| Property Damage and
Automobiles FAQs
Can I do it myself?
Where do I start?
When is a vehicle a total loss?
What happens if we can't agree on an evaluation?
What does "Salvage Value" mean?
Who gets the total loss check?
Who pays for towing and storage charges?
Am I entitled to a rental vehicle when I have a
total loss?
What if my vehicle can be repaired?
Must I use the drive-in facility of the
Insurance Company?
How many estimates should I get?
Am I entitled to depreciation value?
Do I have a choice of repair facilities?
Suppose something goes wrong after the repairs
are made?
Who gets the repair check?
When am I entitled to a rental vehicle during
repairs?
If things don't work out to whom do I complain?
Can I do it myself?
Because it is rarely cost effective for you to hire an
attorney to pursue your property damage claim this monograph
has been prepared by the attorneys at William F. Horsley, P.A.
to assist you in negotiating with the adjuster.
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Where do I start?
If your vehicle is damaged in a collision which is caused by
someone else's fault then you should contact the liability
insurance company for the wrongdoer if you haven't heard from
the liability insurance company within 2-3 days from the date
of the accident. You will know the name of the liability
insurance company from the 'exchange slip' provided to you by
the investigating officer at the scene. You should contact the
liability carrier by telephone and then follow up with a
written notice of your claim telling it 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 then
you can expect a written denial or acceptance of the claim.
There is no harm in speaking with the adjuster but if the
claim is denied ask for the denial in writing. The liability
insurance company is then obligated to confirm to you the
specific reason for the denial.
If your property claim is accepted then you should
negotiate 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.
In other words, 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 specific policy provisions
the adjuster is relying on in support of the offer. 11 NCAC
4.0117
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When is a vehicle a total loss?
A motor vehicle is considered a total loss if the cost of
repairs (and supplemental claims such as projected rental
vehicle during period of repair) equals or exceeds 75% of the
preaccident cash value which is sometimes referred to as the
Fair Market Value (FMV). 11 NCAC 4.0418(5).
Generally speaking the liability insurance carrier is
required to pay the fair market value (FMV) (preaccident cash
value) of the vehicle. In simple terms, the FMV is the value a
seller, not forced to sell, and a buyer, not forced to buy,
would agree upon for the vehicle immediately before the
collision giving rise to the property claim.. 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, but not always is, and this
gives both sides some leeway to negotiate. Many insurance
companies use the National Automobile Dealers Association
(NADA) publication entitled "Official User Car
Guide" which is published monthly. Your finance company
or bank should have a current copy which you can refer to.
Some liability insurance companies have their own valuations.
No publication is completely accurate and they are indeed only
'guides'. So there is some basis to negotiate in every case.
Example: If the vehicle's preaccident FMV is $8,000 and the
estimates for cost of repairs are less than $6,000.00 then the
liability insurance company is obligated to only pay for the
cost of repairs. However, if the estimated cost of repairs is
$6,000.00 or more then the liability insurance company has to
pay the preaccident FMV of $8,000.00 and no more. Frequently
problems arise when claimants fail to understand that the law
does not require liability insurers to pay more than the fair
market value. If FMV is $8,000.00 and the cost of repairs is
$9,000.00 then you will only recover $8,000.00. In other
words, you can't recover more than the FMV even when the cost
of repairs exceeds the FMV.
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What happens if we can't agree on an
evaluation?
If you and the adjuster are initially unable to reach an
agreement as to 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
the vehicle 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, quotations 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 arriving at value. 11 NCAC 4.0418(1).
You should require from the adjuster that a written
statement accompany the total loss payment which statement
should include estimates, evaluations and deductions used in
calculating the payment as well as stating the source of these
values. 11 NCAC 4.0418(4),
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What does "Salvage Value"
mean?
If the vehicle is a total loss and if you and the adjuster
agree on the vehicle's preaccident FMV 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 and let you keep the car. This is because
there is usually some residual or leftover value in totally
damaged vehicles. 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
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. If you
wish to keep the vehicle then you have the right to ask the
liability insurance company prior to your agreeing to
settlement to give you in writing the name and address of the
salvage dealer who will purchase the salvage for the amount
claimed as salvage value by the adjuster. 11 NCAC 4.0148(3)
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Who gets the total loss check?
