Car was totaled, next steps?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Cigarman
Posts: 307
Joined: Fri Jul 12, 2013 5:12 am

Car was totaled, next steps?

Post by Cigarman » Fri Apr 06, 2018 5:30 pm

Hello All,

My 2012 Ford Edge SUV was rear ended about 2 months ago. This week while in the shop getting fixed enough damage was found that the car is going to be totaled by my insurance company. It has 232,000 miles on it, I drive about 40,000 miles a year. The other driver was at fault and their insurance company has already accept liability. Right now the offer from my insurance company is offering about 10% below blue book value. That is not my issue.

I will net somewhere between $7,000 & $8,000 from my insurance company. A decent used SUV with relatively low mileage will probably run between $12,000 and $16,000. Because of my business I cannot get buy with a sedan. Consequently I will be out of pocket anywhere from $4,000 to $8,000. All numbers are estimated.

Here is my question: I feel like I should go to small claims court and sue the other driver because I have been financially damaged. Based upon past history, my last two cars have had 315,000 and 390,000 miles respectively on them. Given the mileage I drive and having a mechanic who regularly maintains the car plus regular tire rotation/balance & alignment, I probably could have gotten another 2 years of driving with my Edge. Now, due to the other driver's failure to control their vehicle, I have to come out of pocket to make up the difference between what the insurance pays and what a reasonable replacement car will cost. My wife thinks I am crazy.

What say the Bogleheads?

jasc15
Posts: 403
Joined: Wed Dec 19, 2012 1:36 pm

Re: Car was totaled, next steps?

Post by jasc15 » Fri Apr 06, 2018 5:35 pm

I had a similar situation a few years ago, and came to the realization that to replace the totalled car with a comparable car would cost me several thousand dollars. I felt like I'd been had by someone, but couldn't figure out who. I'll be interested to see what others think.

123
Posts: 5193
Joined: Fri Oct 12, 2012 3:55 pm

Re: Car was totaled, next steps?

Post by 123 » Fri Apr 06, 2018 5:38 pm

It is your insurance company that is "totaling" your car and affixing a value to it. Your dispute is with them and not with the other driver. Your insurance agreement gives your insurance company the right to pursue a claim against the other driver and/or his/her insurance company. Your interface is with your insurance company and not the other driver, it's really much easier that way.

Your wife is right.

Edited to add:

Years ago getting 100,000 miles from a car was considered exceptional. Today I'd say that 200,000 miles from a vehicle is doing pretty good. Going beyond 200,000 is just free gravy. Sure competent repairs and maintenance can give more life to a vehicle, but they also make it safer and more reliable for the miles you do get. To get 300,000 miles is beyond luck. You were lucky twice, this time you drew the sort stick due to the other driver.
Last edited by 123 on Fri Apr 06, 2018 5:46 pm, edited 1 time in total.
The closest helping hand is at the end of your own arm.

02nz
Posts: 2493
Joined: Wed Feb 21, 2018 3:17 pm

Re: Car was totaled, next steps?

Post by 02nz » Fri Apr 06, 2018 5:41 pm

I'm not a lawyer and don't have extensive experience in this area, but I think the case would be weak, because the damages you would be trying to show (even if backed up by evidence of how long your cars have lasted in the past) are hypothetical. I'd put this in the file of "sometimes life sucks" and come away thankful that you weren't seriously injured. That's far more important than a few thousand dollars.

N10sive
Posts: 626
Joined: Thu May 05, 2016 6:22 pm

Re: Car was totaled, next steps?

Post by N10sive » Fri Apr 06, 2018 5:42 pm

While you say the blue book value isn't your problem it is. You should be asking fair market value at least for your vehicle and then damages for having no use of it and that it pertains to your job. This fight is also with your insurance company. They then can go after the other persons insurance company. Not sure you will get as much as you want but I would at least fight fair market value for your vehicle. Show proof by looking for comparable vehicles if you can.

simplextableau
Posts: 16
Joined: Wed Oct 05, 2016 9:20 pm

Re: Car was totaled, next steps?

