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Replacement Cost by Insurance Company for Totaled Vehicle

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  • jwilliams2jwilliams2 Posts: 871
    edited April 2010
    Please help me to understand. The insurance company has paid you a fair market price for the totalled vehicle which you agreed to. You now want your down payment and interest back as well?

    Does that mean you want a big enough settlement to start over with a brand new car? What about the three years use the car had? You don't feel that should have cost you anything? Please clarify.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Let's face it, when someone totals your vehicle, there is a much larger financial loss than just the value of the vehicle.

    The "much larger financial loss" is not due to any bailee's negligence, liability, or fault.

    The "much larger financial loss" is due solely to your personal money management skills prior to the crash. Not having purchased Gap Insurance was your decision.

    When you settled with the adverse insurance carrier, it's all over. Your continued financial obligation to pay off your loan is not affected by the bailees negligence.
  • taximombutlertaximombutler Posts: 9
    edited April 2010
    Obviously you are so used to the insurance industry protocal that you don't see beyond that. Precendents are set by not setting limitations on how we look at things.

    I purchased the vehicle and financed it to pay it off in approximately 4 years, and was two years into it... so hence, I have paid two years of interest, with only two years of interest remaining. Because a valet driver is negligent and totals my vehicle, I had to fight with an insurance carrier for a month to get an acceptable settlement that would provide fair market value of the vehicle. Yes, I had GAP insurance as well, but the fair market value was higher than what I owed. I count the additional funds received from the payoff of the lien as a "wash" since they will go directly back to "Tax, Title and Registration" of a new vehicle. That is why they give you those monies back in your settlement, because they recognize that you already PAID that money and you will have to pay that money AGAIN! This is no different than the interest. I paid two years, planning to be out of the loan in two more. Now, I must purchase a new vehicle at higher prices due to inflation (they only consider depreciation, not inflation) and finance a higher amount.. just to get the same vehicle, same mileage, etc... and I will pay ANOTHER FOUR YEARS of interest, vs. TWO. I am four years away from having no car payment if I chose to keep the vehicle, instead of the planned two years.

    This is not rocket science, plain simple math. Between downpayment and interest that is approximately $15,000... so that is a financial loss outside of the vehicle. It is not finacially smart to purchase a vehicle with a downpayment, pay interest for 2-4 years and then start this process all over again. Your actual cost of a vehicle will be double the initial cost of the vehicle.

    Obviously, after this situation I will reconsider whether a downpayment is a good choice and with the great interest rates now available, will make that a consideration.

    If I had wrecked my own vehicle the issue would be different. But instead my vehicle was entrusted to a company who handles vehicles for a living, they didn't even disclose that the vehicle would be moved from the hotel garage, right underneath the property, so it was "implied" that the vehicle would stay on the property, not driven onto public streets. This hotel property did not offer any other option, valet is required when staying there. Then there is the entire inconvenience (loss of use as the insurance industry calls it) for there negligence. If companies can pawn off an issue like this to the insurance carrier, who practically makes you do more work than them to just get a fair market value settlement, there is no accountability and litigation is the only option,.

    That is the history of bailment law. Where bailees have "absolute liabilitiy", thus the intention to void having to use litigation for the bailor to get restitution. Unfortunately, because the insurance industry has decided what the definition of the "liability" is, doesn't mean we as the consumer have to agree or accept.

    I would like to note that I am only trying to be in an equal financial position of where I was before the vehicle was totaled, not anything more.

    I will say however, that if a valet company of this reptuation totaled the vehicle ofa celebrity or political official or even the VP or President of the hotel chain, I have no doubt that there would have been a new vehicle in their driveway the next day. :confuse:
  • Another note/comment.

