Find out what your car damage settlement might include, how the amounts you're entitled to are calculated, and why disputes over settlement values sometimes arise.
When your car or other property is damaged or destroyed in an auto accident that's the other driver's fault, you're entitled to be made whole for your losses. The fact that the insurance company holds the purse strings doesn't mean it has the only say in how much compensation ("damages," in the language of the law) you're entitled to receive.
Depending on the circumstances, including the law in your state, your property damage claim will include some of these items:
- the cost of a rental car
- the cost to repair your car
- the value of your car if it was totaled
- the cost to repair or replace any other personal property that was damaged
- the costs of towing and storage, and
- the amount that your car's value was diminished because of the accident.
We'll walk you through each item and explain what you're entitled to receive. At the same time, we'll discuss why valuation disputes might arise, and how you can respond when the insurance company tries to cut corners or save some money at your expense.
Getting a Rental Car
First things first. If you're like most people, you'll need a rental car to drive while your car is being repaired, or while you haggle with the insurance company over the value of your totaled car. There are two sources you can look to for payment.
The at-fault driver's insurance company. If the other driver's insurance company is paying to repair or replace your car under their policyholder's liability insurance, the insurer must also provide you with a rental car. The company likely will tell you its policy is to pay some arbitrary amount per day or per week for a rental (for example, $29 dollars per day or $200 per week) and present it to you as a take-it-or-leave-it proposition.
Don't be shy about negotiating. The insurance adjuster knows that you're probably in dire need of transportation, and they're sure you'll simply take the offer and rent the smallest, cheapest tin can on the rental company's lot. You're entitled to a rental car that's at least reasonably comparable in size and features to your vehicle. Maybe you need a larger car because of work requirements or because you have kids in car seats, or for some other good reason. Fight for what you need.
If the insurance adjuster won't compromise, tell them you'll simply pay the difference between their offer and the cost of a reasonable rental, and you'll add the difference to the damages you're claiming from their insured. The company might decide its cheaper to pay you a bit more than to take a chance on whatever you decide to rent. But if that's your strategy, don't sign a release of your property damage claim until all of your claims are fully resolved. If you do, you waive your right to claim the additional rental amount.
Your own insurance company. Be sure to notify your own auto insurer after an accident, even one that wasn't your fault. Your insurance policy requires it, and if you don't, the company might use your failure to report as a reason to deny later claims.
If you have rental reimbursement coverage as part of your auto insurance (you should—it's cheap and if you need it, it can be a lifesaver), you can make a claim under your policy for a rental car. There's no need to haggle over the amount when you're dealing with your own insurer. When you buy rental reimbursement insurance, you buy a specific amount of daily coverage, and it's limited to a certain number of days.
For example, you might be entitled to $45 per day up to a maximum of 30 days. Some insurance companies simply sell you a fixed amount of coverage—for example, $1,500—and leave it up to you to decide how to spend it.
What happens if you were to blame for the accident and you don't have rental reimbursement insurance? You pay for the rental car, or do without.
Repairing Your Car Damage
Once you're squared away with a rental car, you can turn your attention to getting your car repaired. You've got a couple of options here, insurance-wise. First, if the wreck was the fault of another insured driver, you can make a claim under that driver's auto policy. If you were at fault, the other driver was uninsured, or you simply can't wait for the time it will take to negotiate with the other driver's insurer, you can bring a claim under your own collision insurance—if you have it.
The process begins with one or more repair estimates. A lot can go wrong here, so make sure you know what you're doing. Most importantly, don't sign off on any estimate until you're certain your car will be fully repaired to your satisfaction. Be on the lookout for:
- unrealistic estimates
- incomplete estimates, and
- estimates for improper repairs.
Unrealistic Estimates
The insurance company might ask you to agree to its own estimate, rather than one prepared by a qualified repair shop. There's no way you can know if that estimate is realistic. Does it reflect the actual cost to get the work done competently? You want estimates from qualified, bona fide repair shops.
Demand that the adjuster guarantee that a qualified local repair shop will completely and expertly repair your car for the amount of the insurer's estimate. Use the word "guarantee" and insist that it be put in writing. See what reaction you get. If the adjuster protests that you're being unreasonable, you'll know that their estimate is just a whistle in the wind.
Incomplete Estimates
Make sure that the estimate is thorough and detailed, itemized with all parts, labor, and taxes. Don't accept an estimate made by someone who gave your car a quick once over and came up with ballpark numbers. Unless the repair estimate has been carefully itemized and can be compared apples-to-apples with an estimate you get, it's too vague or incomplete to be taken seriously.
Estimates for Improper Repairs
If your car is fairly new, insist that all repairs be done by a factory-authorized dealer. The dealer's repair technicians have the best understanding of the replacement parts you need, know how to source those parts, and are familiar with the labor needed to make complete and proper repairs. If your car is older, you still, of course, want all the work done by qualified repair technicians.
