Liability Insurance Issue

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PostPosted: Tue Aug 11, 2009 3:56 am   Post subject: Liability Insurance Issue  

We own a 2001 Dodge Grand Caravan with 62,000 miles on it. We also live in California. Could you help me with two basic questions?



On January 23, 2009 while my wife was waiting at a green light to turn left a pickup came through the intersection and lost control hitting the lady stopped in front of my wife pushing that car into the next lane which hit another car, then the pick-up front-ended our van where it than stopped. The driver of the pick-up was cited and caused the accident according to the police report.

Mercury Insurance (the insurer of the pick-up) came over to our home, where we had the van towed and said something to my wife about $5000 to repair but the value was $4900 so they would most likely total it. We would hear from them.

After waiting one month I contacted Mercury Insurance and was told that they wouldn’t offer to settle until they had all claims in for the three vehicles. The pick-up driver had liability coverage of only $10,000

I contacted another insurance company and they told me Mercury could wait two years before paying out on this claim (the statute of limitations) for the other vehicles. And that they would pro-rate the payout when they made the payment.



So on June 14, 2009 I sued the driver of the pick-up. The judge did not seem happy that they refused to mediate with us (he and Mercury Insurance). They said it was a business decision. However, we would be happy to settle this. The estimate I received to repair the van is $6200. The small claims judge gave us $7250

$6230 Van Repair

$175 Tow Bill

$845 two weeks rental



I fully expected Mercury Insurance to appeal, and they have. The first judge dismissed the $5000 valuation that Mercury presented. I also, showed the judge print outs from Cars.com within 100 miles that showed I couldn’t buy a replacement van for less than $6000. In fact all the vans at this price range have 100k miles or more. Also, the $5000 figure that Mercury wanted the judge to go with didn’t include sales taxes and fees that we would need to pay when we buy the replacement van.



Additional info: we do not have collision insurance and Kelly blue book gave a value of $6000



My question is how reliable is the service that the insurance companies use to get ACV? It didn’t seem accurate in this case.

Is it a business decision for an insurance to wait for all claims before making a payment or is this the law in the state of California.



One additional point. A Mercury claims rep. indicated that they could cover the accident (all three cars) if they could settle my claim for $5000. If this accident is more than $10,000 why would they care. The insurance company is only on the hook for 10k Right?

Thank you for your help.

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PostPosted: Tue Aug 11, 2009 5:05 am   Post subject:   

The insurance company has a a legal duty to protect their insured, regardless of their insured's policy limits. If they only have $10,000 then this is all they have to accomplish this. By "protect" I mean settle their insured's liability. If there were 4 people who all should be paid $6,000 then the total amount of their insured's liability is in excess of the insureds policy limit. The _best_ that the insured can do is try to settle with _all_ the parties using the $10,000 limit. Keep in mind that this is not the fault of the insurance company... if they don't protect their insured their own insured can come back and file a bad faith claim against them.



How this all should work is the insurance company determines the _full_ extend of each person's loss. They then pro-rate each person's loss with their insureds policy limits. They then ask each person if they would be willing to sign a release for that amount. If they all agree, a release letter is sent to each person to sign. Once the person signs, payment is issued to that party. If someone refuses to sign then the insurance company either needs to wait for a court to issue a judgement against the insured or until the statue of limitations expired. I think this is where waiting 2 years came from. The only difference is that they are not waiting 2 years to issue payment... if the statue of limitations runs without a judgement, they would not issue payment.



If someone obtains a judgement, the insurance company can either appeal or pay the amount of that judgment at the time. It would be okay for them to pay as at that point they cannot attempt to negotiate a settlement... a court of law has stated that their insured owed $xxxxx.xx. That amount is owed if the insurance company pays or not. That is, if the insurance company were to pay less the that amount, their insured is still on the hook for the remaining amount. So it would not matter if the insured short changed the person with the judgement or someone else... their insured is still going to legally owe the excess and there is nothing the insurance company could do about that.



The problem is then, will the other people be willing to accept less because the insurance company needed to pay you more (not your problem, though). So perhaps it makes good legal sense for the insurance company to appeal. Frankly, this costs the more money in defense and they still end up paying the same $10,000 but they can show that they put up the best defense possible so that their insured does not file a bad faith claim.



Just a note... the insurance company probably did not mediate as again, this would allow their insured to have better grounds for a bad faith claim. Their hands are pretty much tied. A bad faith claim is not limited by any policy limits. So the carrier could be on the hook for the entire loss amount _plus_ damages awarded to their insured for not handling the claim correctly.



