame damage), but the insurance company declared it a total loss. We are in the middle of the insurance process now, which is - insurance company give us half the money to get the car fixed, then we get the other half of the money once we provide a salvage title to them. We're in the latter phase of this process now.
In order to get the salvage title, we needed to get the car a state inspection. When we went to do that, the mechanic started asking us questions about why we're getting the car inspected 7 months before the expiration and when we told him he became very suspicious and suggested the insurance company was scamming us, or benefitting in some way, and that we shouldn't need a salvage title to get the rest of the money.
How this might be a scam? Should we get the salvage title? What should we do from here?
Our car was rear-ended a few weeks back. It was the last in a chain of 3 parked cars, so it only sustained minor bumper damage (we even had this confirmed by a local garage - no structural or frame damage), but the insurance company declared it a total loss. We are in the middle of the insurance process now, which is - insurance company give us half the money to get the car fixed, then we get the other half of the money once we provide a salvage title to them. We're in the latter phase of this process now.
In order to get the salvage title, we needed to get the car a state inspection. When we went to do that, the mechanic started asking us questions about why we're getting the car inspected 7 months before the expiration and when we told him he became very suspicious and suggested the insurance company was scamming us, or benefitting in some way, and that we shouldn't need a salvage title to get the rest of the money.
How this might be a scam? Should we get the salvage title? What should we do from here?
Response by poster: Yeah, the difference between keeping the car and giving it to them was a measly $300. Should I try to fight them on the salvage title, and just show them the state inspection passing?
posted by hellbient at 12:44 PM on February 3, 2020
posted by hellbient at 12:44 PM on February 3, 2020
So, please clarify; you've done all of the work of getting repairs done and they don't have to do that running around and doing it? Seems they should compensate you for that?
posted by mightshould at 1:11 PM on February 3, 2020
posted by mightshould at 1:11 PM on February 3, 2020
Response by poster: Yes, the work was done. Now I'm jumping through the hoops to get the second insurance check. Does that answer your question?
posted by hellbient at 1:24 PM on February 3, 2020
posted by hellbient at 1:24 PM on February 3, 2020
If they totaled the car I would have expected them to cut you a check for the value of the car, with you signing the title and the car over to them. The car is then sent to auction by the insurance company to recoup what they can.
When I had a car repaired at the insurance company's expense, they had me take the car to a body shop and they pay the body shop directly.
Something does not smell right here.
posted by tman99 at 1:28 PM on February 3, 2020 [1 favorite]
When I had a car repaired at the insurance company's expense, they had me take the car to a body shop and they pay the body shop directly.
Something does not smell right here.
posted by tman99 at 1:28 PM on February 3, 2020 [1 favorite]
What insurance company is this? Is it a reputable/well-known one?
posted by amtho at 1:31 PM on February 3, 2020
posted by amtho at 1:31 PM on February 3, 2020
Response by poster: Yes, i had the repairs done at the body shop already, and it passed state inspection. The car is fine. It only had minor bumper damage. Now the insurance company, Gallagher-Bassett, is saying I need to provide a salvage title to get the second half of the money. I agreed to this process a few weeks ago, although I did sign something, the document I signed didn't say anything specific about this process.
posted by hellbient at 1:33 PM on February 3, 2020
posted by hellbient at 1:33 PM on February 3, 2020
I quick search found this:
"Gallagher Bassett is not an insurance company, but it operates as a “third-party administrator.” This means that they handle the claims process for businesses that are self-insured. ... Gallagher Bassett is one of the top third-party administrators by revenue."
It appears they are not an insurance company , but are processing the claim for whoever is insuring you vehicle. I would contact the insurer.
Once you provide the salvage title who will own the car?
posted by tman99 at 1:41 PM on February 3, 2020
"Gallagher Bassett is not an insurance company, but it operates as a “third-party administrator.” This means that they handle the claims process for businesses that are self-insured. ... Gallagher Bassett is one of the top third-party administrators by revenue."
It appears they are not an insurance company , but are processing the claim for whoever is insuring you vehicle. I would contact the insurer.
Once you provide the salvage title who will own the car?
posted by tman99 at 1:41 PM on February 3, 2020
Response by poster: tman99, yes, that sounds right. The driver was apparently a fleet driver.
I will own the car, but it will be with a salvage title, which I'm learning is not something you really want.
posted by hellbient at 2:00 PM on February 3, 2020
I will own the car, but it will be with a salvage title, which I'm learning is not something you really want.
posted by hellbient at 2:00 PM on February 3, 2020
What they’re probably asking for is proof that the car has been re-titled as salvage, not that they want you to give them the actual title. The insurer will not insure a salvage titled vehicle, and they need proof that this car has been re-titled (as opposed to not having it re-titled and theoretically able to be fully insured.
posted by Thorzdad at 2:09 PM on February 3, 2020 [2 favorites]
posted by Thorzdad at 2:09 PM on February 3, 2020 [2 favorites]
I would suggest not contacting GB again before talking with the local insurance regulatory agency.
