What To Do When The Insurance Company Totals Your Car - Lehto's Law Ep. 4.41

hello and welcome once again to Latos law I'm Steve Lee - attorney at law in state of Michigan I've been practicing on for 26 years in the fields of consumer protection and lemon law I often write about the stuff in written a few books as well so here talk about what to do when the insurance company totals your car what to do when the insurance company totals your car I've gotten a few questions about this recently including a phone call I think last week and I had a long discussion with gentleman about this man realized you know it's something we should probably talk about on this show so I will tell you right now that I'm in Michigan as I've mentioned previously and Michigan has no-fault insurance other states have regular fault insurance and I'm thinking that much of what I'm talking about today that won't matter so much about the no-fault except for who the party is you're dealing with and for those of you in normal states you have insurance New York are the people who you're involved in an accident with have insurance in their car you hope and if you have a problem you go after their insurance company well in Michigan you get to insure yourself against other people so you're in a car a drunk driver runs a red light t-bones you on purpose and your insurance covers it for the most part don't get me wrong there's places where the other person's insurance will come into play but the first fight you wind up often with is your own insurance company so we won't get into that today we're talking about this you are involved in a car accident and you've got insurance that covers your car comprehensive collision whatever it is that that covers the whole shooting match as we like to say and your car is totaled and what we're talking about basically is this your car's got damage to it that exceeds the value of the car itself your car is worth $20,000 and it's got $21,000 in damage or your cars worth $5,000 and it's gonna cost six thousand dollars to fix and you realize that it is not economical for the insurance company to fix the car when they could simply replace the car so that's what they're basically looking at the cost-benefit analysis and that's what we're talking about when a vehicle is totaled I will tell you right now I have heard people make arguments both ways I've had somebody call me up and say Steve my car I believe it's totaled but the insurance company thinks it can be fixed and I've also had tell me Steve I think my car can be fixed but the insurance company wants to total it did I get those right either way I've had it happen where people argue both sides of that and that's one of the first problems you'll often encounter and it all boils down to the same thing and that is what is the actual value of your car at the moment it got totaled no the split second before it got totaled okay what was its pre total value and then of course what's it gonna cost to fix I've heard horror stories where somebody said you know I've got a very expensive car I took it to one place and you know estimates are off the chart the insurance company says take it someplace else I took us someplace else again the estimates ruffster and they kept sending this person different places until they finally found one that said yeah we think we can fix it and then the question is do I have to let the insurance company try to fix my car when the first four places that looked at said it cannot be fixed economically and the last place that says they can and I always say well the problem you've got here is that all of what we're talking about here goes back to your contract your insurance contract and insurance Rises basically in the field of contract law so when you bought your insurance policy nobody ever reads the thing but there's a there's a big contract to give you and you read all the coverages and you read all the things and it has all the definitions and it'll say what their responsibilities are what your responsibilities are what to do if you're in an accident what they'll do for you and you're in an accident so on and so forth that's all laid out in that contract so I've had people call me they ask me some questions about you know what should my insurance come to be doing for you right now and I often say well do you have a copy of your contract they say I don't know go find it because chances are the question you're asking me is answered in there somewhere now you might not like the answer or the answer might not get you to the final answer but at least the contras will get you where you need to go so you go look at your contract see what it says but it's gonna say in there something the effect of if your vehicle is is damaged in an accident that we cover you know some covered event we will at our option either repair it or if the vehicle cannot be repaired economically we will then replace it and and then you talk about what is the replacement value of a vehicle so I've had people call recently a Steve I bought a car I'm driving it I've got full coverage insurance on it and somebody t-bones me and the vehicle is now totaled and the insurance company is about to call me and tell me what their verdict is what should I do at this moment in time and this is what we're really talking about here because what they're going to do if they total your car is they're gonna say yes your car is totaled here's what we're going to give you for it they're gonna give you a check the check send me a piece of paper with numbers written on it and all that matters here is whether that number is correct and how do you know that number is correct so what you need to do at this point is do your own research and I know a lot of people watch my podcasts and videos hoping I won't say by the way now you've got to go do homework because they're hoping I can give them all the answers but this is gonna be so dependent on what the car you've got what its value is and where you live and so on I can't possibly tell you that but I can tell you how to figure this out so what they're