Hi, in this video, we will discuss how much an insurance company in California has to pay for a totaled car. My name is Matt Eason. I’m a personal injury attorney. I’ve been practicing law for over 25 years, and part of our practice is dealing with making sure insurance companies pay the appropriate amount for a totaled vehicle.
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In this video, we’re going to discuss how to calculate the value of the vehicle, what’s included and not included in the value of the vehicle, how to increase the value of the vehicle, and most importantly, which insurance company to deal with in negotiating the value of the vehicle.
The first issue we want to talk about is how you determine the value of the car. In determining the value of the car, the law assumes that the transaction is occurring between a willing buyer and a willing seller. If you’re on the boulevard, so to speak, and you’re negotiating the car’s value, what would the parties negotiate the value to be?
With that understanding is how the value is determined, then the question is, how do you go out and find out what the value of your car is? Part of the difficulty in determining what someone would pay for the car is that car prices are so often negotiated. So what you see advertised in the paper or advertised on the boulevard as you drive by or advertised on the internet isn’t always the purchase price. Consequently, just simply getting some purchase price offers for cars out there isn’t always the best way to find out your car’s value.
One mechanism we like to utilize is CarMax. CarMax’s business model is such that they don’t like to negotiate over a value and typically don’t. Consequently, if you can find your car on CarMax, that’s a great resource for you to show the car’s value. Another neat thing about CarMax is that they can ship cars from all around the country to your location. Therefore, what you can do is you can find your car anywhere in the country, take into account its cost of shipping, and theoretically, that’s the value of your car.
In addition to buying your car at CarMax, or maybe trying to find comparable cars that are advertised on the internet and then adjusting it would likely sell for you could also hire an appraiser to appraise the value in your car. Obviously, appraisers cost money. It’s not uncommon they’re $250 to $500, so you have to take that into account to see if that’s really worth doing.
While you’re doing your due diligence based on what you think the car’s value is, the insurance company has their own programs that they’re going to run your car through. Kind of like a Kelley Blue Book type program that they’re going to put in the various features, and it’s going to spit out a number that it thinks the value of the car is. Be very wary of those programs and, in particular, the data going into those programs. Almost every adjuster will run your car through as being in average to poor condition, so be sure and look closely at that report.
Once you find that condition listed on your report, you’re going to want to provide the adjuster with all the information you have to show the condition is actually higher than listed by the adjuster. Things to look for to adjust the value to a higher condition would obviously be the lack of dents and dings and things like that. But also, are there new tires on the car? Has it been worked under recently? A new engine and transmission? Any of that information you have in a reasonable period of time you want to provide to the adjuster to try and increase the value of the car’s condition.
In addition to negotiating the basic value of the car, you also need to take into account what should be included on top of that, and unfortunately, what’s not included in that. On top of the car’s basic value, you’re entitled to reimbursement of the tax title, licensing fees that you have paid for that car. In addition to coming up with the car’s raw value, you do get to add just if you were to go on the street by it with the cost of the tax, title, and license. In California, that can be anywhere from 8 to 10% addition on top of the car’s raw value. So be sure you include that in your demand.
While you get to add tax, title, and license to the car’s value, you don’t get to add sentimental value. Unfortunately, the fact that that was your first car or your favorite car or was a gift to you doesn’t come into the equation. Because the car value is based on what a willing buyer and a willing seller would be selling the vehicle for, and it’s unfortunate, but that is the law.
Probably one of the most important things, though, in negotiating the value of the car is to which insurance company you’re negotiating the value of the car. Many people are reluctant to negotiate the value of the car with their insurance company. Saying, hey, why should my insurance company pay for it when they were at fault? The reality is the other insurance company will have to pay for it, but you’re better off typically going through your insurance company to negotiate the value and then letting your insurance company get reimbursed from the other side.
You typically want to go through your insurance company because your insurance company owes you a duty of good faith and fair dealing. So when they’re negotiating with you, they’re negotiating for a range of values, and they should be paying you in the top range of that value. In contrast, the other side’s insurance company owes their insured the duty of good faith and fair dealing, not you, and as a result, they are going to try and pay you on the low end of the range of value. The difference in value between a high end and low end can be quite significant, and that’s why usually you’re better off going through your insurance company.
However, one of the downsides admittedly in going through your insurance company has to do with your deductible. Often insurance companies will charge you a deductible, but you get that deductible back when they collect the money from the other side. In fact, you are the first person reimbursed. Many of the more reputable insurance companies will actually waive the deductible once the other side admits the liability, in which case that’s not even a challenge for you all. Because of the differences in values between what your insurance company should be paying you and what the other side’s insurance company should be paying you, temporarily being out that deductible is usually well worth it.
If, in the end, you can’t come to an agreement with the insurance adjuster over the value of your vehicle, your insurance company has to pay you at least what they believe to be the value. Then you can arbitrate the difference in that value over time. In contrast, the other insurance company has no obligation to pay you anything until you come to an agreement as to the value, and worse, you would actually have to sue them to get that reimbursed. Again because of those timing differences and ability to resolve conflict differences, you’re usually better off going through your insurance company, if that’s the option that you have.
While the question, “how much does an insurance company pay for a totaled car?” seems straightforward, there are lots of variables about that. If you’ve been involved in a car accident and you have insurance claims for loss of use of car, loss of value of car in personal injury, I hope you’ll consider calling our law firm. My name again is Matt Eason. The law firm is Eason & Tambornini. Our address is 1234 H Street, Sacramento, CA. 95814 and my phone number is (916) 438-1819.
