We are required to carry insurance on the cars and trucks that we drive on public streets, not for our own protection but for the protection of the other motorist that we encounter. If there is an accident, and it is the fault of the other driver, the first hurdle you will face is how to obtain a fair and equitable settlement from the carrier of the car that struck you.
Before deciding which carrier you want to deal with, it is our recommendation that you contact the Department of Insurance in your state in order to learn something about the financial stability of the carrier you have chosen and what complaints they have received from the public. Some carriers offer very competitive premium rates in order to attract customers who are very price conscious. Saving money is one of the objectives that we talk about all the time when dealing with any policyholder. But remember this, when a major incident occurs, a new insurance carrier, offering low rates, is the most susceptible to becoming overwhelmed with claims and they can go bankrupt very quickly. For instance, I worked in Fort Lauderdale and Miami in the aftermath of Hurricane Andrew. Insurance companies were filing bankruptcy right and left and even companies the likes of Allstate insurance Company were nearly bankrupted.
If a carrier goes bankrupt, they have been required to have re-insurance for the protection of the public, but that is a different can of worms and you really don't want to get involved in that if possible.
The bottom line is to search out a company that has a good payment record and one that is financially sound.
Generally speaking, most insurance companies are reasonable in how they deal with the public. But there are some insurance companies that are very difficult to deal with and will use every means to intimidate the people that are involved in accidents, whether they are their policyholders or general members of the public.
In the case of a car that's been involved in an accident but is economically repairable, insurance companies will usually assess the damage and extend a prompt payment. Payment for a rental car is far more contentious. Most carriers will not authorize a rental car until the damaged car goes into the repair shop. However, if the damage prevents the vehicle from being drivable, carriers will pay for a rental vehicle if they insure the at fault vehicle. Once the car is determined to be a total loss, that is when the issue of the value of the vehicle can become contentious. All insurance companies offer what is described as the "ACV-Actual Cash Value" of the vehicle, and most often, vehicle owners see the initial offer as a lowball and want to negotiate to establish a higher value. Some insurance companies will actually work with the vehicle owner to establish an agreed value that is fair to both sides. But there are some, such as National General Insurance Company, who take a hard line and make the settlement offer a take it or leave it proposition. This is not the only insurance company that takes a hard line, but they are well-known for this type of situation. They will basically tell you that the offer is all they're going to pay and that if you do not want their money, they will be glad to keep it. Most people threaten to file a lawsuit, but the carrier knows that this is playing right into their hands. Once the settlement offer is rejected, they will tell you that if you don't accept their offer within a specified time, that they will discontinue the use of a rental car and stop allowance for storage of your car. Further, they know that the legal system works in their favor allowing reasonable continuances and other delaying tactics which work against you, the plaintiff. There are a great many other contingencies that you as the plaintiff will have to endure, which are too many to mention at this time. But needless to say, the deck is stacked in favor of the insurance company and against the public.
When you find yourself in a position as we have just described it, most people will relent and settle. You will be required to sign a release of some kind whether it be a release paragraph above the endorsement block on the check or a document known as a Release of all Claims. The insurance carrier wants to make the Release, ironclad. However, a release is merely a contract between the parties to settle the dispute between them. But enforcement of contract law is only valid if there is no undue influence or coercion. If you are intimidated into signing a General Release under protest, you can get the release invalidated if you meet some criteria to prove that you were coerced and you have a good attorney.
Remember that Judges were Lawyers before being elevated to the bench. When Lawyers put on the Black Robes of Justice, most of them feel an obligation to decide a case on its merits and informed by prevailing law.
Insurance Co's count on the delays of even trivial cases as a means of frustrating the plaintiff who probably needs to take off time from work only to face a continuance and having to do it all over again. There is always some witness who has a scheduling conflict or some other cause for delay, and there is no reimbursement due to the plaintiff. So, by the time you go through 2-3 delaying tactics, most plaintiffs decide to give up. Result: Defense wins!!! You lose!!!
So, what is the primary issue of dispute? The answer is the value of the vehicle in pre-loss condition. The appraiser inspects the vehicle and photographs the damage as well as non-accident blemishes of all types and causes. If you have a minor dent where someone opened their door into the side of your car in a parking lot, they look for and record items such as this as justification to reduce the value of the car.
It is interesting that the insurance co will use these dents on the premise that if the car were traded to a dealer, he would repair that dent before he could put it on his lot for sale. But on the other hand, the appraiser will value the car as if you were selling it to a private owner where minor repairs are often overlooked.
The Ins Co will rarely, if at all, use the value of a car on a dealer's lot as the basis of the value of your car. Why you ask do they not use the dealers value? They will tell you that the true value is what someone will pay for your car in pre loss condition based upon what a similar car sold for with the same mileage and specs. The dealer might have the same vehicle but he has overhead and profit calculated in his price. Most carriers take the position that they don't owe for a dealer's profit, even if you have to pay it. They ignore that the fact that dealer profit was included in the price at the time of purchase and that the original value at the time the car was first insured included the profit.
As mentioned previously, a settlement release is a contract between the parties. It is legal, it is between two parties of age to consent, the parties are of legal age to consent AND, THERE IS NO COERSION OR UNDUE INFLUENCE USED BY EITHER SIDE. This is where a good lawyer comes into the picture. But you need to give him the tools to work with.
You can't use a verbal conversation to prove coercion. You need to write a letter to the adjuster with a copy to the party that caused the damage spelling out the offer by the Ins Co. and what you have found in your search for the value of your car. Without a recap in writing, it becomes a disputed conversation with no proof. State what you want for the vehicle and if they maintain a hard line, consider suing the wrongdoer in small claims court so that you can tell your story to a judge. But be sure to send a copy of the complaint to the carrier and make someone sign for it. If no one signs, the carrier has all kinds of defenses to use against you.
If you have collision coverage on the policy, making a claim on your coverage will provide a better settlement for you and leave the value determination to your insurance company. Your deductible probably will be less cost to you, and your carrier will reimburse you the deductible if they succeed with arbitration against the other carrier.
In our next newsletter, we will discuss other aspects of the personal auto policy.