My Car’s Been Totaled: What Now? Frequently Asked Questions After a Crash Destroys a Vehicle
A car crash can be one of the more frightening experiences of a person’s life. Even in the fortunate situation when no one is injured, the crash disrupts life. I get some phone calls from people who have been in a crash with no injuries, but they have questions about their car. While I typically don’t get involved in property damage only claims, I try to provide helpful advice to make sure that people are aware of their rights in the situation. Here are some of the common questions and answers:
Question: I owe $20,000 on the loan for my car. The insurance company is offering $16,000 for the car. Won’t the insurance company agree to pay off my loan?
Answer: Unfortunately, no. The insurance company doesn’t care about the amount of the loan. The Ohio Administrative Code permits the insurance company to provide either the market value of the vehicle (derived the moment before the crash), or a replacement vehicle of like kind and quality. Sometimes the loan owed on the car is higher than the market value of the car—the car is upside down financially. While Ohio law says the person not at fault for the crash should be put back in the same position he or she was in before the crash, I’ve never encountered an insurance company willing to factor in the loan issue in evaluating the property damage. Gap insurance is something to consider when you’re purchasing a car—if it looks like the amount of the loan will be more than the actual market value of the car.
Question: How does the insurance company determine the market value of the car?
Answer: The Ohio Administrative Code permits the insurance company a few options in offering a cash value settlement for a car determined to be a total loss:
· The average cost of two or more comparable cars in the general area if those cars are currently available, or were available within 90 days before the crash; or
· The average of two or more quotations obtained by the insurance company from two or more licensed dealers in the area; or
· The cost as determined from a generally recognized electronic database.
In my experience, most insurance companies use the last option (a generally recognized electronic database). But they don’t use Blue Book or NADA—they use CCC. Why? Because CCC comes up with fairly low values for your car. But the Ohio Administrative Code allows the insurance company to use CCC to determine the value as long as they use it consistently (why wouldn’t they?).
Question: Do I have to accept the value the CCC report places on my car?
Answer: No. You should request the valuation documents the insurance company used to come up with the settlement offer. Make sure that the CCC report used truly comparable vehicles, and that the information in the report is accurate. Sometimes your car’s worth can be increased if it had special features that were not factored into the initial report.
You can also reject the offer and file a lawsuit against the at fault driver, or your own insurance company in certain situations. At a trial, the question will be the fair market value of the car the moment before the crash. The CCC report is not the best evidence of the market value of the car that was totaled. While there are costs and expenses associated with litigation, litigation and trial may be the best option in some situations. And you can do this with or without a lawyer.
Question: Should I go through my insurance company or the at fault party’s insurance company for the property damage claim?
Answer: While this answer is somewhat fact dependent, I generally recommend pursuing the claim with your own insurance company first. My reasoning is that you typically have more rights with your own insurance company because of the contract you have with them, the premiums you’ve paid, and the insurance company’s desire to keep you as a customer. Your insurance company is your insurer, and you are their insured. They have duties to you that are covered by your contract. These duties include providing rental transportation while you don’t have a car and acting in good faith in handling your claim. You should review your insurance policy to understand your contractual rights, and remember that Ohio law imposes a duty of good faith and fair dealing with all contracts—insurance policies included.
If negotiations with your own insurance company stall or fail, you have the option of submitting the property damage claim with the at fault party’s insurance company. If you’re able to resolve the property damage claim with your own insurance company, the insurance company will pursue reimbursement from the at fault party’s insurance company and should recover any deductible you owe or owed under your policy.
Question: Any other rights I should know about?
Answer: Yes; if you purchase a replacement car within 30 days after receiving a cash value settlement for the total loss of your car, the insurance company must reimburse you for the sale tax on the purchase (up to the amount that would have been payable for sales tax on the totaled car).
You can also review Ohio Administrative Code 3901-1-54 (Unfair property / casualty claims settlement practices) for more information about the way the insurance company is required to handle total loss claims.
Getting in a car crash is no fun, even when everyone walks away with no injuries. If your car has been totaled in a crash, I hope these questions and answers help you navigate some of the complexities of the total loss settlement.