    If my bumper on my vehicle had been ruined.. they would put a new bumper on the vehicle and pay for the entire amount, say $2,000 for example. The insurance company would not come back to me and say, well you used the bumper for 2 years, so we will pay the depreciated value of the bumper, which is $1,300 and you need to pay the additional $700 to get back to where you were with a bumper on your car? That is ridiculous, however, when they total your vehicle, that is what they do.. because they determine on a 75% ratio if that is cheaper for them than rebuilding/repairing your entire car from scratch, if it is even repairable. It is all about the bottom line profit for the carrier, not what is best for the consumer. I could not even elect to have my vehicle rebuilt one part at a time.. so why shouldn't they just buy a new one, say two years old, with depreciated mileage? I would still have been in a better financial position.
  • sanjaysdcasanjaysdca Posts: 269
    We live in a litigation happy world and then we wonder why our insurance premiums, be it auto or health, are going through the roof.

    In any event I would be interested in the outcome. Please keep us updated.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Precendents are set by not setting limitations on how we look at things.


    That's a nice & feel good statement, but the facts are you are expecting others to insure your debt. Not within the law to do so.

    Had you wrecked the car, your negligence, who would you hold responsible for insuring your debt?

    I don't believe even a lady adjuster would agreee with your comments to pay more.

    If it were legal to pay the balance owed on a total, the losses would be variously immeasurable & not able to be promulgated in Liability insurance rates.
  • Kirstie_HKirstie_H Posts: 10,914
    If it were legal to pay the balance owed on a total, the losses would be variously immeasurable & not able to be promulgated in Liability insurance rates.

    You said this in "insurancese", which is basically what I said a few posts back - insurance rates would be impossible to calculate, and would likely become unaffordable for many.

    How would one calculate the difference in potential loss of Person A's vehicle, over a 5-year loan at 10% interest, $2,000 down, at various milestones throughout the life of my car & loan, at various "it got totaled" dates along the way? And how would that calculation differ against Person B, who bought the same vehicle, 4-year loan, 5% interest, $5,000 down?

    If totaled, the person in scenario B will always come out ahead the way that insurance currently operates because they put $5,000 down. On a vehicle with a purchase price of $20K, person B will likely never be upside-down.

    Person A will be upside-down for much longer. However, under taximom's proposal, that person would likely come out ahead on an insurance settlement because they paid more loan interest, and the balanced owed on the loan will always be higher than Person B.

    The downpayment simply reduces the amount owed on a vehicle at any time. Had you not made a downpayment and the insurance company settled for less than you owed, you would still owe the difference. This is the only way in which a downpayment comes into play when a vehicle is totaled.

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  • sanjaysdcasanjaysdca Posts: 269
    Would like to know your opinion if you had rear ended someone and he came after you for lost interest and other tanigible cost would you have paid? OVER the fair market value?

    As I said am really interested in the outcome. Please keep us posted.
    BTW what was the make/model of the car? Just curious
  • tidestertidester Posts: 10,109
    edited April 2010
    Your actual cost of a vehicle will be double the initial cost of the vehicle.

    How do you figure that? On a $20,000 loan over 48 months with 8% apr, the interest works out to $3,436. That's a long way from double.

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    SUVs and Smart Shopper
  • jwilliams2jwilliams2 Posts: 871
    edited April 2010
    What is keeping you from buying an identical replacement vehicle, both in age and mileage. That is what the insurance settlement should have paid for. If you do short term financing you will be in basically the same financial position you were in.

    And legal counsel is going be expensive with a high probability of losing. I can't imagine any lawyer taking this on a contingency basis.

    Perhaps someone on this board can steer you towards an insurance company that will write a policy that pays you the full original purchase price on your future vehicles regardless of age or mileage. I'm not sure if there is such a thing, but it sounds like what you want. I would imagine the premiums would be very pricey. Good luck to you.
  • dtownfbdtownfb Posts: 2,915
    Obviously you are so used to the insurance industry protocal that you don't see beyond that. Precendents are set by not setting limitations on how we look at things.

    taximombutler: For some reason you are caught up on this notion that the insurance must pay you back everything you put into the car. THat is simply not the case. The insurance company only owes you the value of your car based on model year and miles driven, which you have nto shared even though you've been asked several times. Take the emotion out of the situation and think about this practically. You have multiple people telling you the exact same thing.

    If you are looking for additional money, your fight now is with the hotel and valet service.

