Total Loss Determination Of A Rare Or Uncommon Vehicle In Washington State
So you have been in an accident and the insurance carrier has deemed your vehicle a total loss? You are not alone, on average 12 to 14 percent of all post-accident insurance appraisals result in a total loss. That means one in seven vehicles involved in an accident is a total loss.
Whether a vehicle is determined to be a total loss depends generally on whether the cost to repair the vehicle approaches a certain percentage of the fair market value of that vehicle.
I. How Does an Insurance Carrier Determine the Fair Market Value of a Vehicle in Washington?
Insurance companies in Washington are required to rely on actual sales information of similar vehicles within a geographic region centered on where your vehicle is garaged. The Washington Administrative Code (“WAC”) outlining how an insurance carrier can determine the fair market value of your vehicle is found at WAC 284-30-391(2)(b).
In practice, an insurance company primarily uses a survey company to provide comparable vehicle sales or listing data in your geographic region (two common companies used by insurance companies are CCC or ADP), or seeks “licensed dealer quotes” of fair market value from two or more dealers within one hundred and fifty (150) miles of where your vehicle is garaged if no comparable sales data is available. In finding comparable vehicles for valuation purposes in Washington, insurance companies are limited to only using vehicles that are the same year or one year newer. Note “comparable vehicle” means “a vehicle that is the same make and model, of the same or newer model year, similar body style, with similar options and mileage” as your total loss vehicle “and in similar overall condition.” See WAC 284-30-320(3).
A. Fair Market Value of a Common Vehicle
If you own a common vehicle, comparable vehicles should be available to arrive at a fair market value estimate of your vehicle’s pre-accident value. For example, if you drive a 2010 Honda Civic sedan, there are bound to be numerous 2010 and 2011 Honda Civic sedans for sale and sold in your geographic area. Pay attention and make sure the comparable vehicles provided in any sales reports have similar mileage and options to your total loss vehicle and the fair market value should be close to what a seller (who is not being forced to sell) and a buyer (who is not being forced to buy) would reasonably agree on as the sales price of your vehicle right before the accident.
B. Fair Market Value of a Rare, Specialty or Uncommon Vehicle
If you have a less common vehicle, then you may be headed for problems in arriving at a realistic fair market value determination. Uncommon, rare, or collectable vehicles are that way for a reason—and suitable comparable vehicles may be difficult to find. However, the insurance carrier will probably first try to lump the uncommon vehicle in with more common vehicles using the listing data provided by CCC or ADP. Pay close attention to whether the comparable vehicles provided by the reports are actually comparable, that is have the same engine, suspension, interior, and other options that are unique to your rare or uncommon model. If there is only one vehicle like yours in a CCC report, and all of the other vehicles are lesser in some way, by a lesser engine, suspension, interior, etc., this will undervalue your vehicle. The report will then arrive at a price that you as the seller would not accept for your vehicle pre-accident, which is a red flag that the valuation provided by the insurance carrier is incorrect.
1) “Licensed Dealer Quotes” for Rare Vehicles
If the valuation contains one or less of your actual vehicle with a similar engine, suspension, interior, major options, etc., demand the insurance carrier pursue obtaining a fair market value via “licensed dealer quotes.” What does this mean, exactly? CCC or ADP will call two dealers within 150 miles of your garage, give them almost no information about your specific vehicle, obtain a hypothetical price for your pre-accident vehicle, and then the insurance company will average those two hypothetical prices and offer that price up to you as the fair market value of your pre-accident vehicle. Note, however, that in any report CCC or ADP should provide the “licensed dealer” contact information, so you can actually contact the “licensed dealer” and ask them how they arrived at whatever number they generated. Oftentimes, the “licensed dealer” conducted no research to arrive at the valuation number, or was prompted to provide a predetermined number. The insurance companies will then try and pass the averaged number off as the fair market value for your rare or uncommon vehicle.
2) How Does Washington State Protect Consumers from Unsupported “Licensed Dealer Quotes?”
Washington State does not allow insurance carriers to pawn off unsupported “licensed dealer quotes” to arrive at a fair market value of any vehicle, let alone a rare vehicle, because both WAC 284-30-391(4)(B) and WAC 284-30-392(3) set requirements on what is required of all settlement offers in Washington. WAC 284-30-391(4)(B) provides that an insurance company must base all offers on itemized and verifiable dollar amounts for vehicles that are currently available, or were available within 90 days of the date of loss. WAC 284-30-392(3) further requires an insurance company to provide a list of comparable vehicles used to determine the fair market value of the totaled vehicle, even if a “licensed dealer quote” was used to determine the value.
Again, a barometer test for whether the insurance company is coming close to fair market value of a rare vehicle is whether a willing seller would sell for that price and a willing buyer would buy for that price. In the case of a rare or specialty vehicle, a buyer may search far and wide for the unique vehicle and a seller may know what price a rare vehicle is worth. It is probable that the “licensed dealer quotes” will miss the mark, because they are oftentimes not based on actual vehicle sales. More often than not, the “licensed dealer” has never heard of, seen, or ever sold the rare vehicle the insurance company has asked the dealer to evaluate.
II. Items Included in a Total Loss Settlement Offer
The following items must be included in any total loss settlement offer from an insurance carrier:
1. Fair market value of the vehicle immediately prior to the accident; and
2. All taxes and fees that would have been due had you purchased the total loss vehicle just prior to the accident, including items like sales tax, vehicle tabs, and title transfer fees.
See WAC 284-30-391(4).
If you agree with the insurance company on a settlement of a total loss claim, you are required to provide the insurance company with the title to the vehicle and possession of the vehicle before you receive the settlement check.