This is why when I have a claim even when I am not at fault I call my insurance carrier and let them handle it. They pay to repair my vehicle and then go after the driver at fault and it will not effect my rates.
posted by tman99 at 2:22 PM on February 3, 2020 [3 favorites]
This is why when I have a claim even when I am not at fault I call my insurance carrier and let them handle it. They pay to repair my vehicle and then go after the driver at fault and it will not effect my rates.
posted by tman99 at 2:22 PM on February 3, 2020 [3 favorites]
Best answer: What makes no sense is that they’re paying for repairs while telling you it’s not worth repairing. If it’s scrap in their eyes then they owe you the entire value of the car, not the cost to repair it. If you want to keep this hunk of what they consider to be scrap then they owe you its pre-accident value minus its scrap value. Evidently they’ve determined that scrap value is $300. If you add the value of the check you’ve already received, the value of the check you’re trying to get, and $300, is the total a plausible value for the pre-accident car? Because if it’s less, then something’s wrong here.
My experience with salvage titles is in PA, so YMMV, but I suspect the system will be similar where you are. The system works like this: when a car is totaled, it’s considered to not be road-worthy, regardless of physical reality, and the assumption is that its unsafe condition is permanent. The annual inspection you got 5 months ago is null and void, and you shouldn’t be driving the thing. If your license tag expired, the state wouldn’t let you renew it. To remedy this situation you not only have to get the repairs done, you also have to pay a specially certified mechanic to do a sooper-serkrit 987-point special inspection to establish that the miracle of mechanical ressurection has actually occurred. After it has been so certified, you can get a salvage title and the state will allow you to register and drive the car again, but its resale value will have taken a big hit because many potential buyers don’t believe in mechanical ressurection and will figure you’re trying to sell a zombie.
posted by jon1270 at 5:42 PM on February 3, 2020 [2 favorites]
My experience with salvage titles is in PA, so YMMV, but I suspect the system will be similar where you are. The system works like this: when a car is totaled, it’s considered to not be road-worthy, regardless of physical reality, and the assumption is that its unsafe condition is permanent. The annual inspection you got 5 months ago is null and void, and you shouldn’t be driving the thing. If your license tag expired, the state wouldn’t let you renew it. To remedy this situation you not only have to get the repairs done, you also have to pay a specially certified mechanic to do a sooper-serkrit 987-point special inspection to establish that the miracle of mechanical ressurection has actually occurred. After it has been so certified, you can get a salvage title and the state will allow you to register and drive the car again, but its resale value will have taken a big hit because many potential buyers don’t believe in mechanical ressurection and will figure you’re trying to sell a zombie.
posted by jon1270 at 5:42 PM on February 3, 2020 [2 favorites]
I’m wondering if this is an insurance “buy back” scenario. If I understand it correctly, with a buy back the insurance company declares the car as a total loss because the cost to repair is greater than X% of value, but rather than cutting a check for the value, the carrier pays for repairs and “sells” the car back to the owner for scrap value. Basically, this seems like a way for the insurance carrier to avoid paying out for a total loss where a car really isn’t totaled but the math (X% of value) means they have to treat it like one.
The business about getting a salvage title may be required by state law whenever a car has been declared a total loss.
posted by Mid at 6:29 PM on February 3, 2020
The business about getting a salvage title may be required by state law whenever a car has been declared a total loss.
posted by Mid at 6:29 PM on February 3, 2020
Response by poster: Yes, Thorzdad, they want us to provide the salvage title as proof. Sorry if that was not clear.
posted by hellbient at 5:42 AM on February 4, 2020
posted by hellbient at 5:42 AM on February 4, 2020
Response by poster: tman99, I did talk to my insurance initially, but I didn't ask them to step in on this. I guess I thought they would offer. I'm very green to this process.
posted by hellbient at 5:44 AM on February 4, 2020
posted by hellbient at 5:44 AM on February 4, 2020
Response by poster: soelo, I'm in VA, Gallagher Bassett is in PA.
posted by hellbient at 5:47 AM on February 4, 2020
posted by hellbient at 5:47 AM on February 4, 2020
Response by poster: Yes, Mid, the number I keep hearing thrown around is 70%. So, I guess technically speaking, the car is a total loss, despite the fact that every mechanic I've talked to has laughed, shrugged, or shaken their heads at that fact. I mean, it was $1700 in bumper damage to fix.
posted by hellbient at 5:50 AM on February 4, 2020
posted by hellbient at 5:50 AM on February 4, 2020
Right, so if the car is worth around $2500, then a $1700 repair would be around 70%, which might be the threshold for total loss under state law and/or the insurance company's policies. The way this would work, I think, is something like this:
Car worth $2500 undamaged.
Car needs $1700 in repairs.
Car worth $800 as scrap.
