Your Rights When Your Vehicle Is Damaged

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When your vehicle is damaged because of the negligence of another, you have certain rights according to North Carolina law and the rules and regulations of the North Carolina Department of Insurance. In almost all instances our offices will be dealing with the other person's liability insurance company through their adjuster. Even if the personnel at The Law Offices of Lyndon R. Helton assist you in the handling of your property damage claim, you may still need to have some contact with the insurance adjuster.



Because it is rarely cost-effective for you to hire an attorney to pursue your property damage claim, this pamphlet has been prepared by Lyndon R. Helton, PLLC, to assist you in negotiating with the adjuster. We are unable to represent individuals for property damage claims when they are not a client of our office.

If you are a client of ours, we will help you handle your property damage claim as a courtesy. It is still always your duty to mitigate or minimize your loss. For example, delaying settlement of the property damage can result in unnecessary storage fees, depreciated car values and increasing repair costs, which may give the insurance company an excuse not to pay for the entire vehicle damage claim.


If your vehicle is damaged in a collision that is caused as a result of someone else's negligence (fault), the first thing we try to do is contact the liability insurance company of the person who hit you. Once we have obtained sufficient information to report your claim and have done so, we must often wait for the insurance company to set up your claim and assign an adjuster. If you have any information that might aid our office, please contact us immediately.

Most insurance companies require us to wait after reporting your liability claim for 2 to 3 days from the date we are first able to contact the liability company, for an adjuster to be assigned to your claim. Often there will be two adjusters, one to handle the property damage and one to deal with us on your personal injury claim.

You can often help our office obtain the name of the liability insurance company from the "exchange slip" provided to you by the investigating officer at the scene of the collision. After we contact the liability carrier by telephone, we always follow up with a written notice of your claim. Once we send a written notice to the liability insurance carrier the insurance company starts it's investigation.

The adjuster assigned to your claim will have to complete their investigation of your claim before they accept or deny the claim. Unfortunately, our office often has limited control over the amount of time involved before the insurance company makes a liability decision.

If the claim is denied or it appears that the investigation phase is taking too long, our office will often suggest that you file a claim under your collision coverage. We will continue working on the liability issue for your personal injury claim. If the liability company later accepts liability, it will usually pay back your insurance company. This "pay back" provision is handled by your insurance company under subrogation.

If your are satisfied with the offer then we will settle the property claim. Even though you are injured we can settle the property damage claim. We will always leave open the personal injury claim for later settlement. In other words, the liability insurance company is prohibited from forcing you to settle your personal injury claim at the same time you settle the property damage.

If you do not agree with the settlement offered by the adjuster you have the right to reject their offer, but this does not mean that we will necessarily be able to recover any more monies on your vehicle. We will always request that the adjuster tell us the specific offer along with the precise policy provisions and factual documentation the adjuster is relying on in support of the offer. 11 NCAC § 4.0117.


A motor vehicle is considered a total loss when the amount of repairs (including supplemental claims such as projected rental during the period of repair) equals or exceeds 75 percent of the pre-accident cash value which is sometimes referred to as the vehicle's Fair Market Value (FMV). 11 NCAC § 4.0418 (5).

Generally speaking the liability insurance company is required to pay the fair market value (F.M.V.) or pre-accident cash value of the vehicle right before the collision occurred. In simple terms, the F.M.V. is the value a seller, not forced to sell, and a buyer, would agree upon for the vehicle immediately before the collision giving rise to the property damage claim.

Insurance adjusters generally have a book value they use to arrive at F.M.V. They may have some "wiggle" room based on the condition of the vehicle, but there is generally little room for negotiation. Book value is supposedly F.M.V. and as such this gives both sides a little leeway to negotiate.

Many insurance companies use the National Automobile Dealers association (NADA) publication entitled "Official Used Car Guide," which is published monthly. Some liability insurance companies have their own methods to arrive at valuations. Some insurance companies consider their system superior to the NADA Book commonly used. Notwithstanding, no publication is completely accurate and they should and are indeed only "guides." As such there is usually some basis to negotiate in most cases.

