How long can I drive a car before turning it over to the insurance company?
January 15, 2008 12:07 PM   Subscribe

Someone hit my car. Their insurance company wants to total it. How long can I drive it before they take it away?

I hope you'll bear with me. This will take some explaining:

Here in Pennsylvania, my '97 Nissan Sentra was fender-bent by a nice person who left a note under my wipers. As an older vehicle, the Nissan's repair costs are higher than its value... by a little bit. I had the car checked and it's mechanically sound, safe, and even capable of passing an ordinary PA state inspection. However, the insurance company wants to declare it a total loss and take it off my hands.

I could buy it back from the insurance company after they pay me for it, but then the car would be considered a "reconstructed vehicle". Here in PA that means a special, expensive, rigorous inspection designed to keep hucksters from selling totaled lemons to grannies. Passing that one could be hard for any ten year old car, I gather.

On the phone with the insurance company I've noticed that the representatives have been, well, coy about putting a date on when I have to decide what to do with my vehicle. I've been warned that waiting too long and building up mileage on the car will lower its value and hence diminish the eventual insurance payout. Which brought the question:

Me: So, ah, hypothetically speaking, what happens if I drive it around for, say, two years and then make up my mind?

Rep: I don't like to deal in hypotheticals...

She went on to say that the claim would be closed and reopened, and then repeated her warning about the car's value dropping with more mileage. But she didn't fit a deadline. Does this mean that, basically, I can drive my car around until I was planning to get rid of it anyway, and assuming I don't have an accident, the insurance company is obliged to buy it when I'm done with it for what it would be worth without the big dent? Here are the questions I need help with:

First, see question above. Then, assuming the answer is yes,

Is it ethical? Some thoughts about who's involved: the insurance company would be paying me anyway---now they can hold onto the money longer and invest it, then pay me less money in the end. The company might also choose not to raise the rates of the at-fault party until the payment---good for the at-fault party now, but perhaps an unexpected surprise later on. I'm owed money for my loss, but if my plans haven't really changed, how much of a loss is it? (Trade-in value, I suppose...)

Is it legal? This I can't answer... perhaps there's a statute of limitations? But the claim is already filed... it's just on hold. (YANAL, I know...)
posted by tss to Law & Government (21 answers total) 2 users marked this as a favorite
Response by poster: (edit: should read "unpleasant surprise". Most surprises are unexpected, I suppose...)
posted by tss at 12:14 PM on January 15, 2008

You don't want to deal with the other driver's insurance company directly. They are your enemy. Report this to your own insurance company and deal ONLY with them.
posted by Malor at 12:20 PM on January 15, 2008

I agree - why are you talking with them? Your insurance company should be dealing with them.
posted by agregoli at 12:22 PM on January 15, 2008

What Malor said. A hundred times over. Always file through your own insurance and let them handle it on your behalf. Carry enough insurance on your own personal policy for repair and to put yourself in a rental. Give your statement to your own insurer, give them all the details of the accident and information of the other driver(s).

How long ago was this accident?
posted by jerseygirl at 12:27 PM on January 15, 2008

Response by poster: Roger. Let's consider myself duly admonished and back to the question at hand? kthxbye :-)
posted by tss at 12:28 PM on January 15, 2008

Response by poster: The accident was late last month. I discovered the problem when I came back to town after being away for a conference and Christmas. The conversation mentioned with the rep above is from a few hours ago.
posted by tss at 12:29 PM on January 15, 2008

Yeah didn't mean to pile-on the admonishing. I should have previewed. But anyway, good, we're not too far off from the accident. Just been in my fair share of accidents and have, unfortunately, built up some odd expertise in dealing with insurance reps and adjusters for the house and the car.

Call your insurance and tell them you need to file a claim. Tell them you attempted to deal "in good faith" with the other insurance company and are having a difficult time getting any useful answers out of them and they are confusing/pressuring you. Ask if it's too late to file a claim with your own insurance. Tell them what happened, give them the name of the insurance rep you've been dealing with and a claim number you might already be assigned.
posted by jerseygirl at 12:33 PM on January 15, 2008

Why would you want to drive the car around until you're "ready" to replace it? In theory the value of the car should go down at the rate at which you derive value from it. In practice, it might go down faster or slower. So you're actually taking a gamble.
posted by delmoi at 1:48 PM on January 15, 2008

I know this is not exactly what you asked, but I myself and a close friend have both had cars "totaled" by our insurance companies, received the payouts, and then continued to drive them until they either died or, in my case, I sold the junker for $1000. My car was an 89 and I passed it the other day on the road, so yeah, you should in theory be able to continue driving it even if it's totaled. Getting it inspected and passing is another story; just be sure to do the maintenance you need on it and find a station where you are friendly with the folks and it shouldn't be too much of a problem.
posted by Unicorn on the cob at 1:54 PM on January 15, 2008 [1 favorite]

It makes sense to drive a car while it's drivable. Otherwise, you're wasting a (nearly) perfectly good car. It takes a huge amount of natural resources, power, and even water to make a new car, and every car "consumed" represents a new car that's built somewhere (assuming everyone who wants a car gets one, which I know is flimsy, but you get the idea - OP may buy a used car, that car's seller might buy a new one, etc.).