Seems like the amounts you showed the judge were asking prices, not selling prices. NADA would give a better idea of selling prices. You have mentioned that this amount was also $6000.



Many carriers use services such as CCC or AutoSource to determine values of vehicles. Typically I see these values as being lower then NADA. Which is correct? Who know. CCC and Autosource list the vehicles used in the comparison. NADA does not. So where does NADA get their information and it accurate? There are arguments on both side. Today I had an insured's agent call me to discuss the value I was offering his client. I explained I was offering full NADA retail value. He thought I should go by selling prices his client found online. Sometimes you just can't win.



I just have one other question.... was this judge on crack? Why would he make a judgement for more then the value of the vehicle? Also, I'm pretty sure you would have obtained a higher judgment if this judge used the $6000 NADA value and considered the vehicle a total loss (as sales take would have been added to the $6000 and all the other amounts would be the same).



One note... I _may_ be incorrect about what the carrier will pay if the judgement is more then the pro-rated amount ($5000). They _may_ still only pay the $5000 on their insured's behalf. I'm just not sure about this. In any case you may want to ask the adjuster for that person's carrier how that would work. Trust me, they should not have any problem discussing this as the are not trying to be jerks... they just have their hands tied. If it sounds like they might only pay the $5000 anyway, you may want to see if they would be willing to speak to their insured and see if he's willing to kick in $1000 or $500 to get you to settle. Now I doubt this guy has 2 cents to rub together but you never know. At the end of the day you may be left with $5000 from his carrier and a paper judgement for an additional $1200 that you may never see.

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PostPosted: Tue Aug 11, 2009 5:14 pm   Post subject:   

Thank you for sharing your knowledge on this. You confirmed much of what I thought was going on. The $6000 value figure I gave you was from Kelly Blue book not from NADA. I think the insurance companies $5000 value came from either; NADA, CCC or AutoSource.



I think the judge, made the judgment for more than the value of the vehicle because of the attitude of the Defendant in court. Also, the six months of not settling this issue did not help them. Mercury was not clear in the $5000 value. Was this what they were offering us for the van, any why did it not include the sales tax and fees we would need to pay for the replacement van? We gave the judge an estimate that showed the van could be repaired, so he seemed to go with that plus rental cost while it was being repaired.



In Addition we showed the judge we were trying to be reasonable by; Trying to mediate with them, towing the van to our driveway to eliminate storage cost, and not asking for the lost value of registration fee’s and insurance premiums we had been paying on the van while we were waiting for it to be repaired. Not counting the six months (now eight months) of losing our family’s main mode of transportation.



The appeal is set for August 27, 2009. It will be interesting to see what happens. As I said before, we are willing to settle. I believe whatever that number is, we will get a pro-rated percentage of that number. So the higher that number, the higher pro-rated percentage to repair the van. Thanks again for your help.

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PostPosted: Tue Aug 11, 2009 9:04 pm   Post subject:   

I would still recommend calling the adjuster and asking them if they plan to pay a pro-rata amount of the judgment or the full amount of the judgement. This can make a difference to you. Based on this information you may want to give them a number lower then the current judgement amount and have them present any excess amount to their insured and see if he's willing to kick in any money. At the end of the day if you have a judgement and his carrier does not pay the full amount of the judgment you can make his life miserable. Some states allow you to garnish wages and the like. But others don't. So the power you have in the form of that judgement may be great or very little... depending on state laws.



I just want to make something clear... the insurance company had no choice in hold off on payment in this case. Legally they have a duty to protect their insured which means they cannot settle any portion of the claim until everyone agrees to sign a release. If the judge did not know this or care about it is up to him. He can be "upset" as he wants about them not making a payment... they were still doing what was required by law of them. It sucks to be the adjuster when the loss is more then the limits of your insured's policy. Everyone is pissed at the insurance company for not paying when really its not the insurance companies fault.



But I also understand that their value offer might have been low.

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PostPosted: Tue Aug 11, 2009 10:10 pm   Post subject:   

I appreciate all your information and input and will consider contacting the claims representative. The adjuster that came over to our house to look at the van never gave us his name or card.



We hold nothing against the insurance company and understand the situation their in. We only went to court to protect our interest. You have been very helpful. Thank-you

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PostPosted: Wed Aug 12, 2009 11:54 pm   Post subject:   

Interesting lesson in claims!



Addressing the van owner, I didn't see where you mentioned if you had collision coverage on this vehicle. I am assuming you didn't? Do you possess underinsured coverage?



Tscope, since the van owner has sued the at fault party, and if he had first party collision or under insured, would they have interfered with the first party's rights of subrogation by suing the at fault party without filing a claim or notifying their insurer? If so, the first party carrier would have no obligation to pay a first party claim if there was coverage since and they had no opportunity to inspect the damage and assess the claim?