Example: If the vehicle's pre-accident F.M.V. is $8,000 and the estimates for the cost of repairs are less than $6,000 then the liability insurance company is obligated to only pay for the cost of repairs. However, if the estimated cost of repairs is $6,000 or more, then the liability insurance company has to pay the pre-accident F.M.V. of $8,000 because the vehicle is considered a Total Loss. Frequently, problems arise when claimants fail to understand that the law does not require liability insurers to pay more than the fair market value. If F.M.V. is $8,000 and the cost of repairs is $9,000 then you will only recover $8,000. In other words, you can't recover more than the F.M.V. even when the cost of repairs exceeds the F.M.V. Unfortunately, this is true even if the F.M.V. is less than what is still owed on a vehicle.

You should always continue making car payments even if the car is totaled. You are generally contractually obligated to continue making payments, notwithstanding the condition of your vehicle. If you are behind on your loan payments, this will only make the negotiation your total loss much more difficult. In short, the bank or financing company will not care that your car has been wrecked. They still insist on being paid.


If we are unable to reach an agreement as to F.M.V. Then the adjuster will usually base any further settlement offer, not only on published regional average values of similar vehicles but also on the value of the vehicle in the local market. Local F.M.V. must be determined by using either the local market price of a comparable vehicle or, if no comparable vehicle can be found, quotations from at least two qualified dealers within the local market area.

Your vehicle is not worth more because you recently bought new tires or replaced the engine. These items are considered maintenance, and they do not enhance the value. Upkeep of your vehicle helps to maintain the value, not increase it. Sometimes a new paint job will be considered, but usually not.

If your vehicle was in better than average condition prior to the collision the adjuster is required to give due consideration to this fact in arriving at a value, but if your vehicle was not in good condition this will actually lower the value of your vehicle. 11 NACA § 4.0418 (1).

The adjuster will usually provide substantiation for the F.M.V. of your vehicle (when it is a total loss), including estimates, evaluations and deductions used in calculating the payment as well as stating the source of these values. 11 NACA § 4.0418 (4)


If the vehicle is a total loss and we agree on the vehicle's pre-accident F.M.V. and the adjuster is willing to pay the F.M.V., in exchange for a check we must provide the liability insurance company with the Title to the vehicle and possession of the vehicle. In other words, the insurance company is not going to pay you full F.M.V. and let you keep the vehicle. This is because there is usually some residual or leftover value in a totally damaged vehicle.

At the very least, the vehicle can be stripped and some of the parts sold. The value of what is left of the "total loss" vehicle is referred to as the "salvage value." When the adjuster pays the F.M.V. then you must sign over the Title to the vehicle. If you wish to keep the vehicle then the insurance company will pay you the F.M.V. minus the "salvage value."

Usually the "salvage value" is between 10 and 25 percent of the Total Loss value. In other words, if you wish to keep the vehicle then you have the right to do so, but they will offer less Money to allow you to keep the salvage. We generally will ask the adjuster to give us tow offers, one if the insurance company takes the vehicle and one if the client keeps the vehicle. The liability insurance company usually will have a salvage dealer who will purchase the salvage for the amount claimed as salvage value by the adjuster. 11 NCAC § 4.0148 (3).


If your vehicle is financed, the liability insurance company must pay the pay-off amount to the finance company. They are required to do this by Law. If there is any money left after the pay-off, they will write you a check for the difference. Sometimes the check from the insurance company may have your name and the name of the finance company on the check. Usually you will need to endorse the check and turn it over to the finance company. The finance company will pay off the loan and refund the difference to you as your equity in the vehicle.

If the pay-off on the loan is grater than the check from the insurance company then the finance company gets the entire check and you will still owe the finance company the difference unless you had purchased "gap" insurance. (Gap insurance is insurance you purchase when you buy the vehicle. It is sometimes required by lessors for leased vehicles and sometimes provided in financed purchases. Another type of optional insurance you might have purchased is "repair or replacement" coverage. "Repair or replacement" coverage provides that if your vehicle is damaged, your automobile insurance company will pay either the reasonable cost of repairs or the cost of a new auto, whichever is less).

If there is insufficient money to pay-off the loan and you do not have any supplemental insurance, you may be able to use substitution of collateral to get another vehicle and continue making loan payments. Generally if you are "Top-heavy" on a vehicle (in other words you owe more than the vehicle is worth) you would normally be at a standstill. Notwithstanding, if this situation arises you can ask the dealer where you purchased your vehicle if they would be willing to do substitution of collateral.

