My friend totalled his car… It was his fault, even though I don’t think that is a factor. His insurance company offered him only half the cost of the car. He just recently bought it.
Is there any recourse against the insurance company, legal or otherwise, so that he can get the full value of the car reimbursed?
What does he have to do for them to think twice. He hasn’t agreed to anything so this is still pending. The state is Illinois btw. I’m sure that matters because of the laws… any help?
Fault is not a factor. The price he paid for the vehicle is also not a factor. The relevent factor is the current value of the vehicle.
Was it a new or used car? How long ago do you mean by recently?
You’ll want to check with a lawyer licensed in your jurisdiction. In my state, which is not Illinois, the insurance company is usually obligated to pay the amount the car was worth on the day of the accident. This value is determined according to an index–they used to use the “blue book” value, but I think they use something else these days. There is some room to negotiate, if the car was in exceptionally good shape, low milage, etc. and you have documentation thereof…
Note that the amount the insurance company pays may be less than the amount owed on the car. In that scenario, the insurance proceeds would go to the lien holder, and the owner would still be on the hook for any outstanding balance per the terms of his contract with the lender.
I assume he didn’t get the ‘Gap Insurance’?
First of all, despite the fact that the car is “new,” it may have relatively low value. Most new cars drop precipitously in resale value when they leave the lot. Not half, of course, but a lot.
Second, it would depend upon why the insurance company calculated the payoff on the policy the way they did. Prior damage? Deductible? Other reasons? To address the issue, one has to know what the reasoning is, so that one can counter the reasoning.
There are ways to get decisions of an adjuster reexamined. The best recommendation is to pull out the policy and review it to see what the internal steps are with the company. Also, your friend might look to see what Illinois’ Insurance Commissioner (or whatever comparable officer Illinois may have) has available in the way of information on the issue.
Without knowing specifics beyond what is in the post, it is impossible to tell if he has any valid recourse; start with these basics and go from there. 
'“Get a lawyer” may be the best advice. However, why do you think the insurance settlement is “only half what the car is worth”? If your friend’s source for the car’s value is credible, perhaps taking that to the insurance company might help. You say he just bought the car. How “just”? How many miles were on it when it crashed? The insurance company only pays off on the car as it was when it was wrecked. If the car was in poor condition prior to the crash, that would affect its value, too.
If the car was wrecked only a week after purchase (as a new car), then the insurance company should come pretty close to the original sales price. However, if the car was used, or was bought around eleven months ago, or has eleventy jillion miles on it, the actual value might drop. If the car is financed, this leaves a gap between the car’s value and the amount owed. This can be a real bummer when something bad happens.
I had a friend who worked for Allstate and she told me the worst thing people can do is yell and scream at the insurance adjuster. She said Allstate has very specific computer programs, they input all the damage information into the computer and it spits out exactly what Allstate pays.
She said it isn’t often they go against the computer, but if you do you have to negotiate with a higher up official because anyone else simply MUST abide by the computer decisions.
A lawyer also works but they will charge you so it may offset any gain you get.
IANAL and all that, but typically your auto policy says that they will repair or replace with like kind and quality. The company is only on the hook for the amount of money it would take to replace the destroyed car with another of similar condition.
I can think of one or two times when the payoff would be noticeably less than the amount owed. If the buyer of the car still owed more money on his previous car than it was worth (if we make a deal, we will pay off your car no matter what you owe) that negative equity gets rolled into the new car loan. It is possible to buy a $20,000 car and owe $35,000 on it this way. If this is what happened, your friend is SOL.
The other time I can think of this happening is an old car where a lot of money was spent restoring the car to show quality. A show quality car is worth much more than a beater. If they based their pay off on it being an average car of average condition, when in fact it was a pristine example and of show quality the pay off will be low. An appeal to the adjuster backed up with pictures, and receipts will probably get a higher offer.
I settle total losses. It is rare that the customer and I finalize things in a disagreement. I have been told I was off by 50% on my initial offer before, but that condition has always been quickly rectified after a good discussion with the vehicle owner. Sometimes there’s something about the car that I was unaware of, sometimes the customer placed a value on the car based on misinformation. There’s not really enough information in your OP to say what’s going on in your friend’s case, but it sounds like there needs to to be some discussion and explanation going on. Ultimately what is owed is fair market value of the car on the day it was wrecked. A monkey can figure that out: just shop for cars like yours–with all the pimples and unknowns and documented maintenance–and decide what you’d pay someone for the car. A 1990 Chev Cavalier with 10k miles in pristine condition can’t be replaced for $2,250, but it’s still a 1990 Cavalier at the end of the day-- $2,000-$2,250 tops. Because anybody with more than $2,250 to spend on a car is going to be looking for something better than a 1990 Cavalier. There’s always going to be a difference between what your car is worth to YOU as opposed to what it’s worth to someone else. In this case, all that can be done is for someone to support why they value the car the way they do.