Assuming that the damaged party has a valid judgement and is not overturned, they could accept the pro-rated settlement and garnish the wages of the at fault party for the unpaid portion of the damages?



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PostPosted: Thu Aug 13, 2009 1:07 am   Post subject:   

From the van owner.



We had no collision coverage, nor did we have inderinsured coverage.



One interesting note on the original judgement. The "Notice of Entry of Judgement" states: This judgement results from a motor vehicle accident on a California highway and was caused by the judgement debtor's operation of a motor vehicle. If the judgement is not paid, the judgement creditor may apply to have the judgement debtor's driver's license suspended.



I don't think I would do that, but I was suprised to see that.



Also, one last point. I was trying to find out why the amount the insurance company said the van's value was, was less that what I could buy a replacement van for. I'm not sure how accurate this article is, but it was interesting. He is the link:

http://www.theplan.com/documents/Ryanarticle.htm

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PostPosted: Thu Aug 13, 2009 2:44 am   Post subject:   

I have read the information in the link previously and I concur with the analysis. The salient points are that CCC records the take price from the dealers who are enticed by hopes that comps listed on the report will filter to prospective claimants in search of replacement vehicles after settling their losses and there is no guaranty that the prospective buyer will have the negotiating ability or skills to purchase the vehicle for the take price. The data which is based on the take prices are not realistic as they know that the average car buyer does not possess the skills to negotiate for the take price. Those same vehicles are more often sold for higher prices which are then not a realistic or accurate comp value. If CCC wanted to make it's program more accurate, they would go back to those dealers to ascertain what the actual sale prices were and change their information, but it is reported that they do not.



Another point is that CCC and other similar programs are marketed to insurers with the sales pitch that they will indemnify with lower priced settlements thus saving the insurers money to the detriment of claimants. Most consumers are not informed or saavy enough to negotiate with a trained adjuster and negotiater with leveraged programs to settle their losses without having to give up the rental car or accept the undisputed portion of the claim and going to a simple appraisal process which may cost them more than the difference in question. In some cases it could be much more beneficial to use the appraisal process but most often it is not. It was reported that the percentage of gain was wiped out by appraisal costs (facts known by insurance financial strategists).



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PostPosted: Thu Aug 13, 2009 4:13 am   Post subject:   

Could not agree with Mike more on this issue. Thought I don't like NADA's info (lack of) either. Yesterday I searched their online site for information on how they obtain their values. I found no information. Also, who ever gets to see NADA's database? Who's to say it's any more accurate. At least with CCC you have some data to check.

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PostPosted: Thu Aug 13, 2009 4:06 pm   Post subject:   

Quote:
Could not agree with Mike more on this issue




Gonna mark this day on the calendar! Very Happy


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PostPosted: Thu Aug 13, 2009 7:46 pm   Post subject:   

Very informative.

My hope is to settle this claim somewhere in the middle of the insurance company’s $5000 valuation and the $7200 judgment. However, if we can’t settle this before the hearing is there a way to present to the judge, the concept of what “take price” is. Because of the way the article is written, I don’t know if the judge would give it any validity. I will be facing an attorney from the insurance company and I don’t want to look like an idiot. But I think I will need to show the judge why their valuation is low.

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PostPosted: Thu Aug 13, 2009 8:40 pm   Post subject:   

I would simply look for comparative vehicles that are available in your market that are for sale and get a firm purchase price. You need to document the information, confirm none are prior salvage, consider similar options, mileage, conditions, etc. Two vehicles for sale today trump what a dealer stated he would take in a flawed program like CCC or autosource, valuescope or whate ever they call it. My state statutes say that if you and the insurer do not agree on the value, comps can be used.



In Missouri



Quote:
What is Actual Cash Value?

The insurance company is required to pay the fair market value of a vehicle. The fair market value of your

vehicle can be found by surveying dealers in your area, receiving information from recognized groups such as

“CCC”, “ADP AutoSource”, or one of the industry guides, such as “NADA” to determine the average retail

price. When disputing the company’s offer of settlement, it is up to you to prove that your vehicle is worth

more than what the company is offering.

The insurance company will adjust the value based on physical wear and tear as well as any pre-existing

damage. If the company determines some replacement items are better than the ones damaged, they may

apply “betterment.” Betterment is an improvement that increases the value of property and is more extensive

than mere repairs. You would be responsible for those charges. For example, if the tires are damaged or the

battery or mechanical parts must be replaced, the company may replace new for old. The betterment would

depend on the age of the older item being replaced.


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