Post by simplextableau » Fri Apr 06, 2018 5:43 pm

You're entitled to the value of your car before the accident, which was a 2012 Ford Edge with 232,000 miles. The check from the insurance company should be enough to go out and purchase a 2012 Edge with 232,000 miles.

If you decide you want to buy something with less miles, that is your choice but it will obviously cost more, and those funds have to come out of your pocket. You're not entitled to demand the insurance company (or the other driver) pay for you to upgrade to a more expensive vehicle.

I wouldn't want to buy the same car with 232k miles either, so it will be an upgrade that you had not wanted to make, but again, the fact that you make a different purchasing decision now as compared to before the accident is not a legally compensible item.

Edit: Consider the flip side - suppose you totaled a guy driving a 2012 Edge with 232k miles. You generously offer him the high end book value for his vehicle. He says no, because now he's going to buy a 2014 Edge with only 80k miles as a replacement, and he wants you to pay for that more expensive replacement. Would that make sense? (Answer: No way!).
Last edited by simplextableau on Fri Apr 06, 2018 5:57 pm, edited 1 time in total.

Cycle
Posts: 1497
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis

Re: Car was totaled, next steps?

Post by Cycle » Fri Apr 06, 2018 5:43 pm

Could you get a similar suv in a private sale for a similar amount? Ie 8k.

Last year I sold a really well maintained Honda Accord that was in excellent cosmetic condition, 2006. There were tons of accords on Craigslist with 150-200k miles. I wasn't able to even get what I deemed to be fair on Craigslist or cars.com, so I sold it through my works classifieds. The market value for used goods is usually shockingly low.

I value my wife's 2012 Honda crv with 90k miles at 8.5k for net worth purposes, as that's all I'd get in a private sale.
Never look back unless you are planning to go that way

j0nnyg1984
Posts: 630
Joined: Sun Apr 24, 2016 9:55 am

Re: Car was totaled, next steps?

Post by j0nnyg1984 » Fri Apr 06, 2018 5:44 pm

To keep it in simple terms, you're going to get screwed, and there's nothing you can do about it.

It sucks, it wasn't your fault, but your insurance company will never pay you over the market value for an equivalent vehicle.

User avatar
Mlm
Posts: 426
Joined: Sat Apr 09, 2016 6:00 pm

Re: Car was totaled, next steps?

Post by Mlm » Fri Apr 06, 2018 5:47 pm

I think you should be talking to the claims adjuster. The replacement value should be for the exact clone of your car in your area. You should also be reimbursed for sales tax, registration fees and any other transaction costs.

If you want to replace that car with one of lesser mileage than that expense is on you. Sorry.

Jack FFR1846
Posts: 10454
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Car was totaled, next steps?

Post by Jack FFR1846 » Fri Apr 06, 2018 5:47 pm

I'm finding 60 2012 Ford Edges under 230k miles between $7k and $8k on Car Gurus.

I don't know why you think you have to spend more. The insurance company has to replace what you have, not upgrade you.

Your wife is correct.

Link to my search https://www.cargurus.com/Cars/inventory ... ified=true
Last edited by Jack FFR1846 on Fri Apr 06, 2018 5:49 pm, edited 2 times in total.
Bogle: Smart Beta is stupid

Topic Author
Cigarman
Posts: 307
Joined: Fri Jul 12, 2013 5:12 am

Re: Car was totaled, next steps?

Post by Cigarman » Fri Apr 06, 2018 5:48 pm

Thanks all...it appreciate the quick responses.

FireSekr
Posts: 1039
Joined: Tue Apr 02, 2013 9:54 am

Re: Car was totaled, next steps?

Post by FireSekr » Fri Apr 06, 2018 6:09 pm

My car was rear ended a year ago.

Insurance company sent me a pdf of all the cars with similar mileage/condition/equipment in my area that they used to come up with a market value estimate. I rejected their first offer and got maybe another $800 can't remember exactly on their second offer. The amount they paid out was fair and I'd have been able to find a car very similar to the one that was totaled for about what insurance paid me, maybe even a bit less.