    If I had wrecked my own vehicle the issue would be different. But instead my vehicle was entrusted to a company who handles vehicles for a living, they didn't even disclose that the vehicle would be moved from the hotel garage, right underneath the property, so it was "implied" that the vehicle would stay on the property, not driven onto public streets. This hotel property did not offer any other option, valet is required when staying there. Then there is the entire inconvenience (loss of use as the insurance industry calls it) for there negligence. If companies can pawn off an issue like this to the insurance carrier, who practically makes you do more work than them to just get a fair market value settlement, there is no accountability and litigation is the only option

    I'm not sure why you feel the situation would be (or should be) different if you had totaled the car yourself. The insurance company would treat it the same exact way, which is why your only option is to pursue this against the hotel company and valet service.

    Good luck with your lawsuit. Keep us updated.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    "a policy that pays you the full original purchase price on your future vehicles regardless of age or mileage.

    The insurance industry does not offer such a policy as it would create a moral hazard. ;)
  • tidestertidester Posts: 10,109
    THat is simply not the case.

    That is quite correct but one cannot be faulted for wondering. If I buy a new car today and total it tomorrow then my single one month insurance premium basically gets me covered for a new car (minus the instant depreciation). However, if I buy a new car today and total 12 months from now, my 12 months of premiums don't get me anywhere close to being covered for a new car. Somehow, it seems that first month's worth of premiums get a much better return than all the others. :)\

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  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Until we know what the vehicle was - let us assume it was an exotic high power sports car & the valet team decided to take it out to see what it would do on the pretense of transfering it to another lot, which if you think about it, doesn't make sense.

    This act of stealing the car from its original safe parking space is the part that gets me very upset and there should be severe justice inflicted if that is the case. :mad: :mad: :mad:
  • Kirstie_HKirstie_H Posts: 10,914
    What is keeping you from buying an identical replacement vehicle, both in age and mileage. That is what the insurance settlement should have paid for. If you do short term financing you will be in basically the same financial position you were in.

    Very simple & easy-to-understand explanation, jw. The insurance company doesn't owe you a NEW car - they owe you a car that's at the same value as the one totaled. The car that was totaled wasn't new, so why would one anticipate that the replacement vehicle should be new?

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  • Actually.. that was my first thought.... althought very tough to find one identical... but that is not the protocal for how insurance works on claims.

    I also recommended that I choose a new vehicle and depreciate it by the same mileage, years, and all same options... and even though they agreed that would be the same, becuase of inflation, something knowone wants to recognize in this process, the value of purchasing the vehicle today is much higher. They didn't want to base claim on that value.

    I think the point I am trying to make is that there is more financial loss in this situation than just the fair market value of th vehicle, but because we are so used to how the system has been designed to work, in the insurance companies favor, we generally accept it.

    If it was an option, and I did ask, I would have rather had my car built back to perfect condition, part by part and given back to me.. with a rental while I was waiting. However, that wasn't an option because it would have cost them too much and it was questionable about the safety of the frame condition.

    I think the variable here is that a 3rd party, who is in the business of taking care of vehicles, is at fault. Unfortunately, no consideration, outside of litigation, is given when a loss happens due to someone elses negligence. That should change, especially in the case of a valet or dealership, repair service, etc. They need to be held more accountable. If they want to reap the business profits of taking care/selling/working on vehicles then they need to also take full financial responsiblity if they damage/total them, including all monetary losses (time off work, loss of use, equity in the vehicle, etc.. )..
  • wlbrown9wlbrown9 Posts: 839
    "a policy that pays you the full original purchase price on your future vehicles regardless of age or mileage.

    "The insurance industry does not offer such a policy as it would create a moral hazard."

    Not completely true. Allstate offers a new car replacement option (covers the first 3 years). I have this on my 2008 Saturn Outlook. GAP would not do me any good since I took proceeds of sale of some property and paid off the purchase. This option was only $5-8 a month extra IIRC.

    http://www.allstate.com/auto-insurance/auto-insurance-features.aspx

    "New Car Replacement If your new car gets totaled within the first three model years, you can get a new car not just the depreciated value."

