Is the Insurance Company Making a Fair Offer for Your Damaged Vehicle?

When you’ve been in a collision that was another driver’s fault, then you are entitled to compensation for the damage to your vehicle.  But how do you know whether the insurance company is making a fair offer for your damaged vehicle after an Alabama wreck?

In this blog post, we will cover everything you need to know about whether to accept or reject a property damage offer.  To start to know your rights, you must know Alabama’s laws about property damage.

Is the Vehicle a Total Loss?

In Alabama, the amount and type of compensation you are entitled to depends on whether your vehicle is deemed a total loss. But how do you know whether the vehicle is totaled?

Insurance companies in Alabama generally follow the 75% Rule. Under this principle, if the repair costs exceed 75% of the pre-crash market value of the vehicle, then the vehicle will be a total loss. If the repair costs are less than 75% of the pre-crash market value, then the vehicle will be deemed repairable.

For example, if your vehicle was worth $30,000 prior to the wreck and the repair costs are $25,000, your vehicle is totaled in Alabama. However, if the repair costs are $20,000, then your vehicle is not totaled.

Next, we will talk about what you are entitled to under each scenario after an Alabama car accident.

Fair Offer for Damaged Vehicle That is Repairable

If your vehicle is repairable, then you are entitled to three types of compensation from the at-fault driver’s insurance company:

1. Repair costs:  The insurance company must be 100% of the repair costs at a body shop of your choosing.  However, Alabama law permits the insurance company to insist on after-market replacement parts.
2. Loss of Use: You are entitled to a rental vehicle or stipend payment for the time period in which your car is being repaired.
3. Diminution in Value: Any vehicle is worth less after a collision, even if the repairs were made perfectly.  You are entitled to the difference in pre-crash and post-crash value.

Usually the only tricky part of negotiating this type of claim is the element of diminution in value.  Insurance companies sometimes refuse to pay anything for diminution. If so, ask a mechanic or car salesman to write a short letter explaining the loss of value and defining a range of the loss. Present this letter to the insurance company and demand fair compensation.

Fair Offer for Totaled Vehicle

When your vehicle is totaled, Alabama law is fairly straightforward. You are entitled to the “reasonable market value” of the vehicle, plus costs of storage, towing, and all fees.

Sometimes this is an unfair rule. For example, a vehicle’s sentimental value is not considered.  It does not matter if your grandfather gave you the car or if it was your favorite car of your life.

It also does not matter whether you owe more on a car loan than the reasonable market value.  If you owe $20,000 on a car loan, but the vehicle is only worth $15,000, then you will be in a pickle unless you purchased GAP insurance.

To determine the reasonable market value, we tell clients to look at two resources:

1. Kelley Blue Book: The most trusted resource for car valuations, Kelley Blue Book gives you a great idea as to the pre-crash reasonable market value of your vehicle.
2. CarFax Value: CarFax has a function on its website that gives you the retail value, private party value, and the trade in value of your vehicle.  You can search by VIN number.  You should be paid at least the private party value of your vehicle.

What To Do If Insurance Company Makes Unfair Offer for Totaled Vehicle

Insurance companies make decisions based on data.  To change their position, you must counter their data with your own. Download the KBB and CarFax reports for the value of your vehicle.  Send these reports to the insurance company along with a counteroffer.

If the insurance company refuses to budge, you can consider filing a lawsuit to recoup your losses. To do so, you have to file a lawsuit against the at-fault driver in the court system of the Alabama county where the collision occurred.  There is a filing fee for the lawsuit (varies by county) which can be recouped if you win your case.