Ultimately I went with something newer and more expensive because my needs changed, but that was my choice to upgrade. If insurance isn't paying you enough to replace the same car you had, you need to contest the valuation they provided.

mikep
Posts: 3698
Joined: Wed Apr 22, 2009 9:27 pm

Re: Car was totaled, next steps?

Post by mikep » Fri Apr 06, 2018 6:45 pm

simplextableau wrote:
Fri Apr 06, 2018 5:43 pm
You're entitled to the value of your car before the accident, which was a 2012 Ford Edge with 232,000 miles. The check from the insurance company should be enough to go out and purchase a 2012 Edge with 232,000 miles.
This. Also since you'll have to pay sales tax on another vehicle, your check from the insurance company should include the sales tax added to what value they come up with. Seems reasonable to ask for that.. I was in your situation a few years ago and got sales tax and money for a new carseat (required by state law).. so pick the most expensive one you can find.

Random Poster
Posts: 1887
Joined: Wed Feb 03, 2010 10:17 am

Re: Car was totaled, next steps?

Post by Random Poster » Fri Apr 06, 2018 7:17 pm

Jack FFR1846 wrote:
Fri Apr 06, 2018 5:47 pm
The insurance company has to replace what you have, not upgrade you.
Well, yes, but.....what the OP has, or had, was a known entity. Getting another 2012 Ford Edge with 232,000 miles is not a known entity and fairly entails some risk in regards to how the car has been maintained and driven over the years.

So in that respect, the insurance company isn't, and perhaps cannot, truly replacing what the OP had.

But I'm with the OP on this: the fact that the insurance company can't give him exactly what he had before the accident isn't the OP's problem, but insurance company's. Yet no one ever seems to hold them account for this deficiency.

Or, for that matter, the party that caused the loss to begin with. And when that party is essentially judgment proof, the injured party gets harmed again.

Jags4186
Posts: 3909
Joined: Wed Jun 18, 2014 7:12 pm

Re: Car was totaled, next steps?

Post by Jags4186 » Fri Apr 06, 2018 7:32 pm

The problem is that you want a car with 40,000 some odd miles to replace a car with 232,000 some odd miles. Not going to happen. As much as your 220,000 mile car was a “known commodity” it was in reality a car with 232,000 miles on it. It was past it’s sell by date. It’s pretty hard to find a used car with 232,000 miles for a reason...

junior
Posts: 887
Joined: Wed Sep 10, 2008 6:14 pm
Contact:

Re: Car was totaled, next steps?

Post by junior » Fri Apr 06, 2018 7:59 pm

Random Poster wrote:
Fri Apr 06, 2018 7:17 pm
Jack FFR1846 wrote:
Fri Apr 06, 2018 5:47 pm
The insurance company has to replace what you have, not upgrade you.
Well, yes, but.....what the OP has, or had, was a known entity. Getting another 2012 Ford Edge with 232,000 miles is not a known entity and fairly entails some risk in regards to how the car has been maintained and driven over the years.

So in that respect, the insurance company isn't, and perhaps cannot, truly replacing what the OP had.
While this is true, I doubt the legal system recognizes "known entity" as part of the value of the car.

User avatar
dwickenh
Posts: 1763
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Car was totaled, next steps?

Post by dwickenh » Fri Apr 06, 2018 9:50 pm

junior wrote:
Fri Apr 06, 2018 7:59 pm
Random Poster wrote:
Fri Apr 06, 2018 7:17 pm
Jack FFR1846 wrote:
Fri Apr 06, 2018 5:47 pm
The insurance company has to replace what you have, not upgrade you.
Well, yes, but.....what the OP has, or had, was a known entity. Getting another 2012 Ford Edge with 232,000 miles is not a known entity and fairly entails some risk in regards to how the car has been maintained and driven over the years.

So in that respect, the insurance company isn't, and perhaps cannot, truly replacing what the OP had.
While this is true, I doubt the legal system recognizes "known entity" as part of the value of the car.
Any vehicle with 232,000 miles is a ticking time bomb for repairs and maintenance. Some will make 300-350,000 with high maintenance costs.
Most will not make it that far. We all feel ours is worth more than theirs, but common sense says different.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Helo80
Posts: 1079
Joined: Sat Apr 29, 2017 8:47 pm

Re: Car was totaled, next steps?

