Why would my insurance company total my car?

Miscellaneous and Personal Stuff I Must Share
1

I have a four-year old car which is mechanically perfect and has less than 60,000 miles on it. It sustained major hail damage in last week’s southern onslaught of storms. Both the local body shop and the insurance company concluded that it would take about $8000 to fix it… so - instead, they’re writing me a check for retail value ($15,000) and taking the car!:dubious: Apparently it’s all or nothing - I asked if I could get it fixed for the $8000 and just carry liability on it, and they said no. This just seems bizarre to me, unless they can make a lot of money by parting it out or something? There is indeed a TON of hail damage (none to windows though), but ZERO mechanical damage. Totally weird.

Ideas?

2

Ok, what kind of car? My brand new car cost about 15K, so I’m curious about which car can depreciate for 4 years and still be worth that much.

3

I think your right about the parts.
15k to you - the 8K it would cost to fix = 7K.
So if they can salvage more than 7K in parts they come out ahead by paying you the retail value and parting it out. 7K isn’t hard to do if the car’s in good shape.

4

Boyo - It’s a Subaru Legacy. It was probably worth in the $22k range new )I think) but I bought it used 18 months ago for $18k.

5

OP. That seems odd. Typically there is an “owner-retained” option for total losses in which (as mentioned above) you keep the car in exchange for a reduced settlement. However, I do recall working flood totals totals in Texas (hurricane claims) and the law there prohibited this option, at least for flooded cars. This was a direct response to consumer complaints following Katrina–cars had been flooded, settled as “owner retained” and then cleaned up and sold. A few months later the cars started to rot.

Something may be going on in the legal environment in your state–say where you are and I can probably find out if that’s the problem.

6

I’m still waiting for my insurance company to get someone out here. I’m hoping they total mine out and give me a fair price. I have about 75 good-sized dings covering every panel. The sunroof shattered in seconds filling the leather interior with glass, ice, and rain. The windshield cracked along with one of the headlights, and to add to everything, it won’t even start now and the interior smells like a rotting corpse.:slight_smile:

I’m getting pissed because I had to rent a car while waiting for them to get someone over here, and they won’t reimburse me for that.

7

It might be much easier and simpler to just total every affected car from your storm. We had a major hail storm in Phoenix last year, and pretty much every house in my zip code has a new roof and paint job. With so much damage, it is probably much easier and cheaper for them to just fix everything and move on, instead of haggling case by case.

That’s my theory, anyway.

8

This may be exactly it… I’m in Indiana. I have friends in TN who had a similar situation and there were able to do a settlement and keep the car under a salvage title.

9

[QUOTE=Indiana Code]
IC 9-22-3-3 Necessity of certificate of salvage title; bureau determination of fair market value; required application for certificate of salvage title by insurance company or owner **
(a) A certificate of salvage title is required for a motor vehicle, motorcycle, semitrailer, or recreational vehicle that meets any of the following criteria:
(1) An insurance company has determined that it is economically impractical to repair the wrecked or damaged motor vehicle**, motorcycle, semitrailer, or recreational vehicle and has made an agreed settlement with the insured or claimant.

(2) If the owner of the vehicle is a business that insures its own vehicles, the cost of repairing the wrecked or damaged motor vehicle, motorcycle, semitrailer, or recreational vehicle exceeds seventy percent (70%) of the fair market value immediately before the motor vehicle, motorcycle, semitrailer, or recreational vehicle was wrecked or damaged.

(3) The motor vehicle is a flood damaged vehicle.

(b) For the purposes of this section, the bureau shall, upon request, determine the fair market value of a wrecked or damaged motor vehicle, motorcycle, semitrailer, or recreational vehicle if the fair market value cannot be determined from the source referred to in section 2(1) of this chapter.

(c) Except as described in section 11(c) of this chapter, an insurance company shall apply for a salvage title for a vehicle that the insurance company has determined is economically impractical to repair.

(d) An owner described in subsection (a)(2) shall apply for a salvage title for any vehicle that has sustained damages of seventy percent (70%) or more of the fair market value immediately before the motor vehicle, motorcycle, semitrailer, or recreational vehicle was wrecked or damaged if the vehicle meets the criteria specified in subsection (a)(2).

[/QUOTE]

So the dealio is that, even if it’s been totaled by hail (or even a good cosmetic workover by vandals) you have to get a SALVAGE TITLE. Whether you can have the vehicle inspected and convert that back into a regulr or “branded” title, I have nary a clue. You’ll want to talk to the DMV about that. If it is practical for you to do the title dance, check back with the insurance company and see if they’ll pay you an “owner-retained” total loss settlement IF you show them you have gotten a salvage title.

10

Thanks for the legwork, IM. I was OK with the financial settlement - they indeed paid retail and the car is gone. But I tried to do the “owner retained” settlement thing and they wouldn’t even consider it. The damage was 55% of the retail value, which just really struck me as low as a “total” threshold.

I expect there’s a strong market for late-model Subaru parts. :slight_smile: