Table of Contents
This informational booklet has been written to help people who have been in an auto accident. If you have been
hurt in a collision, or if you have had a family member or friend in an accident then please share this material
with them. At LATHROP LAW, we have helped several injured victims. We handle auto accidents, commercial
vehicle accidents, defective drugs, product liability, workers’ compensation, wrongful death, and many other
circumstances involving injury.
In many instances, particularly if it is your vehicle that has been damaged, there are two aspects to the claim:
property damage and personal injury. You will almost always deal with the other person’s insurance company
through its adjuster. An adjuster is the person the insurance company has hired to determine the value of your
overall claim. They may often focus on the bodily injury portion of the claim and may rely on an appraiser to
determine the damage to your vehicle. Both the adjuster and the appraiser are professionals employed by the
insurance company. The purpose of this booklet is to give you the information you need to help make sure you
potentially receive a reasonable and appropriate sum for the damage to your vehicle.
If your vehicle is damaged in a wreck that is someone else’s fault, you should contact the
other person’s liability insurance company immediately to report the claim. You should also
notify your own insurance company of the claim because you may also have coverages that
come into play.
You will know the name of the other person’s liability insurance company from the officer
at the scene, or the police report. The police report should include your personal information,
your insurance information, and information about the other party(ies) in the accident. The police
report is generally not available until at least a couple of days after the accident.
You should contact the other person’s insurance (referred to as “liability carrier”) by
phone, and then follow up with a written notice of your claim describing the time and place of the
collision along with a description of your vehicle. If you send a written notice to the liability
insurance carrier, you can expect a written response. We believe there is no harm in speaking
with the adjuster as long as you limit your discussion to property damage only. But if the
adjuster asks for a “recorded statement” regarding your injuries, it is best to politely refuse and
then discuss the matter with an attorney as soon as possible. If you are injured, never discuss
your personal injury claim with an adjuster without first speaking with an attorney’s office. If the
property damage claim is denied, ask for the denial in writing, and speak with your insurance
company.
Yes, and in most cases we think people should. The reasons for this are two-fold.
The first, and probably most important reason, is that we do not want to unnecessarily delay the property damage aspect of your claim.
Secondly, it is rarely cost effective for you to hire an attorney to pursue your property 2 damage claim – you can save time and money by doing it yourself. If you were not injured in the accident, you would not want to pay an attorney fee on top of the settlement offer you receive from the liability carrier for your vehicle damage. If we represent you on a bodily injury claim related to the accident we will assist you with your property damage claim at no additional charge.
If the at-fault insurance company accepts responsibility for your property claim and makes an offer, you should negotiate that amount with the adjuster. If you are satisfied with the offer then you should settle the property claim. Even if you are injured, it is completely safe to settle the property claim and leave open the personal injury claim for later settlement.
Do not speak with the adjuster about your personal injury claim, speak with the adjuster about the property damage only.
The liability insurance company is prohibited from forcing you to settle your personal injury claim at the same time you settle the property damage claim.
If you do not agree with the settlement offered by the adjuster, you have the right to request that the adjuster send to you, in writing, the amount of the offer along with the legal basis the adjuster is relying on to support the offer.
A motor vehicle is considered a total loss if the cost of repairs (and supplemental claims such as
projected rental vehicle costs during the repair period) equals or exceeds 75% of the pre-accident
auto value, sometimes referred to as the fair market value (FMV).
The liability insurance carrier is required to pay fair market value for the vehicle. Fair market value
is the price at which the property would change hands between a willing buyer and a willing seller
when the former is not under any compulsion to buy and the latter is not under any compulsion
to sell, both parties having reasonable knowledge of relevant facts. (I.R.S. Revenue Ruling 5960). Adjusters generally have a book value (BV) they use to arrive at FMV but they have some
wiggle room based on the condition of the vehicle. BV is supposedly FMV, though not always,
and this gives both sides some leeway to negotiate. Many insurance companies use the National
Automobile Dealers Association (NADA) publication “Official Used Car Guide” which is published
monthly. It is available online at: www.nadaguides.com.
Some liability insurance companies have their own valuations. No publication is completely
accurate, and they are indeed only “guides”. Therefore, there can be some basis to negotiate the
value of your property damage claim in every case.