What happens in this situation is that the insurance company sends the check for the F.M.V. to the finance company, which in turn sends the Title to the liability insurance company and transfers what you owe on your vehicle to a new loan on another vehicle selected by you and the dealer. This procedure allows you to settle the property damage claim as well as provide you with a replacement vehicle. Moreover, you will usually be required to purchase the subsequent vehicle from the same dealer because they must agree to this procedure. Usually you will not be required to make another down payment on the subsequent purchase.

If your vehicle is not financed, then the liability insurance company will write you a check and you may or may not, at your choice, get the vehicle repaired.


The liability insurance company is responsible for all reasonable towing and storage charges until three days after you and the storage facility are notified that the insurance company will no longer reimburse the owner or storage facility for storage charges. The notification can be verbal or written. Once you are notified of this situation you must take all reasonable steps to get the vehicle moved or you will be responsible for the charges. 11 NCAC § 4.0148 (6).


You are entitled to a rental vehicle from the time of the collision if the vehicle is disabled until you receive an offer from the liability insurance carrier. The moment the offer is made (assuming the offer is reasonable) the liability insurance company is not technically responsible

for a rental vehicle. Sometimes a liability insurance company will allow you a few more days if you have had trouble buying a replacement vehicle or allow you to receive the check, but if that occurs it is purely voluntary on the insurance company's part and they are not required to provide you with a rental vehicle after this time. You are always required to "mitigate your damages."

Generally, you should be provided with a vehicle comparable to the vehicle that was

damaged. Some insurance companies have arrangements with automobile rental companies whereby a call from the liability company to the rental company will produce a vehicle to you at a fairly modest cost that the liability insurance company will pay for. This arrangement (Direct Billing) with rental agencies is the reason why we try to contact the liability insurance company as soon as possible. Some insurance companies require that you pay for the rental car and then they will reimburse you.

Some liability insurance companies will not honor a claim called in by our office because they have internal policies that provide that no claim is recognized until it's insured calls and reports the claim. In those instances when an insurance company will not provide a vehicle because the insured has not reported the claim or some other delay, you can rent a vehicle at prevailing market insurance rate price. We will advise you as to what companies the liability insurance companies will approve. While there is always some risk to renting a vehicle on your own, sometimes this gives the insurance adjuster a little more incentive to handle the property damage claim in a timely manner.

Mileage and gas are not paid for by the liability insurance company, just the daily rental costs of the vehicle. Moreover, if you do not have collision coverage, you will be required to purchase this coverage prior to obtaining a rental vehicle. The liability insurance company is not required to pay for this expense. If you do have collision generally you should decline additional coverage because your vehicle's collision coverage will usually cover the rental car.


A motor vehicle is repairable if the cost of repairs is less than 75 percent of the pre-accident cash value (F.M.V.). 11 NCAC § 4.0148 (5). Do not have your car fixed without first allowing the insure company an opportunity to see the damage and authorize the repairs. It will usually take at least three days to several weeks before the car is appraise, depending on the insurance company, when the accident was reported and if liability has been accepted.


Many insurance companies have "drive-in" claim service facilities. However, no insurance company can require you to use a drive-in claim service operated by it. This will usually speed up your claim. If you voluntarily utilize the drive-in claim service, this will not prejudice your right to obtain independent appraisals and negotiate settlement on the basis of such appraisals.

Do not be concerned if the estimate provided by the adjuster is lower than the independent estimates you have obtained. It usually will be lower. Notwithstanding, you can still choose where you wish to have the vehicle repaired. If you have a different estimate from the adjuster, give this estimate to the repair shop where you want your vehicle repaired. They will then contact the adjuster and reach an agreed-upon cost of repairs. You should not be concerned as long as the vehicle is repaired back to the condition it was prior to the accident. Generally the adjuster must see the vehicle before any repairs are authorized. 11 NCAC § 4.0147.


You should get two estimates of repair. If the adjuster insists that more than two estimates be obtained then the insurance company must pay for each additional estimate. 11 NCAC § 4.0149 (1).


Depreciation value is that sum of money which accounts for the decrease in the fair market value of your motor vehicle as the direct result of having been damaged in a collision even taking into consideration that your vehicle is repairable or is repaired. It is a recognition that a vehicle that has been in a collision and is repaired is of less value than a similar vehicle that has never been damaged.