    Also, Erie insurance offers a similar policy: Replacement cost – Erie Insurance will pay to replace your car if it is two years old or less and is a total loss. The Policyholder will receive a new car of the same make and model. If the model is no longer available, the insured will be offered a similar vehicle. (The replacement coverage is not available on leased vehicles.)
  • sanjaysdcasanjaysdca Posts: 269
    edited April 2010
    "but because we are so used to how the system has been designed to work, in the insurance companies favor, we generally accept it. "

    Its an old golden rule
    He who has the gold makes the rule.
    If you dont like it you have the option of going for self insurance. In that case you have the gold and you make the rule...very simple.

    On the flip side if you have the gold to fight (sue) then also you make the rule and depending on the lawyer ($$) you might be able to get your interest back.. I'll be very happy for you.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Where'd she go? :confuse:
  • I'm still here.. been out car shopping.. something I also dread just as much as dealing with insurance adjusters..

    Anyway... did accept offer from insurance, as stated, and I want to note that I went through 6 adjusters up the ladder and ended up with an additional $6K+ on my "fair market value" that they originally said on offer 1, final offer... so paid off the lien and ended up with just enough left to pay for TTL on the new vehicle.

    Now.. still in "mediation" with the general counsel, and VP of Operations of the Valet Company and the hotel chain management on what additional monies they should pay based on the loss. So far they made 2 offers, the last one was the full downpayment back.. So, they have now "implied" that they should pay additional monetary losses on this sitaution, otherwise, they would have just relied on the insurance carrier's settlement and sent me back to them. So, now the issue is not whether they think I should be paid something outside of the insurance claim, but how much? This will be discussed in tomorrow's next conf call. That call will result in either a settlement agreement or an impasse which will prompt the filing of the formal complaint.

    Will keep you posted..
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Congratulations on getting an additional $6,000. That shows you did your homework "proving" the vehicle's value to be more than the adjuster estimated. :)

    By settling with the Hotel & Valet Co's insurance carrier, it is understood they are cleared from any further claims regarding this crash.

    The Hotel/Valet may choose to pay you more and chalk it up to "Positive Public Relations". Or, they are feeling guilty about their Valet jocky taking your car out for a "Joy Ride" in the first place.

    Please advise the year, make, & model of the vehicle.
  • Thank you, I did WAY too much HOMEWORK... no consumer should be allowed to be taken advantage of in that manner from an industry who is in the business to cover liabilities. They are taking advantage of people who have been placed into a claim position and "earning additional profits, above the premiums" and forcing the consumer to spend hours and hours on proving their valuations. That is their job... and yet their is no accountability to how much they "cheat" the consumer on claim after claim and consumers ALLOW this to happen everyday.

    Regarding my settlement with Travelers. Before I settled with Travelers, during negotiations, and upon acceptance of settlement with Travelers, it was stated, in writing that the valet company understood that Travelers was only contractually obligated for the loss of use (rental) and the fair market value of the vehicle and that any additional monetary loss settlement would come directly from the valet company and hotel chain. Under tort law, filing for compensatory damages, there is nothing that prohibits the consumer from filing for the additional monetary loss. I can show that I tried the "mediation" route and provided documentation for damages requested, nothing more, nothing less, so there was nothing requested as unreasonable.

    Yes, at this time the valet company is stating that they are paying out of empathy, however, what they are offering is almost rude and an insult. What gives them the right to decide what value is due based on empathy. The truth is that they are paying to avoid litigation and trying to figure out what will impact their bottom line the least. This was made evident when they tried to deduct part of the rental charges out of the "Empathy Settlement" they were offering. If it really was empathy or good PR and not "bottom line loss", they wouldn't have deducted that amount from what they were offering.

    Bottom line is that businesses need to restore an individual back to the place they were financially before their business created the loss. This should be the standard.

    I am not providing vehicle information because there are other parties involved in that accident and I don't want "third parties" looking for public information based on that information. Not sure why you are asking.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    My reason for asking about the car was to determine if it was a one of a kind, unusual, or of limited production. Factors that would confuse a Freshman adjuster just out of University.