If your vehicle is financed the liability insurance carrier
may determine the pay-off to the finance company and 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 had purchased 'gap'
insurance. (Gap insurance is insurance you purchase. It is
sometimes required by lessors for leased vehicles and
sometimes provided in financed purchases. Another kind of
optional insurance you might have purchased is 'repair or
replacement' coverage. 'Repair or replacement' 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 your
vehicle is not financed then the insurance company will write
you the check and you may or may not, at your choice, get the
vehicle repaired.
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Who pays for towing and storage charges?
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. 11 NCAC 4.0418(6).
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Am I entitled to a rental vehicle when I
have a total loss?
You are entitled to a rental vehicle from the time of the
collision if the vehicle is disabled 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 for a rental vehicle.
Sometimes a liability insurance company will allow you a few
more days if you have had trouble buying a replacement
vehicle, but, if that occurs it is voluntary on the insurance
company's part.
Generally, you should be provided with a vehicle comparable
to the vehicle which 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. The arrangement with rental
agencies is the reason why 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
because they have internal policies which provide that no
claim is recognized 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
and then when the liability company adjuster contacts you ask
what to do about continuing with the rental. Probably you will
be told to turn the rental in and rent a vehicle from the
contact rental agencies. 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. By the way, mileage and gas are not paid for by the
liability insurance company, just the daily rental cost of the
vehicle.
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What if my vehicle can be repaired?
A motor vehicle is repairable if the cost of repairs is less
than 75% of the preaccident cash value (FMV). 11 NCAC
4.0418(5).
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Must I use the drive-in facility of the
Insurance Company?
Many insurance companies have 'drive-in' claim service
facilities. However, no insurance company can require you to
use a drive-in claim service operated by it. If you
voluntarily utilize the drive-in claim service this will not
prejudice your right to obtain independent appraisals and
negotiate settlement on the basis of such appraisals. 11 NCAC
4.0417.
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How many estimates should I get?
You should get two estimates of repair. If the adjuster
insists that more than two estimates be obtained then the
insurance company must pay for such estimate. 11 NCAC
4.0149(1).
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. 11
NCAC 4.0419(2).
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 and to
include in writing any and all other oral agreements you and
the adjuster have agreed upon. 11 NCAC 4.0420(a)(b).
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Am I entitled to depreciation value?
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 a 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. 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. Fact is 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 which will
account for depreciation. We have heard that some insurance
companies will pay 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 effect the
amount anyone would be willing to pay or allow for trade in
allowance for the vehicle.
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Do I have a choice of repair
facilities?
Often adjusters will recommend that you use a particular
repair service. You are not obligated to use that repair
service and the adjuster is obligated to tell you that you do
not have to use the repair service recommended and you may use
the repair service of your choice. 11 NCAC 4.0423(c).
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Suppose something goes wrong after the
repairs are made?
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 which was unknown to you or the adjuster
at the time you signed the release if the discovered damage
was caused by the collision and which damage could not be
determined or known until the repair or attempted repair of
your vehicle. You have thirty days after the repair to assert
the claim for additional damages. 11 NCAC 4.0421(4)
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) of your vehicle which
diminishment was directly caused by the collision. You have up
to 30 days after repair to make claim for diminished value. 11
NCAC 4.0421(5).
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Who gets the repair check?
If your car is financed the insurance company will write the
check in your name and the name of the repair facility. This
is so 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.
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When am I entitled to a rental vehicle
during repairs?
You are entitled to a rental vehicle from the time of the
collision if the vehicle is disabled until the repairs are
finished. If your vehicle is not disabled you are entitled to
a rental vehicle from the time your vehicle goes into the
repair shop until the time it is repaired.
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If things don't work out to whom do I
complain?
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 North Carolina
Department of Insurance. The toll-free telephone number is
800-662-7777. The mailing address is North Carolina Department
of Insurance, Consumers Services Division, P.O. Box 26387,
Raleigh, NC 27611.
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 issue
the deputy commissioner may recommend to the commissioner that
appropriate legal action be taken including a public hearing
or the filing of a lawsuit. (The Division will not investigate
a complaint which is also the subject matter of a lawsuit. If
a lawsuit has not been filed but you have an attorney the
Division will investigate only with the attorney's consent).
11 North Carolina Administrative Code (NCAC) 4.0115.
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For more information, please see our
Automobile Accidents page.
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