If you and the adjuster are initially unable to reach an agreement as to Fair Market Value (FMV),
then the adjuster is required to base any further settlement offer not only on published regional
average values of similar vehicles but also on the value of similar vehicles in the local market.
Local FMV must be determined by using either the local market price of a comparable vehicle or,
if no comparable vehicle can be found, quotes from at least two qualified dealers within the local
market area. If your vehicle was in better than average condition prior to the collision the adjuster
is required to give due consideration to this fact in determining value.
You should require from the adjuster that a written statement accompany the total loss payment.
This statement should include estimates, evaluations and deductions used in calculating the
payment as well as the source of these values.
If the vehicle is a total loss, and if you and the adjuster agree on the vehicle’s pre-accident Fair
Market Value and the adjuster is willing to pay the FMV, then the liability insurance company gets
the car. In other words, the insurance company is not going to pay you FMV for a car determined
to be totaled and let you keep the car. 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 and turn over possession of it to the insurance company. However, if you wish to keep the
vehicle, then you must pay the insurance company the salvage value. You pay the salvage value by
accepting a check from the insurance company for the FMV less the salvage value. Prior to settling
the property damage claim, you also have the right to ask the liability insurance company to
provide, in writing, the names and addresses of the salvage dealers who will purchase the vehicle
for the amount claimed as salvage value by the adjuster.
If your vehicle is financed, the liability insurance carrier may determine the pay-off to the finance
company, write a check to the finance company for the pay-off, and write you a check for the
difference. Sometimes the check from the insurance company may have your name and the name
of the finance company on the check.
You would then endorse the check and turn it over to the finance company. The finance company
will pay off the loan and refund the difference 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 will still owe the finance company the difference unless
you have purchased “gap insurance.” Gap insurance is insurance you purchase, generally when you
first purchase the vehicle, to cover the “gap” between the amount financed and the vehicle’s value.
Sometimes, it is required by lessors for leased vehicles or provided in financed purchases. Another
kind of optional insurance you might have purchased is “repair or replacement” coverage. Repair or
replacement coverage obligates your automobile insurance company to pay either the reasonable
cost of repairs or the cost of a replacement vehicle, whichever is less. If your vehicle is not financed,
then the insurance company will write you the check.
The liability insurance company is responsible for all reasonable towing and storage charges until
three days after you and the storage facility are notified in writing that the insurance company will
no longer reimburse the owner or storage facility for storage charges. The written notification must
contain the name, address and phone number of the facility storing the vehicle.
WARNING: As soon as the liability insurance company is no longer responsible for storage charges, YOU become
responsible. These are often daily fees and they can add up quickly. The storage facility will not release your car until the
storage fees are paid so avoid unnecessary delay.
If your vehicle is totaled, you are entitled to a rental vehicle from the time of the collision until you
receive an offer from the liability insurance carrier. The moment the offer is made (assuming the
offer is reasonable) the liability insurance company is not responsible to pay for your rental vehicle.
Sometimes, a liability insurance company will allow you a few more days if you have had trouble
buying a replacement vehicle. If that occurs, it is voluntary on the insurance company’s part.
Generally, you should be provided with a vehicle comparable to the vehicle that was damaged. Thus,
if you were driving a compact car you should be able to rent another compact car. If you were driving
a four door sedan then you should have a comparable four door sedan. Most insurance companies
have arrangements with automobile rental companies whereby a call from the liability company to
the rental company will produce a vehicle to you at fairly modest cost, which the liability insurance
company will pay. Mileage and gas are not paid for by the liability insurance company, just the daily
rental cost of the vehicle.
This arrangement with rental agencies is among the reasons you should contact the liability insurance
company as soon as possible. However, some liability insurance companies will not honor a claim
called in by you. Some policies state that there is no claim until its insured calls and reports the claim.
In those instances when an insurance company will not provide a vehicle because the insured has not
reported the claim, you should rent a vehicle at prevailing market prices. When the liability company
adjuster contacts you, ask what to do about continuing with the rental. You probably will be told
to turn in the rental and rent a vehicle from the rental agency with which the insurance company
regularly contracts. In such a case, the liability insurance company should be liable for the initial rental
cost at the prevailing rates until you are placed in a lower-rate vehicle.
Another cost of a rental vehicle is the “extra” insurance the rental car company requires. While the
liability carrier will pay for the daily fee, they will not pay for the additional insurance. This may cause
you problems as the rental car company requires you to give them a debit/credit card to have on file.
