Vehicle Property Damage FAQs

It is rarely cost effective for you to hire an attorney to pursue ONLY your property damage claim; however, property damage claims can be difficult and frustrating to navigate. We understand how difficult it can be to resolve your property damage claim on your own; therefore, if you are a client of ours we may be able to help your handle your property damage claim. Most times we can help by explaining your options and educating you on how to deal with the adjuster. If you were not injured in the accident and/or have not hired an attorney, we hope that you will find some of the information discussed below to be helpful.

If your vehicle has been damaged in a collision which is caused by the negligence of another, the first thing to do is contact the liability insurance company for the at-fault party. However, if you are injured in the accident, it may be best to speak with a personal injury attorney prior to making any communications with the adjuster. Your conversation may be recorded and you may unknowingly make statements that could negatively impact your case, and a personal injury attorney may be able to help you find the applicable insurance company and report your claim for you. Often, the necessary insurance information can be found on the “exchange sheet” or accident report which the responding officer may provide to you.

After contact has been made with the insurance company, an adjuster will be assigned to your case within one day to a few days. Often there are two adjusters, one handling the property damage and the other handling your personal injury claim.

Clients frequently ask us whether they are able to get a rental car while their vehicle is being repaired or while they are waiting for it to be replaced. While each case is different, we hope this short summary explains how insurance companies generally deal with rentals.

An insurance company insuring the at-fault driver, the defendant, generally does not authorize rental cars until they complete their investigation of the claim. Insurance companies are allowed a reasonable period of time to investigate the accident and determine whether they are in fact liable for the incident under North Carolina law. This means that we cannot promise that a rental car will be immediately forthcoming in your case; however, we will always use our best efforts to help expedite this process if possible.

If you need a rental car, you can get one on your own. If the defendant’s insurance company accepts liability, they will generally reimburse you for the cost so long as the cost of the rental is reasonable and the time of your rental does not extend past the time your car was repaired or an offer is made for the value of the vehicle if it was totaled.

Please be aware of the following pitfalls when renting a car on your own. If you do not have collision insurance (full coverage) on your car, the rental car company may require you to sign up for their collision insurance or require you to demonstrate the financial ability to pay for any repairs. The rental company’s own insurance can be expensive and it is generally not reimbursed by the defendant’s insurance carrier.

If you choose to rent a car, please remember that you have a legal responsibility to mitigate your damages. In other words, you have a legal responsibility to minimize the length of time you keep the rental car. This means you need to be sure your vehicle is repaired as quickly as practicable. If you have your own collision insurance, you may want to use your own coverage to speed up the process of getting your car repaired or replaced. If, and when, liability is accepted, the defendant’s insurance company will then reimburse your insurance company for the cost of repairs and also repay you for your deductible.

If you are unable to rent a car on your own or do not want to do so, an attractive alternative is to get rides from friends or borrow another’s vehicle. If you choose to do this, please be sure to keep a record of the names, addresses, and telephone numbers of those who helped you, as well as the dates they helped you. Also, keep receipts of any buses or taxis that you had to use. These records will assist in documenting your claim for the loss of use of your vehicle.

A vehicle is considered a total loss when the amount of the repairs (including supplemental claims such as projected rental during the period of repair) equals or exceeds 75% of the pre-accident cash value of the vehicle which is sometimes referred to as the vehicle’s Fair Market Value (FMV). In other words, the FMV is the value a seller, if not forced to sell, and a buyer, if not forced to buy, would agree upon for the vehicle immediately before the collision giving rise to the loss.

Insurance adjusters generally have a book value they use to arrive at FMV. They may have some discretion based on the condition of the vehicle, but there is generally only a little room for negotiation. Book value is supposedly FMV and as such this gives both sides a little leeway to negotiate. Many insurance companies use the National Automobile Dealers Association (NADA) publication entitled “Office Used Car Guide” which is published monthly. Our office has a current copy which we refer to when we negotiate the value of our clients’ vehicles. Some liability companies have their own methods to arrive at valuations. They may consider their system to be superior to the NADA book value. Notwithstanding, no publication is entirely accurate and they should be, and are indeed, only “guides.” As such, there is usually some room to negotiate.

If the vehicle is a total loss and an FMV is agreed upon, the liability carrier will require the Title and possession of the vehicle in exchange for the settlement check. In other words, the insurance company will not pay the FMV and allow you to keep the vehicle. This is because there is usually some residual or leftover value in a totally damaged vehicle. At the very least, the vehicle can be stripped and some of the parts sold. The value of what is left of the “total loss” vehicle is referred to as the “salvage value.” When the adjuster pays the FMV then you must sign over the Title to the vehicle. If you wish to keep the vehicle then the insurance company will pay you the FMV minus the “salvage value.”