In other words, it is a value of loss over and above the repair costs. Depreciation is a very uncertain and gray area. The amount of depreciation will also depend on the severity of the damage. If there is minor damage there probably is no depreciation. On the other hand, the more severe the damage the more likely depreciation is present.

When negotiating with the adjuster we will try to get depreciation. The value of a vehicle can be reduced just because it was in a wreck. Most adjusters will not volunteer depreciation value, therefore, we will raise the issue if you have asked that we do so on your behalf. Generally we will not be able to make a claim unless you have secured a written statement that indicates that the vehicle has depreciated.

It is not important that the estimator indicated an actual amount. Industry standards usually allow 5 to 10 percent of the repairs. Unfortunately some companies think because the vehicle is back in it's prior condition, it (the vehicle) has not depreciated.

Most insurance companies will not allow recovery unless your vehicle is no more than three years old and damage amounts to 25 percent or more of the fair market value. There is no computer formula that will account for depreciation.


Often adjusters will recommend that you use a particular repair service. You are not obligated to use that repair service and the adjuster is obligated to tell you that you do not have to use the repair service recommended and you may use the repair service of your choice. 11 NCAC § 4.0423 (c).

While you do have a choice of repair shops, you usually will not be able to designate the parts that are used. Generally, you are entitled to a condition as good as it was just before the accident. Bear in mind that unless your vehicle is brand new it's made up of used parts. This may mean that "like, kind, and quality" ("L.K.Q.") parts may be used in the repair of your vehicle.

The insurance company also will not usually pay to have your entire vehicle painted. If only a part of your vehicle was damaged, you are not owed an entire paint job. Most body shops can match the color of your vehicle accurately, even if the paint has faded.


If you sign a release involving a repair to your vehicle, that release does not bar you from later asserting a claim for damage to the vehicle that was unknown to you or the adjuster at the time you signed the release, if the discovered damage was caused by the collision and which damage could not be determined or known until the repair or attempted repair of your vehicle. You have thirty (30) days after the repair to assert the claim for additional damages. 11 NCAC § 4.0421 (4).

If you sign a release involving a repair to your vehicle, that release does not bar you from later asserting a claim for diminished value (depreciation) of your vehicle which diminishment was directly cause by the collision. You have up to thirty (30) days after repair to make claim for diminished value. 11 NCAC § 4.0421 (5).


If your car is financed the insurance company will write the check in your name and the name of the repair facility. This is because the damage to the vehicle reduces the value of the car, which means the finance company's lien rights are also diminished. Therefore, the finance company will always require that the damaged vehicle be repaired so its interest in the vehicle remains protected. If your vehicle is not financed, you get the entire check.


You are entitled to a rental vehicle from the time of the collision if the vehicle is disabled until the repairs are finished. If your vehicle is not disabled you are entitled to a rental vehicle starting on the day that the body shop actually begins repairs. It is important to remember that the adjuster for the insurance company knows how many days it will take to repair the vehicle and will generally not allow any additional days for the rental vehicle. If the body shop is slow in completing the repairs, the insurance company will not pay for any more time for a rental vehicle than was reasonably necessary to repair your vehicle. It is always important to pick a reputable body shop that not only stands by it's repairs, but also will be responsible for any delays.

Generally, you should be provided with a rental vehicle comparable to the vehicle that was damaged. Some insurance companies have arrangements with automobile rental companies whereby a call from the liability company to the rental company will produce a vehicle to you at fairly modest costs that the liability insurance company will either pay for directly or reimburse you later.

In those instances when an insurance company will not provide a rental vehicle because the insured has not reported the claim or they are still investigating the claim, you can rent a vehicle at prevailing market prices and then if the liability company accepts liability they should ultimately pay for the vehicle and possibly allow you to continue renting. If you rent a vehicle on your own, you do take a chance that the insurance company will not accept responsibility. Moreover always rent from the contract rental agencies that charge insurance rates. If not, often the liability insurance company will refuse to be liable for the initial rental costs at the higher rates if insurance rates are available at another company. Mileage and gas are not paid for by the liability insurance company, just the daily rental cost of the vehicle.


If you have additional questions after you have read this brochure, please do not hesitate to contact our office. This pamphlet answers some of the most commonly asked questions about property damage claims. Again, if you are our client we are here to help you with this portion of your case and will try to offer alternatives if possible.