obligated to give you generally speaking is if they've totaled your vehicle and you've got coverage for that is fair market value or replacement value for that car so let's just pick a car at random let's just say it's a dare I go there a 2002 Daiwa Lanos okay again I know the cars got no value but let's pretend it does okay so you've got this car and it's got coverage on it and the car gets told okay and you know the insurance comes to call you can just say your car's totaled or or you may have done some research in your own and discovered the car's got seventeen thousand dollars in damage and you know that exceeds the car's value well what you need to find out then is what is the value of your car what's the fair market value of your car how much would it cost you to go out and replace your car in the market today and this is one of those things that it's actually I believe inherently unfair but there's really no other way to do this and an example I'll give you as a client of mine very good friend of mine actually I've known for a long time who owned a beautiful brand-new convertible Mustang he bought the car brand-new black triple black convertible Mustang the first week he owned it he stopped at a red light somebody just plows into him and just destroys his brand-new car car had less than a thousand miles on it and the insurance company called him up said here's we're gonna give you for your car it's totaled and the number was significantly less and he bought the car for and he thought to himself wait a second if I buy the car on Monday how dare you tell me that on Thursday it's worth this much less than what I paid for it on Monday so I was a young attorney at the time and I looked at the letter that my client had gotten and so I said well let me call the guy talk time so I called the adjuster and I said you know I'm curious to know how do you rationalize this number and this will show you how long ago this was the guy goes do you have a newspaper in front of you and I said I can get one he goes ok grab free pressor News either the two big Detroit newspapers that they had back then and I pulled one out he goes go to the classifieds and he goes and look for a brand new Mustang like your clients except in the used section because it's now I used Mustang he's find yourself a low mileage used convertible Mustang from that same year and I found one and he goes look at the price and sure enough the price was right about what he'd offered my client was right below and the guy goes yeah he goes I can find 2 or 3 Mustangs identical to your clients and and they're asking prices are right around what I've offered your client so your client could simply take the check for me and go buy one of those Mustangs now the only difference is that the Mustang he's buying isn't brand-new like his was on Monday and he doesn't know anything about the previous owners and and none of them had that low mileage many of them had a few thousand miles none of them are in the hundreds though and the guy goes I can only give you a couple extra bucks for the mileage difference he goes but I'm sure you see my point is it that fair market value is determined by the market and we're going to look at it and say yeah you can buy this in an arm's-length transaction with a stranger that's what that thing is worth so the key is you have to find out what your vehicle is actually worth and many people overestimate the value of their own things okay and I can tell you right now that for instance these microphones behind me if you looked at one of them and said Steve what's that thing worth you know I can give you a price for it but you can go onto eBay which is where I bought half of those and find another one of each of those microphones and see what the prices and watch what it sells for and that's probably a good gauge do what that thing is worth that's a good market place generally speaking assuming that they're not scams and so on so you can do your own research and this is really easy nowadays because you can go on the internet to eBay or a bunch of other places that sell cars and look up make model year mileage and even zip code because that actually is going to play into this on some levels some vehicles have more value in different parts of the country than in others and so you can actually find some comparable prices for vehicles similar to yours depending on how rare your car is if it's a 19 it's a 2000 so you die Wulin else good luck you know cuz it's so few of them out there but anything that you own you should be able to find a comparable one for sale on the internet so what I recommend you do is do your research and look into finding documentation print out pages for instance showing what vehicles are keeping in mind that someone advertising something for sale on the internet might take less for it so just because someone's selling a car for 20 grand doesn't mean the cars worth 20 grand okay but if you can find sale prices where someone's sold one for 20 then yet vehicles worth $20,000 but do your research line up all your paperwork and do everything you can to document what your car was worth the moment you crashed it because you can show what it costs to replace today and that's what the documentation is so when the insurance company that makes you their first offer and by the way I purposely phrased it using the word offer because what they're doing quite often is in negotiation and a lot of people in the insurance industry don't let me talking about this but they are negotiating with you okay they're not gonna call you up make you their best offer right off the bat many adjusters actually get bonuses for low balling people and some companies actually encourage their adjusters to say well if somebody's entitled to a dollar offer from 90 cents to see they'll take it because if you take it you just basically shot yourself in the foot at least 10 cents worth and that's money in their pocket keep in mind insurance company and you although you're on the same in some respects our adversaries at this point cuz they want to pay you