III. What are Your Options Regarding Negotiating the Fair Market Value of Your Vehicle?
If you believe the insurance company is undervaluing your vehicle, despite following all of the criteria outlined above, you absolutely have the right to negotiate with the insurance company regarding the fair market value of the total loss vehicle. Items like condition, mileage, aftermarket equipment, and improvements done to the vehicle less than two years prior to the accident may all be considered in the negotiation process.
A. No Fault Event Insurance Clauses for Innocent Accident Victims
Many insurance policies have a “no fault event” clause in them which allows an insured motorist involved in a total loss accident to seek the assistance of their own insurance company to resolve the fair market value and settlement of a total loss claim. How the “no fault event” clause works is simple: You, as the innocent victim of another’s wrongdoing, work with your own insurance carrier to arrive at a fair settlement amount for the total loss of your vehicle, and then your own insurance company turns around and through an informal or formal process gets that settlement amount from the insurance carrier of the at-fault motorist. The “no fault event” submission to your own insurance carrier can help you because oftentimes your own insurance carrier is more receptive to assisting you in arriving at a fair market value for your own vehicle than the adverse insurance carrier of the insured party at fault in causing the accident. You also have a contractual relationship with your own insurance carrier – something you do not have with the at-fault insurance carrier. Both your insurance carrier and the opposing party insurance carrier will likely use the same third party evaluation companies like CCC or ADP, and both carriers are bound by the same Washington laws and regulations, but your own insurance carrier may act like more of an advocate on your behalf or be more receptive to arriving at a fair market value and settlement offer for your vehicle. Deciding to use your own insurance company to resolve a rare vehicle total loss claim has the potential to produce notable improvements in the settlement amount—upwards of 40% improvements are possible in the valuation of a total loss settlement.
Note also if you decide to work with your own insurance company to resolve a total loss claim you enjoy the substantial protections against unfair claims practices as an insured found in the Insurance Fair Claims Act, Revised Code of Washington (“RCW”) 48.30 et al. The Insurance Fair Claims Act has provisions for un-capped treble damages, as well as a mandatory award of reasonable attorneys’ fees, and actual and statutory litigation costs, including expert witness fees.
B. Appraisals of Your Rare or Specialty Vehicle After a Total Loss Determination
Most insurance agreements have an appraisal provision which provides if the insured and the insurance carrier cannot agree on a fair market value for the vehicle pre-accident, either party can invoke the right to have an appraiser review the vehicle and give an appraisal of the vehicle. Check your insurance policy for the specific terms of the appraisal clause. See also WAC 284-30-391(3). The cost of an appraisal varies, but plan on at least $250-350 in the Seattle market. For a rare or specialty vehicle, an appraiser may be the best option if neither the at-fault insurance carrier nor your own insurance carrier is recognizing a fair market value of your rare vehicle. Oftentimes the appraiser provisions in an insurance policy will allow you to hire one appraiser and the insurance carrier to hire the other appraiser, and then the appraisers will arrive at a fair market value either independently or collaboratively.
C. Filing A Complaint With The Washington State Insurance Commissioner
If you believe your insurance carrier or the at-fault carrier is not following the terms of your policy or Washington State laws while evaluating your vehicle to arrive at a fair market value, you can file a complaint with the Washington State Insurance Commissioner. The Commissioner’s office cannot act as your lawyer or provide you with legal advice, and cannot determine the value of a claim or make liability decisions, but the Commissioner’s office can investigate a claim and direct an insurance carrier to fix problems of non-compliance with Washington State laws or policy terms if such problems are found. Filing a complaint may be used as a way to expedite the resolution of your claim with the insurance carrier. See File A Complaint Against An Insurance Carrier
IV. Can You Retain Your Total Loss Vehicle in Washington?
You have the option to retain your vehicle as part of the process of receiving a total loss settlement payment from an insurance company. If you decide to retain the vehicle, the insurance company can deduct the salvage value of the vehicle from any final settlement offer. See WAC 284-30-391(5). The salvage value of a vehicle varies based on a number of factors.
Depending upon the damage incurred in the accident, it may make sense to retain the vehicle. If the vehicle is a rare vehicle, specialized parts on the vehicle may greatly exceed the salvage value assigned by the insurance company. If you think you can sell or part out the rare vehicle for more than the salvage price offered by the insurance carrier, retaining the vehicle might be the best course of action.
A. What Happens to the Title in Washington if You Retain Your Total Loss Vehicle?
If you decide to keep your vehicle after a total loss determination, you will receive whatever settlement amount agreed upon less the salvage value of the vehicle from the insurance carrier. You are then required to notify the State of Washington of the total loss of the vehicle. See RCW 46.12.600.
The title of a vehicle determined a total loss by an insurance company will receive a “WA REBUILT” branded title if you choose to keep/repair the car and fall under any of the following criteria:
- Is 5 years old or newer; or
- Meets the “market value threshold” criteria:
- It’s 6–20 years old;
- It’s a passenger vehicle, light-duty truck, or sport utility vehicle (SUV); and
- It had a retail value of $7,880 or more before being destroyed, damaged, wrecked, or declared a total loss.
Essentially Washington State is recognizing that there are a lot of vehicles out there that are between 6-20 years old and have a value of under $7,880 that insurance companies choose to identify as a ‘total loss,’ which are actually not totaled, and should not receive a “WA REBUILT” branded title.
See the Salvaged Vehicle link here for more information regarding retaining a total loss vehicle in Washington State found here.
V. Still Need Help Settling Your Total Loss Claim?
If you are unsure about settling your total loss claim or believe your rare vehicle is being substantially undervalued, please contact a Beresford Booth litigation attorney to discuss your options.
Beresford Booth PLLC (425.776.4100), www.beresfordlaw.com
BERESFORD BOOTH PLLC has made this content available to the general public for informational purposes only. The information on this site is not intended to convey legal opinions or legal advice.