Beyond Repair
After an accident, can you recover not just the cost of repairs but also the lost value of your wrecked car?
People frequently complain to me that their car was damaged in an accident and the insurance company will not pay for the lost value of their car after it has been repaired. It is only common sense that a repaired car is worth less than it was before it was damaged. Think about it this way: You are interested in buying a good used car. The car lot has two similar cars that are just what you want. The price is the same for each car. The salesperson tells you the white car had damage that has been repaired and the blue car has never been damaged. Which one would you buy? Everyone would take the blue car. Anyone would want a substantial discount to take the white one with the repaired damage.
So, it seems only reasonable that the auto insurer should pay for the car's repair and also pay for the lost value that repairing can't restore. Only this way would you be "made whole" or returned to about the same position you were in before the accident.
But in my experience auto insurers uniformly refuse to pay the lost value of a repaired car. They say things like, "we can't do that," "we never pay that," etc.
The law in New Mexico says you can recover the lost value of your repaired vehicle if you are collecting from the insurer of the person who was at fault in causing the accident. Our official Court Jury Instructions say: "In determining damages to personal property, you may award the reasonable expense of necessary repairs to the property, plus the decrease, if any, in the fair market value of the repaired property as compared to its fair market value before the occurrence." (UJI-Civil 13-1817)
Unfortunately, the New Mexico Court of Appeals recently decided you cannot recover the lost value of your repaired car from your own auto insurance under your collision coverage. All your own insurer has to pay is the cost of adequately repairing your car. (Robert Davis v. Farmers Insurance, 2006-NMCA-099)
All this assumes your vehicle is not "totaled." If your vehicle is "totaled," all any insurer has to pay you is the fair market value of your car before it was wrecked. You might think a "totaled" vehicle is one that is wrecked beyond repair. That is usually not true. A car is "totaled" if the cost of repairing it is more than the pre-collision value of the car. In other words, the insurer can "total" your car if the value of it is less than the cost to repair it. This can really hurt.
Auto insurers often come up with values that may seem ridiculously low. They say they hire "independent contractors" to determine your car's pre-collision value, but these "independent contractors" are not really so independent. They depend almost entirely on auto insurers for business, and they know whom they must please. Also, these "independent contractors" do not always do a good job of researching the car-sales market, and their "comparables" used to determine values are often non-existent or wildly misstated.
In Dellaira v. Farmers Insurance Exchange (2004-NMCA-132), the New Mexico Court of Appeals decided you can sue your own auto insurer under our Unfair Practices Act for "lowballing" the value of your totaled vehicle. Dellaira's lawsuit complaint alleged that the insurance adjuster was obligated to indemnify Dellaira for the total loss of the vehicle in an amount that would enable the purchase of like kind and comparable vehicle. The complaint alleged that the adjuster failed to do so, and that the adjuster had contracted with an appraiser it knew to be lowballing. The Court of Appeals decided Dellaira's complaint stated a cause of action under NMSA 1978 § 57-12-2(D) (2003), which makes actionable knowingly false statements in connection with the sale of services in regular course of trade or commerce which "may, tends to or does deceive or mislead."
If your car is an older one, but is in good shape, it probably has little fair-market value, even when honestly valued. Thus, if it is wrecked, it will be easily "totaled" because even just a few needed repairs will cost more than its value. You get a small check; they take your car. You had good transportation; now you have nothing but a check that is too small pay for replacement car.
To add insult to injury, if you had financed the purchase of your "totaled" car and you owe more on the auto loan than your car was worth (in the industry, this is called being "upside down"), you will not even get the small check. It will go to the auto-finance company, and you will still owe the balance of your auto loan—you just won't have an auto. You will be walking.
I hate property-damage claims because of all this. I tell people that all one can do is minimize the screwing you are going to get if your car is wrecked.
I have written a The People's Law column that suggests how to handle your own property damage claim. You may access the column by going to my website www.thepeopleslaw.com and clicking on the "Articles" tab. The article is called "Somebody Hit My Car." Good luck.
Robert (Tito) Meyer practices law in Las Cruces, representing people who have been injured in accidents and the families of people who have been killed in accidents. Contact him at tito@zianet.com, (505) 524-4540,
(800) 610-0555, or PO Box 1628, Las Cruces, NM 88004. This column is not intended to provide legal advice to any specific person, or with respect to any particular problems or situations. To find a lawyer, call the State Bar of New Mexico referral service, (800) 876-6227.