So, the practice of marking a car "salvage" just because the monetary value of repairs exceeds the probable resale value of the car -- may make sense, in a way, from an insurance company point of view, but it definitely does NOT make sense from a using-it-up-before-throwing-it-away point of view.

Please pardon my semi-screed here. I think it is as relevant as delmoi's comment, at least. (no offense, delmoi, your comment did deserve a response).

Another, perhaps more directly financial, angle -- giving up the car now, on the insurance company's terms, probably means using the insurance settlement PLUS additional funds to purchase another car - funds that the OP may or may not have available at this moment.
posted by amtho at 2:09 PM on January 15, 2008

Response by poster: UOTC: Unfortunately, I don't think you can get a reconstructed vehicle re-registered in PA unless you pass the enhanced inspection. Only a (relatively) few stations around the state can give those inspections, so I don't think you can get chummy with the people who work there.

Delmoi: I'm afraid I don't understand your point. My car is (relatively, again) a known quantity---I have been good about servicing it and it hasn't given me much trouble. I don't think I can afford to buy a reliable new used car now, even with the payout. Hoping that another used car will work for me for what I can afford seems more of a gamble at this point. I will be "ready" to replace the car when I finish grad school and have a Real Job.
posted by tss at 2:14 PM on January 15, 2008

Ask the insurance rep if they'll give you money for repairs, so you don't have to have a salvage title.
posted by theora55 at 2:44 PM on January 15, 2008

When a vehicle is totaled by an insurance company, and they buy it, they mark the car as being "salvaged" (the terminology changes by state... PA calls it salvaged. California calls this "junked"). Officially, it is no longer a vehicle at this point, and can not be registered for use on the roads. An automotive dismantler and/or rebuilder can purchase the "junked" car, repair it, get it (thoroughly) inspected by a state agency (frequently the DOT or State Police), and re-title the car -- as a "reconstructed" vehicle (again, this is PA terminology, in California, and many other places, they call this "salvaged" -- yes, that's just to confuse you). Reconstructed vehicles can be registered, insured and driven just like any other vehicle on the road. (see also)

The inspection between "salvaged" and "reconstructed" is substantial. Most currently registered cars from the 90s would require some work to pass.

So, if you want to keep driving your car, then what you want to do is avoid selling it to an insurance company. Until your title changes hands, it's still a clean title, and not subject to any more inspections than any other car its age.

Let your own insurance company do the legwork, but tell them that you (and your mechanic) know that the damage is cosmetic, and that you'd rather get a mismatched fender from a junkyard than to lose the car over this. The payout you'll get will be lower, but you'll get to keep the car.
posted by toxic at 2:47 PM on January 15, 2008 [1 favorite]

Response by poster: Thanks to everyone for their comments! My action plan is this:

1. Ask my question to the Pennsylvania Insurance Department's consumer line. Since the results from this inquiry might be of interest to others, I'll post what I learn here.

2. Ask my insurance company to encourage the other insurance company to give me a cash settlement for my claim.
posted by tss at 4:25 PM on January 15, 2008

I was in a similar position to you. I also ended up dealing with the other guy's insurance company. They wanted to write off my car. I didn't want to write off my car. I wanted my car, which I liked and had sentimental attachment to, fixed like it was before the other driver ran into the side of it. They weren't interested. I wrote letters. I made phone calls. They were adamant that all they could do was write off the car.

I asked myself one day *why* I was dealing with *his* insurance company, and could find no good reason. So I called my insurer, with whom I had third party property, fire and theft cover only, not comprehensive cover. They advised me to send them a claim form marked Report Only, and that they would contact the other insurer on my behalf. I did that.

A week later I got a letter from the other insurer. They paid for repairs.

Really, all you need to do is be a polite, persistent nuisance, and use every bit of support available to you, and it will eventually become cheaper to give you what you want than to keep arguing with you.
posted by flabdablet at 4:36 PM on January 15, 2008 [1 favorite]

It depends on the state laws, they are quite different from state to state in these sorts of matters. One issue is that it may be uninsurable once it's been totalled.

What you might want to consider is getting a settlement from them without it getting legally junked. Their client broke your car, they owe you compensation. Once you are compensated for your loss, it (should be) up to you what you do with the money.

In fact, as I type this, I realize that the only way they get to total your car is if you agree to it. They can't just take your car. What the can do is not compensate you unless you give them the car.

Getting back to the first thing, though, is that YOUR insurance company may no longer be willing to offer you a policy, even if you get the other company to just pay you off. Meaning you might be screwed no matter what you do. Sorry. My car is the same way- I like it more than it's worth.
posted by gjc at 8:08 PM on January 15, 2008

My insurance company totaled a car I owned once. The car was mechanically fine, it just had a lot of body damage.
I kept the car, they subtracted $400 for what they would have got selling it as 'scrap' and gave me the rest of the blue book value of the car as a check.

They also continued to insure the car, which always made me wonder what would happen if it got 'totaled' again.

