Auto Property Damage

                                HAS YOUR CAR BEEN DAMAGED IN AN AUTO ACCIDENT?

If so, you may have either a property damage claim against your own insurance company, under your collision coverage, or a property damage claim against the owner/driver of the car that caused the accident.

Your claim against your own insurance company, under your collision coverage, would be a "no-fault" claim in the sense that your company would be responsible for paying for the repair of your car - subject to your deductible - without regard to who was legally at fault in the accident.

Your claim against the person who caused the accident, and their insurance company, would involve no deductible but, would be based upon that person having negligently caused the accident.


Assuming that (1) your auto insurance policy contains collision coverage, and that (2) the owner/driver of the car that hit you was at fault, you have a choice of whether to make a claim against your own insurance company, under your collision coverage, or a property damage claim against the insurance company that insures the person who caused the accident.


Whether you choose to make a claim against your own insurance company, under your collision coverage, or a property damage claim against the negligent party’s insurance company, the basic responsibility of the insurance company is the same and the claim will be handled in generally the same manner. The only difference is that if you opt to have your damage paid for by your own insurance company, under your collision coverage, that payment will generally be subject to a deductible - the amount of which is specified in your policy.

In either event, the basic responsibility of the insurance company is to pay you either the reasonable cost of repairing your car, to put it back in the same condition it was in immediately prior to the accident, or pay you whatever the reasonable value of your car was at the time of accident - whichever is less.

                                    HOW IS THE COST OF REPAIR DETERMINED?

Traditionally, insurance companies - not the law - required you to obtain three written estimates itemizing what it would cost to repair your vehicle - and would pay you based upon the lowest of those estimates.

That approach has largely been abandoned. Most insurance companies today hire, or have on staff, professional damage appraisers who physically inspect your vehicle, prepare a written estimate and secure the agreement of a particular auto body shop to repair your vehicle for that amount of money. In some instances, the insurance company may simply have an agreement with a particular body shop to pay whatever that shop charges.

A word of caution: Where a professional appraiser is used that appraiser is being paid - either as an employee or an independent contractor - by the insurance company and has a vested interest in keeping that company happy by minimizing the cost of repair. Appraisers who give the benefit of the doubt to you are not likely to be around long or to receive future assignments. In other words, their future livelihood depends on their satisfying the company who pays them - not you!

You should also be wary of repair shops that have special "sweetheart deals" with insurance companies. In essence, the insurance company places on a "special approved list" those body shops with whom it has some special arrangement or side agreement. Often the spoken, or unspoken, agreement is that the company will refer its repair business to the shop in exchange for the shop’s agreement to keep the costs of repair low, within certain a certain range, or "satisfactory" to the company. Among the means often utilized by body shops to do that are using non-union labor, or billing out labor charges at below market rates, omitting some items of damage from their estimate, or using used or rebuilt parts to make those repairs that are included in the estimate. Obviously, however beneficial such arrangements may be to the insurance companies and the body shops, they seldom work to your advantage.

                                                HOW CAN YOU PROTECT YOURSELF?

The first, and simplest, thing you can do is to make sure that you are physically present at the time any appraisal, or repair estimate, is made so that you can point out to the appraiser specific items of damages and insist that the appraiser, not just simply list those obvious items of visible damage but, look for, and include, items of hidden damage underneath your vehicle, such as a bent frame, mechanical damage under the hood, body damage inside the trunk, etc.

Secondly, simply as a "check", obtain a couple of written, itemized estimates, on your own from body shops of your choosing so that you have some basis for comparing what the insurance company appraiser is including, or not including, on his/her estimate with those items appearing on the estimates that you have obtained.

Although, in most situations it may not be practical to do so, in some serious cases, involving substantial differences, you may want to hire your own property damage appraiser, or a licensed "private adjuster", or an attorney.

                                                        WHOSE CAR IS IT ANYWAY?

Because you are busy, didn’t ask to be involved in the accident to start with, and may feel that’s what insurance companies are for, you may tend to "just leave it all to the insurance company to take care of", and adopt a very passive role in the claim process. That is seldom helpful and often leads to a great deal of misunderstanding which can end-up costing you dearly later.