A motor vehicle is repairable if the cost of repairs and supplemental claims are less than 75% of the
pre-accident fair market value.
Many insurance companies have “drive-in” claim service facilities. However, they cannot require
you to use their facilities. If you voluntarily utilize their drive-in claim service this will not prejudice
your
right to obtain independent appraisals and negotiate settlement on the basis of such appraisals.
You should get two repair estimates. If the adjuster insists that you obtain more than two, then the
insurance company must pay for the others.
Sometimes adjusters will have you obtain estimates and then make an offer over the phone. If you
do not agree with the phone offer, and if the adjuster has never seen the damaged vehicle, you can
require that the adjuster or the insurance company’s appraiser personally inspect the damaged
vehicle.
If the adjuster accepts liability and advises you to have your vehicle repaired with the understanding that the insurance company will reimburse you, then you should request from the adjuster a
statement in writing to that effect along with any and all other verbal agreements you and the
adjuster have agreed on.
Depreciation value is the sum of money that accounts for the decrease in your vehicle’s fair market
value as the direct result of it having been damaged in a collision, even taking into consideration
that your vehicle is repairable or is repaired. It is recognition of a vehicle that has been in a collision
and is repaired but is now worth a lower value than a similar vehicle that has never been damaged.
In other words, it is a value of loss over and above the repair costs.
Depreciation is a very nebulous and gray area. 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. When negotiating
with the adjuster you should demand that you get depreciation. The fact is that the value of a
vehicle can be greatly reduced just because it was in a wreck. Most adjusters will not volunteer
depreciation value; therefore, you should raise the issue. On the other hand, some liability carriers
will volunteer this information if your vehicle is no more than five years old and damage amounts
to 25% or more of the fair market value. There is no computer formula that will account for
depreciation, but it might typically run between 10% and 20% of the repair bill for depreciation.
You should be aware that if your vehicle is less than five years old and the damage to the vehicle
exceeds 25% of its fair market value, you must disclose that fact to any subsequent buyer. This
disclosure will certainly affect the amount anyone would be willing to pay or allow for trade in
allowance on the vehicle.
Often adjusters will recommend that you use a particular repair service. You are not obligated
to use that repair services, and the adjuster is obligated to tell you that. You may use any repair
service you choose.
If you sign a release involving a repair to your vehicle, that release does not bar you from later
asserting a claim for damage to the vehicle that was unknown to you or the adjuster at the time
you signed the release. As long as the discovered damage was caused by the collision, and this
damage could not be determined or known by you or your adjuster until the repair or attempted
repair of your vehicle, you may file a claim for additional damage. You will typically have 30 days
after the repairs to assert the claim for additional damage.
If you sign a release involving a repair to your vehicle, that release does not bar you from later
asserting a claim for diminished value (depreciation) as long as this diminishment was directly
caused by the collision. You will typically have up to 30 days after repair to make a claim for
diminished value
If your car is financed, the insurance company will 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 get the entire check.
If your vehicle is non-operable, you are entitled to a rental vehicle from the time of the collision
until the repairs are finished.
If you have a complaint about an insurance company and the way in which it is handling your claim
you may call or write the Consumer Insurance Information Division of the State you live in.
When a complaint is received, the Consumer Services Division will take information from you and
then an analyst from the division will request information from the insurance company, agent,
or adjuster. If the analyst finds that there is just cause for the complaint, a recommendation will
be made to both sides as to how to settle the situation. If this does not resolve the problem, a
deputy commissioner may arrange a conference with the insurance company involved to resolve
the problem. If the conference does not resolve the disputed issues the deputy commissioner may
recommend to the commissioner that appropriate legal action be taken including a public hearing
or filing a lawsuit. (The Division will not investigate a complaint that is also the subject matter of a
lawsuit. If a lawsuit has not been
We hope this booklet has been helpful. Please fee free to share it with others. We want to make
sure you are armed with enough information to make the best decisions in your accident claim.
Please let us know how we can help.
If you have been injured, you can call us 24/7.
1.800.800.8888
www.callthehammer.com
1601 Business Center Court, Louisville, KY,
40299 Kentucky | Indiana | Ohio
If you have been injured, contact:
Federico Lathrop
federic