Usually the “salvage value” is between 10-25% of the total loss value. In other words, if you wish to keep the vehicle then you have a right to do so, but the insurance company will offer less money to allow you to keep the vehicle in its salvaged condition. When we handle property damage claims, if the client requests, we will ask the adjuster to give us two offers: one if the insurance company takes the vehicle and one if our client keeps it, so that our client can make an informed decision.

If your vehicle is financed then you will need to determine the pay-off to the finance company. The liability insurance company must pay the finance company. They are required to do this by law because the finance company has a lien on the vehicle and title. If there is any money left over after the pay-off, the insurance company will write you a check for the difference. Sometimes the check from the insurance company will have your name and the name of the finance company on it. You may have to sign it over to the finance company. The finance company will pay off the loan and refund the difference, if any, to you as your equity in the vehicle.

If the pay-off on the loan is greater than the check from the insurance company then the finance company gets the entire check and you may still owe the difference unless you had purchased “gap” insurance. (Gap insurance is insurance you purchase when you buy the vehicle. It is sometimes required by lessors for leased vehicles and sometimes provided in financed purchases. Another type of optional insurance you might have purchased is “repair or replacement” coverage. This coverage provides that if your vehicle is damaged, your automobile insurance company will pay either the reasonable cost of repairs or the cost of a new auto, whichever is less). If there is insufficient money to pay-off the loan and you do not have any supplemental insurance, you may be able to use substitution of collateral to get another vehicle and continue making loan payments. Generally, if you are “upside down” on a vehicle (in other words, you owe more than it is worth) you would normally be at a standstill. If this situation arises, you can ask the dealer where you purchased your vehicle if he would be willing to do a substitution of collateral where you simply substitute the new vehicle for the original damaged vehicle on the same loan.

In a substitution of collateral, the insurance company sends the check for the FMV to the finance company, which in turn sends the Title to the liability insurance company and transfers what you owe on your vehicle to a new loan on another vehicle selected by you and the dealer. This procedure allows you to settle the property damage claim as well as provide you with a replacement vehicle. Moreover, usually, you will not be required to make another down payment on the subsequent vehicle. You will usually be required to purchase the subsequent vehicle from the same dealer because they must agree to this procedure.

If your vehicle is not financed, then the liability insurance company will write you a check for the total loss.

If your car is financed, the insurance company will usually write the check in your name and the name of the repair facility. This is because the damage to the vehicle reduces the value of the car which means the finance company’s lien rights are also diminished. Therefore, the finance company will always require that the damaged vehicle be repaired so its interest in the vehicle remains protected. If your vehicle is not financed you should receive the entire check.

Depreciation value is that sum of money which accounts for the decrease in the fair market value of your motor vehicle as the direct result of having been damaged in a collision even taking into consideration that your vehicle is repairable or is repaired. It is recognition that a vehicle which has been in a collision and is repaired is of less value than a similar vehicle which has never been damaged. In other words, it is a value of loss over and above the repair costs.

Deprecation is a very uncertain and subjective area and usually only applies to newer model vehicles. The amount of depreciation will also depend on the severity of the damage. If there is minor damage there probably is no depreciation. On the other hand, the more severe the damage the more likely depreciation is present. Depreciation in value, also called diminution of value, usually results when the title to your vehicle will be “marked” because you must disclose that the vehicle has been damaged when you sell it.

When negotiating with the adjuster we negotiate depreciation claims when the damage supports the claim. The value of a vehicle can be reduced just because it was in an accident. Most adjusters will not volunteer depreciation value; therefore, we will raise the issue if you have asked that we do so on your behalf and your vehicle will have a “marked “title. Generally, we will not be able to make a claim unless you have secured a written statement from an adjuster or appraiser that indicates that the vehicle has depreciated. It is not important that the estimator indicates an actual amount. Industry standard usually allows for some range in value of the depreciation. Unfortunately, some companies think because the vehicle is back in its prior condition then it has not depreciated.

The liability insurance company is responsible for all “reasonable” towing and storage charges until a few days after you and the storage facility are notified that the insurance company will no longer reimburse the owner or storage facility for storage charges. The notification can be verbal or written. Once you are notified of this situation you must take all reasonable steps to get the vehicle moved or you may be responsible for the charges.