Left to itself, the insurance company will "take care of everything" - typically - to its advantage and your distinct disadvantage: obtaining an appraisal of your damage, having your car towed to a "sweetheart shop", and repaired - with little, or no, say from you - and all at your expense!

Keep in mind, your car belongs to you, not the insurance company. You are entitled to have it repaired wherever you want, by whomever you want, to your satisfaction, and to be reimbursed for the reasonable cost of that repair. Only you can authorize repair of your car! Further, since you are the person who is legally responsible for paying for those repairs, you, not the insurance company, should be the party who decides when, and how much, the body shop is to be paid.

Realize that once you pay the body shop, or endorse any settlement check over to it, or authorize the insurance company to pay the shop directly, you no longer have any leverage over the body shop and no longer any effective means of requiring it to fully repair your vehicle to your complete satisfaction! Keep in mind that "He who controls the checkbook, controls the repair of your vehicle".

                                                    SOME  PAINFUL  FACTS  OF  LIFE

Having said that, prepare to accept some basic facts of life. You may not like them, but, realistically, you must accept them because it is simply the way things are.

You are the one whose car is damaged. You are the one with no transportation. You simply cannot afford to get squared-off with the insurance company who really could care less whether your property damage claim ever gets settled or your car ever gets repaired!

The playing field is not even. The insurance company inherently holds the upper-hand when it comes to property damage claims. It has all the time in the world - and most of the money to go with it. Since its legal liability is generally limited to paying you the reasonable cost of repairing your vehicle, or its reasonable pre-accident value, it has no fear of being sued by you. The longer any lawsuit goes on, the longer it gets to keep its money in its pocket and out of your hands.

                                                    NEGOTIATING THE COST OF REPAIRS

While the cost of repairs, as agreed to between the insurance company and the body shop, is inevitably going to be on the low side, there may be some, but probably not much, flexibility in what the insurance company is willing to pay in settlement of your property damage claim. Typically, no more than a few hundred dollars at best.

Insurance companies, and body shops, typically, work out of books, and manuals, that purport to say what each item of repair will cost in terms of both labor and material. Painting a fender takes "x" time in labor and "x" dollars in paint. To the extent that they deviate from those "estimates", they "lose" money.

Trying to negotiate with body shop people is hopeless. They understand what side of the bread their butter is on. They have no more control over the insurance companies than you do. Further, as we have seen, their very existence depends upon the insurance companies. When the insurance company says, "Jump!", their only question is "How high?"

No body shop owner is going to jeopardize his business for your sake! His business depends, not simply on you but, upon an endless stream of income funneled to him by the insurance company. He can survive without your business but he cannot survive without the insurance company - and he knows that!

Forget all the slick ads about how the insurance company is your good neighbor and what good hands you are in with them. Insurance companies are money-making machines. They make their money, not by selling insurance but, by investing the premium dollars they collect from us all and investing them in pricey real estate or blue chip stocks. The sole purpose of their existence is to make money, money and more money. They are not about to sacrifice that noble purpose for you. Whenever you make a claim, you cost them money and that gives the money machine hiccups and cuts into company profits.

                                    WHAT DOES IT MEAN IF YOUR CAR IS A TOTAL LOSS?

As we have seen, the insurance company’s obligation is limited to paying you either for the reasonable cost of repairing your vehicle or paying you its reasonable value - whichever is less! Insurance companies are big believers in the concept that "less is better" when it comes to honoring their obligations and paying claims. A lot better!

If the cost of repairing your vehicle equals, or exceeds, its value, your vehicle is a "total loss".

                                    HOW IS THE VALUE OF YOUR VEHICLE DETERMINED?

The value of anything is a matter of opinion. As a result, it is something about which reasonable people may differ. When it comes to vehicles, value refers to the reasonable market value - sometime referred to the actual cash value (ACV) - of a vehicle immediately prior to the accident. In other words, what was the reasonable value of your vehicle in the open market the instant prior to impact?

There are essentially three ways of determining your vehicle’s value:

Traditionally, value was determined by reference to the Kelly Blue Book. You simply looked up the listed value of your make and model automobile adding to, or subtracting from, that figure for a variety of factors such as age, mileage and equipment to come up with a value range. Typically, insurance companies took the mid-point between the "high" and "low" Blue Book values to be the "reasonable market value". Although such valuations were, obviously, only rough approximations, they generally were treated as being absolute.