The check isn’t coming from the claim rep’s personal account, and they have better things to do than fight with you when they know you’re right. Your friend needs to help the claim rep to help him.
I’ve gone through this twice with US insurance companies. Both times they ended up paying me the higher value.
When they make the offer I respond with “I can’t replace the car for that”.
They will tell me that is all the car is worth.
I don’t accept the offer and tell them I need a few days to think about it.
A few days later I come back and tell them what the going LOCAL rate is for the car. I provide newpaper and internet ads to prove my point. The last time I flooded the insurance agents inbox with ads (I only did that because he was a jerk).
These ads have to be for the same year, options, and approx milage. I also only use ads from car lots, not private sales.
With that, they change their tune.
I have a friend who was an old time auto claims adjuster, he is still in the business but a different area.
One of the things he has repeatedly told me, is that snotty lawyers are a PITA.
He is actually quite guilty about underpaying in cases where he hated the lawyer.
In your friend’s case I would simply say that I don’t give a toss about the value of the car, just deliver me a car of the same year, mileage, model etc - and make sure it is not a lemon.
The key word is ‘indemnity’ - essentially a variation on Seven’s approach.
My understanding is that claims adjusters have quite a lot of leeway and as long as you can get past the computer operator, you can get a reasonable deal.
Just wanted to observe that the OP must be in the running for Charter Member with fewest posts.
Which I suspect does not bode well for his/her continued participation in this thread!
Gap is only used these days on leases where it is usually provided by the vehicle manufacturer and the costs rolled into the ‘acquisition fee’.
Because the car really belongs to the manufacturer, they are covering themselves against the leasee driving it off a cliff while reaching for the cell phone.
State Farm and GEICO do not offer Gap on cars financed by a traditional loan. Others may but my Insurance friend (15 years selling auto) tells me he has never sold a policy.
FWIW, I totalled a car in 2002 - my fault. Book price was about $12K, State Farm gave me almost $16K without complaint and my policy did not go up.
I thought gap insurance was generally offered by the lienholder, not the insurer.
When my wife and I purchased a vehicle a year ago using a loan from our credit union, we were offered Guaranteed Asset Protection (GAP). Since we put 50% down, we declined - we knew we’d never be upside down on the loan (we paid if off in full after 8 months). Here’s their summary of the program:
Well, one way is to find ads in the paper with the same car. If a car is advertised @$9500, it’s hard for the Insurance co to argue that your car is only worth $5000. (assuming that your car didn’t have anything weird going on, of course).
Usually, you can take this sort of thing to mediation, or contact your States Insurance Commisioner.
Oh come on, I can’t post at work or in my sleep which leaves about 3 hours and I have to eat and I’m trying to help a friend through this. Okay, I’ll give up eating and post more. I am reading all responses and have a running list of relavant information to share. But you want participation, you got it…
-I’ve never been in a car accident (when I was driving)
-I’ve never gotten a moving violation
-Last month, I accidently wrote a check to the police dept for a parking ticket. Unfortunately, it happened to be from a check book that was connected to a cancelled account which was stopped because I was burglarized. A complete accident. They thought I was committing identity theft until I went into the station the next day with cash and the police report number.
Anything else? If not I’m gonna grab a sammy.
I have a question that just a bit off topic. I’m having trouble selling my truck for what it’s worth (manual transmissions being not as popular as they once were). Let’s say I called my insurance company and asked them what my truck is worth. Let’s say that I could live with amount minus the deductable. What if then I totalled the truck. Would that be fraud?
PS - I wonder if it’s coincidence that the Ads by Goooooooogle on the bottom of the page are all for auto insurance companies.
We didn’t ask if you’re a good driver and an honest guy. At least three posts asked for more details on what you meant by “His insurance company offered him only half the cost of the car. He just recently bought it.” Namely:
If what you mean is totalling the vehicle intentionally then yes, that is fraud. In most states insurance fraud is a felony that can result in jail time and hefty fines. When I was handling auto claims in Ohio I believe the statute allowed for up to 5 years in prison and $50,000 in fines.
The nasty part about accidents is, you always lose.
You can’t go by the purchase price of the car. That price includes dealer prep, dealer profit, salesman’s commission, sales and excise taxes, finance charges and stuff like that. None of that adds value to the car and you aren’t insured against losing it. And then when you buy a replacement you again pay dealer prep, dealer profit, salesman’s commission and on and on all over again.