The other party was deemed at fault, and my insurance was Allstate in California for what it's worth.
posted by whoda at 7:51 AM on January 16, 2008

tss: toxic is absolutely right. To reiterate: so long as registration hasn't lapsed or anything, there is no need to re-register the car. There has been no change in owner. I've never heard of someone selling their totalled car to the insurance company and then buying it back; it makes no sense when you can keep the car and use the settlement money to have it fixed privately.

Also, the suggestion that you do this through your insurance company and not the other one is pertinent to the question at hand because it sounds very odd, their offer to buy it from you and then sell it back. I'd bet you good money that they're giving you a run-around. They have lots of money on the line, and it's worth it for them to be coy and say "oh, yeah, well, I don't like to be specific about time frames..." only to have you find out in a month that they don't have to pay out any more because of some technicality. I know a woman who made $30,000 in bonusses last year as an insurance rep because of the amount of payout she saved the company. They're probably lying to you.

Tell your insurance company want to keep the car and take the payout. They owe you that.
posted by koeselitz at 11:24 AM on January 21, 2008

sorry, "Tell your insurance company you want to keep the car..."
posted by koeselitz at 11:26 AM on January 21, 2008

Response by poster: Thanks again for the comments, everyone. The short answer to the short question at the top of my post is: two years.

The results are mostly in. I'm posting them here because I hope they might be useful for others reading this thread later. Since this is long, I've placed the most interesting items in bold text, though they are clarified and qualified by context.

Just to recap, the only options on the table for me from the at-fault party's insurance company were either (1) having them total my car and take it away, leaving me with some cash (2) having them total my car and then sell it back to me, leaving me with about 8% less cash. As toxic points out, option (2) is a tough situation---the car would be declared salvaged and getting it un-salvaged is an expensive proposition. There was no option to just have a cash settlement, as koeselitz suggests---either way the car is totaled.

First, I called my own insurance company and asked them whether they could find a fix for my battered car that didn't involve totaling it---either repairing it without paint, or just giving me a cash settlement. It turns out that they weren't much more flexible than the other company---they claimed that conclusions like that were pretty standard, and that they were probably as likely to total it themselves! I do have the feeling that if I called again and got someone else, the answer would still be different. I may yet try again.

At any rate, the responses from the consumer line at the Pennsylvania Insurance Department were a bit more interesting. The statute of limitations for filing an insurance claim is two years, and that the money owed is the value of the car at the time of the accident! A later e-mail from the same correspondent (I have three) says also that I have two years from the date of loss to settle the claim as well. At any rate, the implications of this are a bit surprising to me, beyond my original expectations. If I wanted to, I could continue driving the car for a little less than two years, then "sell" it to the at-fault party's insurance company for more than it would be worth even without the dent.

This seemed a little bit unusual to me, so I called my own insurance company's total loss department in the hopes that they would be more candid with me, a policyholder, than the at-fault party's company's total loss department. These folks suggested a more logical possibility: what would happen is that the claim would be closed, and then I would refile the claim when I was ready to refile. The company would reappraise the car at that time and then total the car, paying out its value as of the claim date. That's pretty much the scenario I was asking about at the top of this message.

With that additional data point, I went ahead and called the at-fault party's insurance company and let them know that I wouldn't be letting them total my car for a while. This was a bit of an experiment, and sure enough the rep asked me then if I would be closing the claim---otherwise the company would have to call me every 30 days and ask me what was up, and nobody wants that, right? I proposed that if I left the current claim open, the insurance company would be obliged to stick to its original estimate of the car's value, no matter how long I dragged my feet.

To my surprise the rep said that barring further damage to the vehicle, the company would always owe me the value of the car at the time of the accident, whether I closed the claim or not. Added mileage and normal wear shouldn't matter---a statement explicitly echoed by the PA insurance office contact, and directly refuted by one of the rep's colleagues a week ago! Of course I asked for that in writing, and first he said OK, then he said he thought it would be OK, but he'd ask his manager and send out the letter tomorrow. I'll wait until I get the letter to decide what to do, but even if he can't offer his assurance, I don't mind having to answer the phone once a month. I don't know for sure whether the insurance company can close a claim without my assenting to it, but it doesn't seem that way. I also don't know for sure whether the insurance company can change the offer they made on a claim that hasn't been closed, but it's beginning to feel more and more like they'd have a hard time doing it.

Conclusion, for now:

I don't know for sure what the outcome will be, but if you're in a situation like mine, viz.
  • A car you're likely to sell within the statute of limitations for settling auto insurance claims
  • A car "totaled" by cosmetic damage
  • State laws like Pennsylvania's
then it seems to me that filing a claim right and getting an offer from the insurance company right away, then checking your obligations with your insurance office consumer hotline, gives you a more favorable range of options. Either way it seems like I will be getting more driving time out of the car---on track with my original plans---and then a nice price for the car in the end.

For the time being I'll sand off the rust and get some primer on there. More news as it comes.
posted by tss at 5:46 PM on January 22, 2008

Thanks for the update. Someone smacked into my car this weekend while it was parked in front of my house and I'll probably need some of your advice. I didn't even know that the consumer line at the Pennsylvania Insurance Department existed before reading your post.
posted by Alison at 1:46 PM on March 11, 2008

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