Each week we report on the most interesting and informative articles concerning total loss disputes. Regarding our valuation appraisal of a Nissan 240SX with 201,776 miles that was involved in a front end collision on 9/28/22 that caused it to be a total loss.
Total Loss
Auto appraiser for total loss disputes
How to Convince an Insurance Company to Total your Car
It’s a matter of simple economics. The insurance company wants to pay out as little as possible when it comes to claim expenditures. This is part and parcel of their business model which isn’t difficult to understand. As with all corporations, turning a profit is typically the most important goal.
In automobile claims, when a vehicle is damaged, it will be deemed repairable or, if repair costs approach or exceed the vehicle’s value, it will be declared a total loss. Does the vehicle owner have a say in whether their car gets repaired or totaled? In first-party claims, where the accident was your fault, the answer is no. However, in third-party claims, where the at-fault party’s insurance company is picking up the tab, in certain situations, the answer is yes. All it takes is a little convincing.
Most folks have never heard of a third-party Auto Diminished Value claim. These are filed by car owners to recoup the value lost because their cars now have repair histories. Depending on the extent of the damages, the value lost can exceed 50% of the car’s pre-accident value. Even most of those who are familiar with Auto Diminished Value don’t realize that it isn’t necessary to have your car repaired to file such a claim. And many of our clients are doing just that. Prior to authorizing repairs, car owners can demonstrate how totaling their cars makes financial sense for both parties.
For this example, let’s consider a car with a Retail Value of $35K and a Fair Market Value (Trade-in Value) of $30K. Insurance companies typically consider totaling cars if the repair cost approaches 75% of the retail value. In this case, that figure is around $25K. But what if the car’s damage estimate comes to only $15K? Most of us don’t want to drive a car that had extensive damage, especially if structural damage or air bag deployment occurred. No matter – at these figures, the insurer will almost always elect to pay to have the car repaired.
So, how does the owner of this car convince the insurance company to total the car? Along with various other potential expenditures for the insurance company, Third-Party Auto Diminished Value claims represent another major disbursement. When repair costs are this high, the likelihood of structural damage and/or air bag deployment is almost certain.
Scenario #1 assumes a 30-day repair time and that the supplement won’t exceed the amount shown. Every insurance company has endured the nightmare repair where a car must go in for multiple supplements. Also, if the car is a luxury car, high-end SUV or pickup truck, renting a comparable vehicle will cost $125/Day and up. Add another few thousand dollars for a Loss of Use claim.
There are many other logical reasons for preferring that your car be totaled besides loss in value after repairs. Safety and quality of work issues aside, if another negligent driver slams into your car, good luck trying to collect for Auto Diminished Value without resorting to legal action. Insurance companies flat-out refuse to pay for DV on cars with previous repair histories.
From the insurance company’s point of view, negotiating repair costs with body shops and haggling over car rental and diminished value issues are time-consuming and costly – not to mention the potential for further litigation. The total loss and salvage recovery process is a snap, by comparison. If the insurers don’t recognize these mutually beneficial arrangements, it’s up to car owners to educate them.
Hire an Expert Automobile Diminished Value Appraiser
John M (Arizona)- Thank you very much for the diminished value appraisal. I was able to use it along with the insurance company field appraiser’s salvage estimate and repair estimate to agree with them that the right thing to do was to declare the vehicle a total loss. I managed to pick up one of the few remaining new models in the nation last week and am bringing this to closure without having to file a diminished value case in court. Thanks again!
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TOTAL LOSSES AND THE APPRAISAL CLAUSE
Disputes over the values of automobiles and trucks involved in total loss claims are common. There are three points of view to consider – the car owner’s opinion, the insurance company’s opinion and the findings of an umpire who is hired when an impasse occurs. Resolution of total loss disputes by invoking what is known as The Appraisal Clause is becoming more common as insurers tighten purse strings. What is the appraisal clause? It is simply an insurance provision allowing either the insurer or the vehicle owner to demand a binding appraisal of damaged property in the event of a dispute as to its value. An independent appraiser is hired by both sides. If they can’t agree, The Appraisal Clause can be invoked by either party. One would hope that this process produces equitable settlement amounts but it doesn’t always work that way. Both retail and fair market value can be subjective. Insurance companies place certain roadblocks such as only recognizing comparable vehicles from tight geographic areas. Insurers disallow recognized sources of book values such as NADA, preferring to use the CCC valuation method which was developed for the insurance industry. Often misrepresentations of prior damage and conditioning or inadequate allowances for mileage differences occur. Even more complicated and arbitrary are Appraisal Clause proceedings involving diminished value.
If the car owner and the insurance company disagree on the value of the vehicle, either may make a written demand to invoke The Appraisal Clause. Each party will select a competent and impartial appraiser. It is preferable that both are licensed appraisers in at least one state. The two appraisers, if in disagreement over the value, will select an umpire. If the appraisers do not agree on an umpire, the matter goes to a judge of the court having jurisdiction.
In the event that The Appraisal Clause is invoked and an umpire is necessary, each party will pay its chosen appraiser and bear the expenses of the umpire equally. This means of alternative dispute resolution is designed to effectively and cost efficiently resolve disputes by avoiding the typical legal process. Arbitration, also known as mediation, acknowledges the existence of a dispute. Each party has the right to specify the credentials of the umpire. The naming of a third-party to serve as an umpire is not a selection until the other has agreed to accept him. He must be both competent and disinterested. Independent appraisers being considered as umpires that receive most of their work from insurance companies have often been considered “advocates” rather than disinterested parties and subsequently disqualified. The same would apply to independent appraisers who derive most of their work from, for example, a large automobile leasing company or network of dealerships.
In order to trigger The Appraisal Clause, both parties must be unable to agree on the value of the property or amount of the loss.The umpire should be free of undue influences and not have prior relationships with any party involved. This strengthens the expectation of good faith in the selection process. The umpire’s authority is usually limited to determining the value of the property. Issues such as coverage, liability, causation and exclusions should be determined before The Appraisal Clause in invoked. Appraisal awards are most often made by umpires who are not experts in law or the judicial process but their rulings are typically enforceable. Umpires are not free to disregard pertinent evidence lest their awards be set aside by magistrates. Both the claimant and the insurance company are bound by the obligation to exercise good faith and fair dealing in the context of The Appraisal Clause. It is not permissible for either the claimant or insurance company to engage in any tactics designed to defeat the appraisal process from its objectives. Neither party may engage in conduct designed to unreasonably postpone, delay or prevent The Appraisal Clause and the subsequent settlement.
The Appraisal Clause in total loss disputes has become the methodology of choice for resolving disputes over the values of automobiles and trucks. The St. Lucie Appraisal Company is an expert in the field of valuation appraisals for all types of motor vehicles in all 50 states. Our clients are assured of competent reporting and, of course, credible participation in the arbitration and mediation process.
Additional fees you may incur are $125.00 for our representation in Appraisal Clause negotiations, and half of an umpire’s fee (Umpires typically charge from $300 – $700) if either are necessary. On average, approximately 10% of Appraisal Clause cases go to an umpire.
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Please eMail the insurance company CCC or other valuation report to Email: contact@stlucieappraisal.net
Service throughout Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi , Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming
Founded by Franklin Colletta, The St. Lucie Appraisal Company is a family-owned appraisal company that offers nationwide service. We provide Diminished Value Appraisals, Total Loss Valuations, and Loss of Use Reports.
This is an Open Education resource focused on auto diminished value, collective knowledge and the sharing of scholarly content.AUTODIMINISHEDVALUE.COM and TOTALLOSSDISPUTE.COM are services of The St. Lucie Appraisal Company
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