When someone is legally at fault for wrecking your car, who is supposed to take care of this, and what are you entitled to? This question has to do with the law regarding property damage, which is separate and distinct from a claim for injury to your body (personal injury).
What Expenses Does A Car Wreck Cause?
When your car is wrecked, you can expect these expenses:
- Towing and Storage: the car has to be towed somewhere;
- Rental Car: you will need a car to drive while yours is being evaluated or in the shop;
- Fix or Total Loss?: the car has to be fixed, or you have to be paid for the value of the car if it is “totaled;”
- Diminished Value: if this wreck caused the need for some major repairs, then you may have a situation where the value of the car is reduced, even after it has been repaired. If the car has a diminished value even after it is repaired, then someone has to pay for that.
Let’s say you are driving a car that is three-and-a-half years old. You have owned it for two years, you paid $27,000 for it, and the “fair market value” (see below) is currently $20,000.
Someone runs a red light, and crashes into it. The good news is that you suffered no injury to yourself. The bad news is that the collision caused damage to your car that will cost $11,000 to fix, the car had to be towed to a garage, and the repairs will require that the car be in the body shop for 14 days.
Further, because this was a “heavy hit” that caused the unibody to be bent (it will have to be straightened out in the body shop), the repairs do not completely restore the car to the condition it was in before the wreck, even though it looks the same.
All of this is going to cost somebody some money! The questions are: who and how much?
The first thing you need to know is: does the person who ran the red light have auto liability insurance? Not everyone does. Also, if they have some insurance, they may not have enough insurance. If you have an expensive car and have a lot of damage, the other person’s coverage may not be enough to fix it.
The backup questions are: do you have car insurance, and, what kinds, and how much? Why would this matter when you didn’t cause the wreck – see below.
What are you entitled to from someone?
The lesser of the following:
- The reasonable value of necessary repairs to any property that was damaged plus the difference between the fair market cash value of the property immediately before the occurrence and its fair market cash value after it is repaired; or
- The difference between the fair market cash value of the property immediately before the occurrence and the fair market cash value of the unrepaired property immediately after the occurrence.
As a practical matter, this usually means that you are entitled to have the body shop repair bill paid, unless the car is totaled (see below).
In addition, you are entitled to reasonable compensation for the “loss of use” of the car during the time reasonably required for its repair (or for the time it takes to determine the car is “totaled” and to get payment to you if that is the case), and incidental costs such as towing.
However, no one has to provide you with a rental car; they only owe you for the cost of the loss of the use of your car (which, fortunately, is usually equal to the cost of a rental car) for a reasonable time your car is being fixed, or, if it is a total loss, the time to appraise the car and get the check to you.
It is a little different if your car is destroyed. A car is “totaled” when the cost to fix it is more than the car is worth (see below). Taking our example, above, if the car could be fixed, but it would cost $23,000 to fix it, then you are only entitled to recover the value of the car, and only entitled to the cost of a rental car.
No one has to replace your car, even if it is almost new, or even if it is a special collector’s car or one with sentimental value to you. They owe you for the value of the car, but you can’t make them go get you a similar car.
What you are entitled to from the person who is at fault for the wreck?
All of the above:
- Full compensation for the towing and storage costs, as long as they are reasonable and as long as you move forward to get your car repaired in a timely manner, the cost of repairs or the fair market value if the car is “totaled;”
- The value of the “loss of use” of the vehicle. This usually means the cost of a rental car that is the reasonable equivalent of the car that is damaged;
- The lesser of the cost of repairs or the “fair market value” which is defined as “the amount of money which a well informed buyer, willing but not obliged to buy the property, would pay, and which a well informed seller, willing but not obligated to sell it, would accept, taking into consideration all uses to which the property is adapted and might in reason be applied;”
- The price of the “diminished value” of the car, if any. The law says a vehicle suffers “diminished value” when it sustains physical damage in a collision, but due to the nature of the damage, it cannot be fully restored to its pre-loss condition. Weakened metal that cannot be repaired is one such example.” However, in contrast, “stigma” damages occur when the vehicle has been fully restored to its pre-loss condition, but it carries an intangible taint due to its having been involved in an accident. An owner does not have to be paid for “stigma” damages.