Insurance company could declare total loss, take the car, and pay you $2500.
Instead, insurance company pays you $1700 (which you use for repair) and "sells" you the car for the $800 scrap value; the $800 is deducted from the amount they owe you for the total loss, so you end up receiving $2500 in value (supposedly).
Getting a salvage title seems like it is likely a state law requirement when a car is declared a total loss.
I'm basically making this up based on the one linked article, so others should weigh in.
posted by Mid at 7:16 AM on February 4, 2020
Car worth $2500 undamaged.
Car needs $1700 in repairs.
Car worth $800 as scrap.
Insurance company could declare total loss, take the car, and pay you $2500.
Instead, insurance company pays you $1700 (which you use for repair) and "sells" you the car for the $800 scrap value; the $800 is deducted from the amount they owe you for the total loss, so you end up receiving $2500 in value (supposedly).
Getting a salvage title seems like it is likely a state law requirement when a car is declared a total loss.
I'm basically making this up based on the one linked article, so others should weigh in.
posted by Mid at 7:16 AM on February 4, 2020
Response by poster: Yes Mid, that's more or less right, except in this case my payout was $4800. It only took $1700 to fix my car, which never had any structural or frame damage, just superficial bumper and trunk lid damage.
I'm learning that having a car with a salvage title is a terrible thing to have, for many reasons, so now I'm thinking about contesting it.
I've talked with the Commissioner of Insurance's office, and they were very helpful. I'm going to talk to the insurance company soon and see what they say about me not providing a salvage title.
posted by hellbient at 8:39 AM on February 4, 2020
I'm learning that having a car with a salvage title is a terrible thing to have, for many reasons, so now I'm thinking about contesting it.
I've talked with the Commissioner of Insurance's office, and they were very helpful. I'm going to talk to the insurance company soon and see what they say about me not providing a salvage title.
posted by hellbient at 8:39 AM on February 4, 2020
Response by poster: Melismata, the insurance commissioner's office claimed there's no way insurance companies are interested in the refurbishing and reselling of cars in this way, nor are they legally allowed to.
posted by hellbient at 12:43 PM on February 4, 2020
posted by hellbient at 12:43 PM on February 4, 2020
You do not need to give them the title nor do you need to have it written off as a salvaged vehicle. You only need to provide your receipt for the payment you made to get it fixed. If they are calling it a total loss then they will have to give you the actual value of the vehicle in the checks combined total and that would be the blue book value plus any fees you incurred from the loss of the vehicle while it was in the shop, any new parts or upgrades you had done and the remaining balance on your insurance policy. That is what they would owe you for the salvage title. If they say you owe them the title then you call your insurance agent and they will collect it for you.
posted by The_imp_inimpossible at 12:34 AM on February 5, 2020
posted by The_imp_inimpossible at 12:34 AM on February 5, 2020
Response by poster: Update:
After the insurance company sent the first check, and I got all of the repairs done and paper work in order, it was then time to get the second check. The deal with the insurance company was that I was to provide a salvage title in order to get the second check.
I sent an email to the agent, asking her to make an exception regarding the salvage title. I noted that the damage done was minor bumper damage, that no frame damage had occurred, that this was far from a "total loss" and a salvage title was not necessary in this case. I emailed her a small note from a garage that I got right after the accident, and some photos that were taken shortly after the accident.
After a couple of days, she got back to me to let me know that they would be sending the check, without the need for a salvage title!
It was a little bit of extra work, but totally worth it that we got a little extra cash and didn't have to jump through the hoops of getting a salvage title. And our car still runs great!
Thanks all!
posted by hellbient at 1:23 PM on July 31, 2020 [1 favorite]
After the insurance company sent the first check, and I got all of the repairs done and paper work in order, it was then time to get the second check. The deal with the insurance company was that I was to provide a salvage title in order to get the second check.
I sent an email to the agent, asking her to make an exception regarding the salvage title. I noted that the damage done was minor bumper damage, that no frame damage had occurred, that this was far from a "total loss" and a salvage title was not necessary in this case. I emailed her a small note from a garage that I got right after the accident, and some photos that were taken shortly after the accident.
After a couple of days, she got back to me to let me know that they would be sending the check, without the need for a salvage title!
It was a little bit of extra work, but totally worth it that we got a little extra cash and didn't have to jump through the hoops of getting a salvage title. And our car still runs great!
Thanks all!
posted by hellbient at 1:23 PM on July 31, 2020 [1 favorite]
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They want to refurbish the car themselves so that they can resell it and therefore make even more money on your car; i.e., they want to be the ones making the money, not you, so they won't give you your money until you sign it over. This all just happened to me, except that I didn't personally have to provide the salvage title (they all did the paperwork for me). And I had frame damage, so the "total loss" seemed justified even though the car was totally drivable. It's all about them wanting to make money, and it's now the way things work, though not a scam per se.
posted by Melismata at 12:33 PM on February 3, 2020