    Empathy Value is very subjective. You don't start at a high figure and go down.

    "restore an individual back to the place they were financially "

    Because the "at fault" driver is not to be held responsible for more than the cost of the property damaged, his Liability carrier will not offer excessive indemnification to a Claimant beyond the value of the damage. Outstanding loan balances are not part of the damage. They are non related to the value of the vehicle.

    Your pursuing is admirable, but seeking more than what you've been offered needs proof that it augments the value of that which was damaged.
  • dtownfbdtownfb Posts: 2,915
    Congrats! Glad it is working out for you.
  • gss2004gss2004 Posts: 1
    Are you still writing on this blog? I am in a similar situation with the insurance company and I am doing a ton of homework to counter offer what they initially offered for a settlement on the car. Did you communicate with them via the phone or through letters/emails? Any advice you can offer?
  • taximombutlertaximombutler Posts: 9
    edited June 2010
    Hi... I have finally settled with the valet's insurance carrier, after moving through 6 different contacts, via phone and email. Basically, after I refused the first two offers from the first two adjusters (via phone conversations and explaining what I wanted), they passed me on to a 3rd adjuster. That adjuster I communicated with via both phone and email, and he ended up being my final adjuster, but I had to communicate with his supervisor and then a VP in claims to actually settle. They want to settle and close the claim and hope that you will just accept what they offer. They made me at least 4 FINAL OFFERS, which I didn't accept and my settlement still went up from the. I did my own market analysis on my own vehicle so I knew what the fair market value was. I also used the resources of my own personal insurance company to make sure I was understanding how they determine the fair market value. We ended up agreeing to to the listed NADA Retail Value, and that is considered one of the highest settlements you will get, for the fair market value of the vehicle. My advice: Know the fair market value (including ALL options on the vehicle) and don't settle until you get it.. just keep going up the chain. They carve off $1,000's on each settlement, they just won't make that extra on yours, which is what I told them. They also paid for me to be in a rental for 36 days.

    I am fighting the rest of my settlement request through litigation since the valet company wanted to provide very little on the additional amount requested. Since they totaled my car I wanted to recover my downpayment, time off work and the two years of interest paid into the car since I had to go purchase another one and start the financing process all over again. They agreed to a very small portion of that part of the request, but not enough for me to settle. In addition, they were skating their corporate responsibilties and were extremely arrogant - enough for me to walk away from the smaller amount they offered and take it to litigation.

    Hope this helps... I will certainly post later this year when the litigation process starts.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    downpayment, time off work and the two years of interest paid into the car

    Because the above are not direct, but resultant losses related to your financial condition, not the cause of the crash, good luck.
  • michaellnomichaellno Posts: 4,300
    It would be interesting to determine the ROI on the litigation when you factor in legal fees, time off work to go to court, etc. when compared to the increased compensation (judgment) amount - if any.

    Who knows - it might all be worth it.

    And, if successful, it might set a precedent.
  • Kirstie_HKirstie_H Posts: 10,914
    So, I'm somewhat satisfied with my insurance company's handling of my total loss. However, there are a few things that miffed me, and I'm wondering about the proper way to handle them.

    First, when I was hit, I was away from home in another city. Of course I had no idea how to get home, and the insurance company offered no options - no one-way car rental. Thanks to Southwest airlines, I was able to get a same-day one-way plane ticket home for $113. Should I ask for reimbursement?

    Second, when I got home, the insurance company told me they had a rental car reservation for me, under my rental coverage. I showed up and the place had NO CARS. I was pretty peeved about that, since no one told me I should call first. Second day, the same place had NO CARS. OK, I've had enough. I made a reservation at another company myself, picked up the car, and will pay for it myself. Should I expect them to reimburse me? Honestly, I think this is a definite yes given that I have rental car coverage. It shouldn't be contingent on their company of choice having vehicles available.

    Thanks for any tips.

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  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    The policy doesn't cover the airline ticket home because it is not a specified benefit. Procuring your own rental car should be reimbursed when you have rental car coverage, but this benefit does have limitations.
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