What you are entitled to from your insurance company?
That depends entirely on what kinds of insurance coverage you have, and what your coverage limits are. Your insurance is based on an insurance policy – a contract – and you may or may not have collision coverage or towing coverage or rental car insurance. If you have the “State minimum” coverage, you may not have any coverage that helps you with the expenses of fixing your car.
One thing that you have to consider when deciding whether to use your insurance, or going through the insurance company of the person who is at fault is your deductible. If you make the claim through your company, they won’t pay the first level of the loss. For example, if you have collision coverage, and the cost of the repairs is $11,000, and your deductible is $500, they will only pay the body shop $10,500, and you will have to make up the difference. The insurance company for the other driver may pay you back your deductible at some point, but it may not be for a while.
You may not have coverage for everything that you are owed. If you don’t have coverage, for example, for towing and storage, your insurance company doesn’t have to pay for towing and storage, even though you are entitled to recover that from the insurance company for the person that caused the wreck.
Which insurance company should I deal with?
If the other person’s insurer will take care of things on a fair and timely basis, you are better off working through them. There is no deductible, and they owe you for things you might not have your own insurance for.
On the other hand, if the other company is delaying paying you for reasons such as they don’t think their driver is at fault, or taking too long to decide if the car is a total loss or not, you will get faster service through your company. In addition, if you are injured, it is often better to go through your own insurance company because the other driver’s insurance company may try to use your property damage claim as an opportunity to get information from you that may harm your bodily injury claim.
A few additional tips:
- Tell the insurance company about any recent repairs or upgrades. If the insurance company says your car is a total loss and they want to pay you for your car, take a look and see if there is anything about the condition of your car that is unusual or unique and bring that to the attention of the insurance company. Examples are very low miles and recent repairs or upgrades (oil changes, new tires, etc). You will need to get invoices for those items so that you can prove the cost and the date they were completed, but these may help you get a larger settlement for your car.
- Diminished Value only applies if you own the car. In other words, if you are leasing the vehicle that was damaged, you will not be entitled to receive damages for the diminished value of your car.
- You may have to take out a car loan. Many people complain that the car that was totaled in a collision had no debt and was reliable transportation, but that they had to take out a loan to buy a new car and/or had to make repairs to the new car. Unfortunately, this does not matter and you are not entitled to compensation for that. If your car is totaled, you are only entitled to the fair market value of that car. You are not entitled to payment of the “intrinsic value,” sentimental value, or reliability of the car – and you are not entitled to be debt free after your property damage settlement is completed.
- You can keep your car after agreeing to a total damage settlement. If the insurance company determines that your car is a total loss and it wants to pay you for your vehicle, you have the choice of letting the insurance company keep the vehicle or taking the vehicle back. If you choose to take it back, your settlement will be reduced for the “salvage value” of the car, which is usually a relatively small amount. In either case, the insurance company should pay you for the remaining value of your car tabs and some taxes.
Here is a hard truth – property damage claims are fundamentally unfair. Why? Because the consumer has so little leverage. Let’s say your car is a total loss. You think it is worth $20,000, but the insurance company only offers you $17,500. What can you do? You can file a lawsuit, but those can take a year or more. Even if you win, you still only get $20,000, AND, if you had to hire a lawyer, you DO NOT get back your legal fees. Moreover, the insurance company doesn’t have to pay for your rental car for the year before you go to court – so you haven’t had the money, or a car. The insurance company can hold out forever, but you can’t. This gives them a lot of power. Sometimes, it is best to cut your losses and move forward to resolve the property damage claim even though the results are often so unfair. However, we hope these tips and this information has been helpful to you in negotiating as fair a result as possible for your property damage claim.