Pay attention to the kind of parts that are used to make your repairs. Your strong preference should be for factory-authorized replacement parts, if they're available. If the repairs are being paid for by the other driver's insurance, you should insist that any estimate quotes only those authentic parts.
If you're having the repairs done under your own collision coverage, check your policy. It likely authorizes the insurance company to choose, in its sole discretion, between factory-authorized replacement parts and aftermarket (refurbished or reconditioned) parts. Since aftermarket parts are almost certain to be cheaper, you can guess which parts the insurance company will choose. In that event, the best you can hope for is that the parts are covered by some kind of replacement guarantee for at least a limited period of time.
Your Car is a Total Loss
When the estimated cost to repair your car is at least 75% to 85% of your car's value, most insurance companies will declare it a total loss. Should that happen, the insurance company typically pays you the actual cash value (ACV) of your car before it was destroyed.
Determining your car's ACV. The ACV of your auto should be what comparable cars are selling for on the open market. In theory, you should be able to take your ACV settlement and use the money to buy a vehicle that's substantially similar to the one you had. But it doesn't always work out that way.
When it makes you a settlement offer, the insurance company might rely on price information it gets from a company it hires to provide ACV data. It's a competitive business, and lots of firms vie for insurance company work. Do you think insurance companies tend to hire companies that come up with higher prices for totaled cars, or lower prices? The question pretty much answers itself.
Do your homework and research the value of your totaled car. Check for values of comparable autos at reputable online services such as Kelley Blue Book or Edmunds. Look in the paper and online for similar cars for sale in your area. Admittedly, this only tells you about asking prices, not selling prices. But this information can be helpful in determining ACV.
Armed with that information, you're in a better position to negotiate with the insurance company.
Options if you can't agree on ACV. If you're not able to agree on your vehicle's ACV, you do have options. Those options depend on whether you're negotiating with your insurance company or the at-fault driver's insurer.
Dealing with your insurance company. Your insurance policy's collision insurance probably includes an "appraisal clause." You and your auto insurer submit the appraisal to one or more independent appraisers who determine the ACV of your car. Check your policy for details.
Dealing with the at-fault driver's insurance company. When you reach an impasse with the other driver's insurance company, you have the option to file a lawsuit. The problem, of course, is that lawsuits take time and they're expensive. If you can't afford to get another car without the money from your totaled vehicle settlement, then as a practical matter, you may not be in a good position to hold out while a court case decides whose appraisal is right. Even if you sue in small claims court, the time you'll wait to get a court decision will still be measured in months, not days or weeks.
Damage to Other Personal Property
What if other personal property was damaged or destroyed in the collision? For example, your golf clubs might have been mangled when you were rear-ended. Or your cell phone or laptop might have been tossed around the inside of your car and damaged.
Dealing with your insurance company. Check your policy. It probably limits the insurer's responsibility for other personal property to a fixed amount (for example, $1,500). Certain kinds of property might be excluded from coverage.
Dealing with the at-fault driver's insurance company. The other driver's auto insurer must pay to repair the property or, if it can't be repaired, must pay you its fair market value when it was destroyed. Note that market value is probably less than replacement cost.
Towing and Storage
If your vehicle wasn't drivable after the wreck, or if you had to have it stored while awaiting repairs or an ACV settlement, you've probably incurred towing and storage charges. These charges can add up quickly.
Dealing with your insurance company. If you have towing and storage coverage, your company likely will pay a fixed amount per day for storage, up to a maximum amount. There's probably a cap on the towing charge as well.
Dealing with the at-fault driver's insurance company. Towing and storage charges are treated as out-of-pocket expenses that will be included with the rest of your damages. The responsible driver's auto insurer must compensate you for these losses.
Making a Diminished Value Claim
A diminished value or reduction in value claim happens when, even after your vehicle is repaired, it's worth less than what it was worth before being damaged. Diminished value claims are most common when your car is fairly new. The idea is simple: A reasonable buyer won't pay as much for a vehicle that's been extensively damaged as for the same vehicle without prior damage.
In most states, you're only allowed to make a diminished value claim against the other driver's insurance company, not against your own auto insurer. The value of this claim equals the difference between what your car's undamaged fair market value would have been and its actual post-repair fair market value.
Get Help With Your Property Damage Claim
The rules for property damage claims can be complicated and difficult to apply in specific cases. If there's no dispute over liability and the amount of your property damage is fairly small, you might be able to get a fair settlement on your own. But if you're fighting with the other driver's insurance company (or your own) about significant property damage, you need experienced counsel on your side. The insurance company will be represented by a lawyer. To make it a fair fight, you should be, too.
Here's how to find an experienced car accident lawyer to help you with your property damage claim.
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