Post by Helo80 » Fri Apr 06, 2018 10:03 pm

Cigarman wrote:
Fri Apr 06, 2018 5:30 pm
What say the Bogleheads?

1. I would not accept the settlement figure until you are happy with what they are offering and what you are seeing for comps on the market, as well as through KBB, NADA, and the like (though I always say this.... KBB is not gospel. When car dealers and insurance companies do valuations, they have access to dealer auction data that you as a consumer do not have access to nor are allowed to go to. Use KBB to negotiate up, but take the KBB price for a grain of salt )

2. If you have photos of the condition that show it was maintained much better than comps (interior, exterior, etc.), then document that and show it so you can bump up the condition of the vehicle. Also, maintenance records can be helpful as well.

3. There's a computer program (don't know the name off the top of my head, but I think there is one software vendor that sells to most insurance companies) that they're using where they feed in year, make, model, ext/int condition, mileage and comps... and then it spits out a valuation.


Side note...

Yes, I totally get and empathize with you that your baby was injured beyond repair, and that you were hoping to get another 100k+ miles out of it, but that is not going to happen. I also get that you feel the vehicle is worth another $4 grand....

1. Be thankful that you were not injured (at least it does not sound like it)
2. Insurance is only obligated to pay replacement cost and replace like with like... While you were planning to get more usage out of it, unfortunately, it's a sunk cost at this point.
3. Say this were a 2018 Edge with 10k miles on it... Even though you were planning on maybe another 350k miles of usage on it... the insurance company would still not do anywhere near a full replacement cost.

Yeah, it sucks losing a car earlier than you had intended to let go of it, but hey... life.

ThisTimeItsDifferent
Posts: 246
Joined: Sat Jan 31, 2015 2:51 pm

Re: Car was totaled, next steps?

Post by ThisTimeItsDifferent » Fri Apr 06, 2018 10:20 pm

You have "Nobel" Prize in Economics honorees on your side.

Unfortunately, the "market for lemons" means that the cars for sale are worse than the cars that continue to be owned (or would have been continued to be owned if not totaled in an accident). Therefore, even the average price or FMV for a used car of equivalent age and mileage actually for sale will be below the price that yours would have been worth and was worth to you, and below what you would have to pay extra to get one that is of higher quality than the average ones for sale.

https://en.wikipedia.org/wiki/The_Market_for_Lemons

The Market for Lemons
From Wikipedia, the free encyclopedia

Akerlof's paper uses the market for used cars as an example of the problem of quality uncertainty. It concludes that owners of good cars will not place their cars on the used car market. This is sometimes summarized as "the bad driving out the good" in the market.
"The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a well-known[1] 1970 paper by economist George Akerlof which examines how the quality of goods traded in a market can degrade in the presence of information asymmetry between buyers and sellers, leaving only "lemons" behind. In American slang, a lemon is a car that is found to be defective only after it has been bought.

Suppose buyers cannot distinguish between a high-quality car (a "peach") and a "lemon". Then they are only willing to pay a fixed price for a car that averages the value of a "peach" and "lemon" together (pavg). But sellers know whether they hold a peach or a lemon. Given the fixed price at which buyers will buy, sellers will sell only when they hold "lemons" (since plemon < pavg) and they will leave the market when they hold "peaches" (since ppeach > pavg). Eventually, as enough sellers of "peaches" leave the market, the average willingness-to-pay of buyers will decrease (since the average quality of cars on the market decreased), leading to even more sellers of high-quality cars to leave the market through a positive feedback loop.

Thus the uninformed buyer's price creates an adverse selection problem that drives the high-quality cars from the market. Adverse selection is a market mechanism that can lead to a market collapse.

Akerlof's paper shows how prices can determine the quality of goods traded on the market. Low prices drive away sellers of high-quality goods, leaving only lemons behind. Akerlof, Michael Spence, and Joseph Stiglitz jointly received the Nobel Memorial Prize in Economic Sciences in 2001, for their research related to asymmetric information.

Post Reply