The recession has brought an interesting new factor into the relationship between drivers and their insurance companies. The average age of vehicles now on the road in the United States is ten years, meaning that if those cars are involved in accidents, insurers are more likely to total the vehicle over owner objections. In totaling the car, the insurer is generally out less money than were they to authorize repairs.
There is little mystery in the “totaled” equation. If the insurer believes that the cost of repairs is half of the car’s worth, they will declare the vehicle a complete loss. This decision is based on:
– The value of the make and model in the given area.
– The value that pricing services apply to the make and model.
– The easy availability of replacement parts.
– The cost of the labor involved in the repair.
The company will also take into account the overall safety profile of the vehicle; will it be safe to drive after the repair?
Although state insurance departments can use their authority to hold insurers to the letter of the law, they cannot make them pay more money for a damaged or “totaled” vehicle. Consumers can, however, contest the offer:
– Most consumer advocates agree that by simply disputing the company’s offer, the insurer may come back with a slightly higher figure.
– Substantiating the claim of worth with values from pricing guides and local advertisements for vehicles of the same make and model with similar options and mileage (and in the same zip code) is a powerful tool.
– Consumers can demand an appraisal. Generally each side picks an appraiser who chooses a mediator to evaluate the loss. If the consumer and the company agree to the process, the decision is binding.
There will, however, come a point when the insurance company is done negotiating. It’s a difficult call to make, but consumers need to try to gauge when their insurer is simply “done” and take the money. If, however, the individual values the moral point over the monetary amount and can afford to do so, filing a lawsuit against the insurance company is an option.
In the short term, however, more drivers are complaining to state insurance boards that insurers, in totaling their cars, are giving them far less than the vehicle’s actual work and making it extremely difficult for the driver to acquire a functioning replacement.