An alternate way of determining value is to "shop the vehicle". Historically, that has involved consulting the local newspaper ads for used vehicles in an effort to determine what comparable vehicles were selling for on the day of accident in your community and then averaging them out to come with an "average" value which was then taken to be the "reasonable market value". The inherent problem, of course, was, and is, finding two or three "comparable" vehicles for sale at that point in time so that an accurate average could be determined. Even then, of course, the average was still just a theoretical "average" that, at best, would merely be an approximation of the value of your specific vehicle.

Although used for decades, the above methods have been discarded by most insurance companies in favor of computerized evaluation services. Why? Because the prior methods lack a critical ingredient desired by insurance companies - control. If you can control the game, you can win every time! Further, if you can control the game without appearing to do so - even better!

Today most insurance companies subscribe to computerized vehicle evaluation services. The appraiser, or adjuster, simply plugs in the essential data pertaining to your vehicle, pushes the magic button and Shazam! The computer purportedly does a national, or regionalized, search to determine in seconds exactly what every vehicle comparable to yours was being sold for on the date of accident, averages them out, and spits out a "foolproof" evaluation representing the "reasonable market value" of your car! And, its very official and authoritative too. After all, how could anyone possibly doubt a computer print-out - especially if it carries the name of some supposedly independent service rather than the insurance company’s name.

The insurance company hopes you will forget the old axiom, "Garbage in, garbage out" and overlook the fact that this supposedly "independent" service may be owned and operated by the insurance company itself or, if independently owned, may - just like the "independent" appraiser or the body shop owner - be totally dependent upon the insurance company for its livelihood.

Don’t count on such computerized services giving you the benefit of the doubt. Their very existence depends on the insurance companies who subscribe to their service.

Since the insurance company is "married" to the particular service it subscribes to - paying it hundreds of thousands, if not millions, of dollars a year - don’t expect it to negotiate

its "foolproof" computerized evaluation more than a few hundred dollars - if at all. From their perspective, it simply makes no sense to pay out all of that money to such a service and then not use the figures which it provides!

                                WHAT ARE YOUR CHOICES IN A TOTAL LOSS SITUATION?

Whatever the value of your vehicle, in a total loss situation, there are two basic ways in which the settlement of your property damage claim can be handled. Some insurance companies will tell you what those choices are and allow you to make the selection. Most will simply make the choice themselves depending upon what they perceive to be in their own best interest.

The most common approach is for the insurance company simply to offer to pay you what it considers the "reasonable market value" to be, take-it-or-leave it. In exchange for that payment, you are required to sign over ownership of your vehicle to it. In turn, it will take your vehicle and sell it as "salvage" to recoup as much of its money as possible.

The alternative is for the insurance company to offer to pay you what it considers to be the "reasonable market value" of your vehicle, less what it, its appraiser, or computerized service, considers to be the "estimated salvage value" of your vehicle, take-it-or-leave-it. In that scenario, the insurance company will pay you less money for your car but you continue to own the junk and are free to repair, or dispose of, it as you see fit.

Unless you, or your brother-in-law, are into auto repair business, and have the means to repair the vehicle on the cheap, you generally are better off to accept the "reasonable market value" and sign-over the title to the insurance company.

Remember, to the insurance company it is all about money with the object always being to pay you as little as possible! That is the insurance business!


Do you need three guesses? Since you are the legal owner of your vehicle, generally you are responsible for the payment of any towing and storage charges on your vehicle. A major exception is where your own insurance company is paying for the repair of your car, under your collision coverage, and your policy specifically provides for the payment of towing and storage by your company. Note that, generally, your collision coverage does not automatically include the payment of towing and storage charges. Those are usually separate coverages that must be separately purchased at the time you buy your insurance.

Where your property damage claim is being paid by the negligent party’s insurance company, you have a clear legal right to be reimbursed for the towing and storage on your vehicle but you must assert that right. You should not simply assume that the insurance company will automatically pay for such items - even in situations where they may have taken the initiative in having your vehicle towed or stored. Insist upon towing and storage charges being included in any property damage settlement you agree to!

Problems involving towing and storage charges are most likely to arise in total loss situations and generally will stem from your assuming that the insurance company will automatically include such items in any property damage settlement with you. Again, do not make that assumption!

Reach a clear, unequivocal, agreement with the insurance company - in advance of settling your property damage claim - about who is going to be responsible for paying any towing and storage charges. Otherwise, the insurance company may settle your property damage claim, take your car as salvage, and leave you stuck with a substantial towing and storage bill - which you, as the owner at the time of towing and storage - are legally responsible for paying!

The same thing can, and frequently does, happen in a total loss situation where you have settled with the insurance company with you keeping the salvage. Some months pass and one day you discover that you, as owner of that salvage, you now owe some body shop hundreds of dollars in storage fees. Avoid the problem by dealing with it out-front and resolving it with the insurance company in an unambiguous manner - preferably in writing.

                                        WHAT ABOUT THE LOSS OF USE OF YOUR CAR?

Typically, following an accident, your car is going to end-up in a body shop for some days, if not weeks, while it is being repaired. In a total loss situation, it, typically, takes some days, if not weeks, to determine whether your vehicle is a total loss and, if so, to find a replacement for it. The responsibility for finding a replacement, by the way, is your responsibility, not that of the insurance company.

Although it seems to be a little known fact, the general legal rule in most states is that you may be entitled to be reasonably compensated for the loss of use of your vehicle for those days, or weeks, that you are deprived of it due to its being damaged in the accident. Where recoverable, compensation for such "loss of use" is owed to you over and above whatever the cost of repairs, or "reasonable market value", towing and storage charges, may be.

If your property damage claim is being handled by your own insurance company, under your collision coverage, your right to be compensated for loss of use generally depends upon whether your policy specifically includes such loss of use, or car rental, coverage. It is generally is not automatically included as a part of your collision coverage but is a separate coverage which you must separately purchase at the time you buy your insurance. Where your policy contains such a provision, the company’s liability is, typically, limited to "x" number of days of loss of use, or car rental, at "x" dollars per day.

If your property damage claim is being handled by the negligent party’s insurance company, you generally have a clear legal right to be reasonably compensated for such loss of use for a reasonable period of time. Although the law does not specify define what is "reasonable", generally 30 days is about the maximum absent some unusual circumstances such as the unavailability of foreign auto parts that delay repair. The per diem amount allowable as "reasonable" generally tends to equate to the reasonable cost of renting a comparable vehicle, ie. same make and model vehicle. No fair renting a limo as a substitute for your 1950 VW Beetle!

Although the law does not expressly address the matter, insurance companies are, obviously, reluctant to pay for loss of use where you have access to a second vehicle of your own or have not actually been forced by necessity to rent a replacement vehicle.

A final point on loss of use: Do not expect the insurance company to volunteer to pay you for loss of use. You will generally have to assert your right to receive it before they will even acknowledge that such a right exists. The exception: where you have a potential personal injury claim against them and their insured. In that scenario, they may offer to pay loss of use in an effort to "control" you and as an inducement to keep you from retaining a lawyer.


If you have a sympathetic appraiser, or adjuster, they may offer you their hankie. Remember, in a total loss situation, the insurance company’s legal obligation is merely to pay you whatever the "reasonable market value" of your vehicle was the instant before the collision. It is not responsible for paying off your existing auto loan! That is true even though you may actually still owe the bank more than your car was worth at the time of accident! Tough but that’s the way it works!


With one small, but important, exception, the answer is a resounding "No!" Reason: Again, in a total loss situation, the insurance company’s legal obligation is merely to pay you whatever the "reasonable market value" of your vehicle was immediately prior to the collision. Realistically, that payment almost never is sufficient to permit you to replace your destroyed vehicle with a new, or even a comparable used, one. It is one of those harsh facts of life that you must accept!

The lone exception, that I am aware of, occurs where your property damage claim is being handled by your own insurance company, under you collision coverage, and your policy specifically requires the company to replace your totaled vehicle with a "new", "like", or comparable", one. Such policy provisions are relatively new and quite rare. Generally, collision coverage limits the insurance company’s liability to the "reasonable market value", or "actual cash value", of your vehicle at the time of accident.