as little as possible and you want them to pay you as much as possible so it's your typical capitalism situation again so when they call you up and make you an offer don't immediately accept it say I need to look at it do some research talk to some people and find out if that offer is appropriate so if you find out that they've offered you $15,000 but you can document your car's worth 20 you then call them back and say well you know your offer is low I think I'm entitled to 20 and here's why and lay it out for them because if you have the research to explain where your numbers came from you can at least force them presumably to show you where their numbers came from and so when I made the phone call behalf of my client the guy told me said Steve I can show you exactly where I got these numbers from I got him out of today's newspaper you know and that's where they mean I know that was a vehicle that had enough of them in the marketplace to show what the number was so that you know there's a population to base that calculation off of so do your research get your paperwork together when they make you an offer unless it's a dollar on the dollar keep in mind that they're planning on negotiating I know a lot of people who say Steve they've offered me 15 grand I'm worried if I tell me I want 20 they're gonna withdraw the offer well you know they owe you some money right it's not like you're negotiating with somebody was the right to tell you know the worst that they can do presumably is come back and say no we think 15s fair take 15 you know and now that's the other question that arises because in many states like Michigan if you sue an insurance company you're forced to pay your own attorney fees so if the insurance company offers you 18 and you think you're entitled to 20 okay you could sit there and dig in your heels and argue with them till you're blue in the face hoping they move off of 18 but of course they're an insurance company they know that you need the money to get into the car they're gonna dig in their heels but they don't need to go blue in the face because insurance companies lots of money they can just sit then go now you know if you want the 18 take it otherwise see ya and so then you have to ask yourself do I take the 18 or do I do something else because in Michigan the only other things you can do there's two of them and one of them is meaningless one of them will cost you too much one of them is you can file a complaint with the insurance commissioner in Lansing who is a former insurance executive who's not gonna care is gonna say Oh a complaint against this insurance company for low-balling okay nothing will come of it the other thing they could possibly do is you could possibly do if you're in this situation is file lawsuit and litigate the issue but if they offered you money that shortchanged you to thousand dollars it's not gonna be worth it for you to hire an attorney and sue them over $2,000 so the lawsuits I've been involved in with insurance companies we're almost always with a outright denied a claim where they actually said you think you're entitled twenty thousand dollars we're gonna give you a zero okay and I've talked about some of these before and different topics but generally speaking that those are rarer but they happen and the clients come to me and said yeah it's worth it for me to hire you to litigate this claim over twenty thousand dollars because the alternatives are gonna give me zero but our you know litigate over a couple thousand probably not litigate over five grand maybe and so it depends on how far apart you are but the real question is what are they offering you and where does it check in with actual fair market value the fair market values the thing you have to take a good hard look at and find out what that car could be replaced for at that moment in time and you know there are some oddball situations if you had an extremely rare car and it was insured properly and it gets destroyed and the question is you know what can you replace it for there might not be comparables for it okay it depends on how rare the car is so but generally speaking most cars are fungible how does your word for the day meaning that you know one make model your car and the other make model year car that are identical and the mileage is are the same those are generally speaking there have the same value but in the same condition their commodities in that respect one other thing I've encountered more than once is I've discovered somebody who had full coverage insurance on a car there's only worth a couple thousand dollars and I and I ask and say wait a second you are covering you're carrying full coverage insurance in this car it's only worth a couple thousand dollars they say yeah but if I get an accident it gets totaled they'll replace it I said yeah I'm gonna cut you a check for two grand how much is that insurance costing you every six months you know it might get the point where you'd be smarter is taking the money sticking in a bank account and getting the de minimis coverage you know bare minimum you can get in Michigan's called PL PD but you know there comes a time when the value of your car is dropped to the point where it doesn't make any sense at all to carry full coverage on it because you know it's gonna be totaled with almost anything that happens to it but generally speaking what you do in the insurance company totals your car is you do your homework find out what the car was really worth and when they make you an offer understand that the offer is the first step in a negotiation it's not a final offer you can almost always talk them up especially if they've low-balled you questions or comments otherwise shoot up my way Latos a lot comm le h TOS lawm i'm on twitter at Steve Lyons stitcher SoundCloud pod mean Google plan YouTube thanks for watching and listening bye-bye

Channel: Steve Lehto

Views: 96,134

Rating: 4.9042358 out of 5

Keywords: Lemon Law Lawyer, Lemon Law Attorney, Michigan Lemon Law

Id: 8OQXQOq3N48

Length: 16min 28sec (988 seconds)

Published: Wed Jul 11 2018