I just bought a car last week. When I was applying for the loan, the processor told me “full coverage” insurance is actually only 85% of the NADA value. I paid an extra $300 for gap insurance, which covers that 15% if the car is stolen or wrecked.
I’m not an expert on insurance, but this sounds odd to me. Gap insurance is usually understood to mean that you are “upside down” on your loan, i.e.: the payoff on the loan is more than the retail value of the car. You buy gap insurance to avoid owing a balance in the event your car is a total loss. AFAIK most policies pay the retail value of the car at the time of the loss, as determined by a specific guidline, not 85% of that value. If you buy a new car it becomes a used car once you register it in your name. The 85% figure might be a rough estimation of the value at this point. In addition, most people carry insurance w/ a deductable, so the amount you will receive, in the event of a total loss, is the market value, minus your deductable.
The part I have a problem with is the suggestion to essentially harass them. I’m sure it works at times, but I find it to be a bad practice.
I also know adjusters well, I worked in property claims for years as part of my 12 years in insurance. That tactic would have worked well with some of them, others it most certainly would not.
Insurance in my jurisdiction in the US is meant to put you back in the same condition you were before the loss. This means you have to come up with a price if the car can not be repaired and since this number is a best estimate on what it should take to put you in an equivalent vehicle it is always open to interpretation.
The insurance company is trying to figure out what a judge would order them to pay if you sued them. By figuring this out early, everyone can save the aggravation of actually have a court decide.
People seem to think the insurance company owes them payment. Actually the person causing the damage owes, but the insurance company is acting as their agent pursuant to the coverage they bought to protect themselves. For example if you ave a 50K BMW and you are hit in my state and they have only 25K in coverage the insurance company will write you a check for 25K and say that’s all folks.
The adjuster is getting his number from somewhere. You have to show him why your car is worth more. Condition and options are the most common way. It may be 2K difference between good condition and excellent in the program the adjuster uses. This a matter of opinion. Make them document how they arrived at the determination but understand if you get adversarial with them they can just say “hey this is it. sue us.” Everyone wants to avoid this.
In most cases it really does not matter what you paid for a car, or how much you owe, it what is the value at the time of loss in its current condition.
I know I am repeating what most posters said but I had a little time on my hands.
Hope it goes well
Mr. Peabody
Unless you have “underinsured” coverage, which in my experience most people do who have nice cars.
Yeah, but at that point aren’t you going to *your * insurance company for underinsured motorist?
I attended a very interesting (but not unbiased) talk the other day about auto insurance company lowball practices (in the US). Apparently some companies are very aggressive and a bit discriminatory in how they do it. For example, a single parent with one car is seen as much less likely to dig in her heels for full payment than a patriarch with several vehicles. If you think you may have come across as “demographically vulnerable,” I wouldn’t hesitate to use Shagnasty-like tactics to let them know you won’t take it lying down.
I think they lowballed me because using the NADA site the number for “clean retail calue” is about $1,300 more then they offered. $1300 US more. The “clean trade in” number is about what they offered, by again in US dollars. The offer was in Canadian dollars of course.
Then you got served. Why would you trust a loan processor to give you that information instead of an insurance agent? I’ll bet you bought the gap insurance from the loan processor, and he had the handy forms there ready for you to fill out, huh?
Joining the list of people how have successfully negotiated with an insurance adjustor. As everyone said, back it up with facts.
If your vehicle was new at the time of purchase and you bought the endorsement form 43R (or L in the case of a lease), AND it’s within the first 24 (or 36, depending on the company) months of your owning said vehicle, the company will pay the replacement cost of that vehicle. Other than that, you get actual cash value only.
Please let us know how this will work out.
@Rick That linked definition was not very good, it does not mean ‘compensate’, it means put you back in the same position that you were in before the event. In Economics terms it would be to return you to the same indifference curve, although possibly a different point on that curve.
The thing is that adjusters don’t necessarily understand the term, offering the trade price rather than the retail price is not indemnification since the average joe cannot buy an equivalent car for that price.
I’ve quite often found that I’ve needed to explain people’s own jobs to them.
FRDE is correct. The insurance definition is to return someone back to the state they were in the moment just prior to loss. Of course that’s not word-for-word, as it’s been years since I had to recite it.