While no two cases are ever exactly alike, and one has to be careful about generalizing, my general experience is that it is seldom productive, or economically prudent, to get involved in a life and death struggle with the insurance company in a property damage case. It generally is a battle that you cannot win since the insurance company always will have more time, and money, to spend than you do - and, as we have seen, the game is basically rigged in favor of the insurance company from the start.

Against that background, the best strategy for most people is to simply get in and out as quickly as they can, on the best terms they can. Cut your losses and move on! That is hard for me to say to a client, and even harder for a client to hear, but it is usually the best, most honest, advice that I can give to a client considering the stacked deck we are playing with.              


Forgive the lawyer-like equivocation but "It depends". It depends on the law of your state, It depends on whether your property damage claim is being handled by your own insurance company, under your collision coverage or by the negligent party’s insurance company. It also depends upon the particular insurance company involved.

If your claim is being handled by your own insurance company, under your collision coverage, you may be required to sign a "Proof of Loss" which makes a formal claim for payment under your policy in a specified amount. Generally, however, such a proof of loss is distinguishable from a "Release" and does not cut-off your right to make a supplemental claim in the event that additional damage is discovered - but that general rule may vary from state to state, company to company, and policy to policy.

If your claim is being handled by the negligent party’s insurance company, it is going to want any settlement that it make with you to be a full and final settlement of your property damage claim for ever and ever come what may. Thus, the company may well insist, as a condition of making any payment to you, that you sign a formal release. Typically, that release will be a full and final release of any and all property damage claims, past, present or future, known or unknown, that you may have arising from this particular accident. Generally, once you sign such a release, and accept payment, your claim is settled forever and can never be reopened - even if additional damage is found.

Another word of caution: Do not be lulled into a false sense of security if the insurance company does not require that you sign such a formal release.

Many insurance companies these days use what are called "release form drafts" to settle property damage claims. Such drafts, which generally have the appearance of checks, may contain a statement, on the front or back, to the effect that it is being issued in "full and final payment of any and all property damage claims". Depending upon the law of your state, your endorsing that draft may have the same legal effect as if you had signed a formal release. If so, it settles your property damage claim in full and forever.

Something further to watch out for: With the advent of computers, such "release form drafts" have evolved to the point where the magic words, "full and final settlement of any and all property damage claims" no longer appear and have, in fact, been replaced by computer codes, or symbols, that are incomprehensible to those outside the insurance company and which may, effectively, hide from you the fact that, by endorsing that draft, you are, in effect, accepting that payment in full and final settlement of all your property damage claims. Aren’t insurance companies wonderful!


Sorry, but again, I have to say that "It depends". It depends upon a lot of things like the law of your state, whether your property damage claim is being handled by your own insurance company, under your collision coverage, or by the negligent party’s insurance company, upon the particular insurance company involved, and, very importantly, the language of any release, or release form draft, being used.

Things get particularly dicey when you are settling your property damage claim with the negligent party’s insurance company, and are given a "release form draft" in payment.

If the draft actually contains some "release form" language, front or back, it is extremely important to note the specific language used. For example, does it, in effect, say, "In full and final release of all property damage claims" or does it simply say "In full and final release of any and all claims"?

If the releasing language is not limited to property damage claims, it may, in effect, be a general release of any and all claims of every kind and description which you may have including any claim for personal injury arising out of the same accident! Insurance companies have been known to "snooker" claimants out of their personal injury claims by the subtle use of such language.

Result: the person endorsed the draft, and accepted "x" dollars, in the belief that they were settling their "property damage claim only" when, in fact, they were settling both their property damage and their personal injury claims for the amount of their property damage!

With the increased use of computer-coded settlement drafts today, where any release form language may have been replaced by indecipherable computer codes, or symbols, it is often impossible for those outside of the insurance company to know what the scope of the release form draft actually is and whether it applies to property damage only or to all claims of any kind - including personal injury claims!



                                        WHAT CAN YOU DO TO PROTECT YOURSELF?

Consult a lawyer before signing any release or endorsing any settlement check!


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auto property damage
Ray C. Estabrook 1998