How to handle your hail damage: 1. Will your car be totaled? General rule of thumb is that most insurance companies wont fix a damaged car when the cost to repair the damages is 60% of the value of the car (Ive heard as low as 50%, but that is subject to the company you have and their situations). Thus, if your estimate of the damages is $5000, and your car is worth $8000, chances are high that they will total it out and give you the maximum amount for the car via the depreciated market price. 2. What is your market value of the car? Remember that Insurance companies wont give you full market price for the car, but will subject it to depreciation. All this is subject to interpretation, so make sure you have as much facts as possible when arguing your case. Heres what you need (because the adjuster will do the same same thing to get his numbers): A) Book Value: The Kelly Blue Book, Black Book, and NADA Book (among others) are the industry valuation reference book. Look up the make, year, model, mileage, and additional valuable features to determine the current market prices. Each books value differs slightly, so the more you know, the more you cant be tricked into accepting a value thats not realistic. Now, books give you an accurate market value, but to verify values in your location, you need (and adjusters get)... B) at least 3 comps or comparative cars being sold on the local marketplace: Just like Real Estate Assessments, you need comparisons to justify the money. Go on the internet and look for the same car (with features and model type) with similar mileage. These will help you know what your cars truly worth, in case the adjuster isnt accurate with his numbers. We had a customer with an insurance dispute, and upon analyzing the adjusters data found that the adjuster was running comps with 30,000 more mileage that what their car had. The adjuster then encouraged the customer to submitt 3 comps that favored his side of the dispute. The difference in this situation made the check thousands more. C) Condition of the car before the damage: An immaculate car demands more money. A pigged up car, or one with bad paint, rust or just poor operating condition will fetch less money. Appearance is important, so make sure its clean if the damages are horrific and you are certain the vehicle gets considered a total loss. Of course, the higher the market value, the more the repair estimate needs to be to get to the 60% mark, so it CAN work against you depending on your situation. So you have to do your homework to determine what situation you need to stress out about. 3. How much do you own on your car loan? Most important question is if you owe what your car is worth (or less is better). If your car is totaled, they dont want it on the road. If you owe more than what its worth, the insurance companies dont care. They are legally obligated to pay what their contract states (subject to PA laws, of course) and they are not legally obligated to give you any more. You will be responsible for the difference in the loan. GAP insurance, which is offered at most dealership for an additional fee is an insurance product that helps bridge the gap between the loan amount and the market value if a situation like this arises. If you purchased this coverage (or auto insurance policies may offer similar coverages) this can help you in this situation. Another preventative measure is to always pay extra on the principle on your monthly car payments to get that loan balance down faster, so that if something bad occurs, you dont get caught upside down in your loan, with no money to pay it off. Calling your loan company and asking for a 10 day payoff will give you the payoff good for the next 10 days. Its good to know this before meeting an adjuster for an estimate because he may show some mercy in your situation if he knows where you stand, and is under orders to make the customer go away happy. Remember, an amortized loan is legally designed to pay the bank more $ in the beginning of the loan, and pay the car off later in the loan. So everyone is the most vulnerable to car losses in the 1st half of the loan period. Meaning: Just because you paid $6k to the bank, doesnt mean you owe $6k less on the loan! You might have paid $4k to the bank in interest (as a privilege to do business with them) and only $2k went to pay down the car. It all depends on your terms, type and interest payment on the loan document you signed. Do your homework and be prepared, because in order to make sound financial decisions during this stressful situation. Avoid impulsive decisions. Avoid anger by arming with information. And assembling a team of experts. If you are prepared and have done your homework, there is a chance this catastrophe can turn out in your favor, and you can end up in a better situation than you started with. This rant was written by a licensed PA insurance agent and is for informational purposes only. Not a substitute sound legal or financial advice. This just explains the process and some of what goes on. Consult Pennsylvania licensed professionals to come up with a plan thats right for your situation. Good luck, and if we can help, let us know.
Posted on: Sat, 24 May 2014 02:26:59 +0000
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