How to get total loss or diminished value from GEICO

(Denver, CO )

Last November my wife and I were involved in a major accident that substantially damaged the rear end of our three week old 2007 RAV4.

We had the RAV taken to our dealership being told by both the dealership and GEICO, the at-fault party’s insurance company, that it would be best to have a certified Toyota dealership repair the extensive damage in order to keep the vehicle’s value. The original assessment on the vehicle’s damage was $11,000. A couple of weeks later further damage to the car was assessed at $15,000, and a few months later the total damage was assessed at over $16,000.

Concerned about the amount of damage to the car at the onset of the accident we inquired with GEICO if the car should be considered for total loss. The GEICO adjuster did not feel there was enough damage to the RAV4 to warrant it being totaled. They stated that the $16,704 in estimated damage did not reach the 75% threshold of the value of the car needed to warrant it being totaled, or for them to even consider being totaled. However, it was up around 70%, not counting the rental car, which I’m sure brought it up to 90%. I also brought up diminished value and the GEICO adjuster said I could make a case and said in order to that I would need an estimate from a dealership on the value of the RAV4

I then talked to the Burt Automotive repair shop about the damage and they said that GEICO was pushing them to repair the RAV4, which was contradictory from the conversations that I had with the GEICO adjusters, stating that Burt kept insisting that the vehicle could be repaired, don't figure...

The repairs dragged on for an astronomical six months. During that time period I had multiple conversations with GEICO and Burt Automotive (repair shop) about having the car totaled, and or total loss, and they were all met with much resistance, and I was assured by GEICO and the repair shop that the car could and would be repaired, and that we were still under the threshold for not totaling the car.

We finally got the car back in April and I took it over to our Burt Toyota salesperson, so his shop could take a look at the car. After their review they felt that the repair shop did a good job and there were no issues with the RAV4, it had retained its original value, huh!. Over the next weeks of driving the RAV4 my wife and I noticed several problems with rattling and ground noise and took it back for further repair. This process dragged on for the next several months where we continually began to find new things wrong with the RAV4, and we decided that we just did not feel right about the car.

We decided to start shopping for a new car and went to another dealership. After the repairs we really weren’t happy with the dealership where we purchased the car. When we went to trade in the RAV they estimated its value to be worth $12,000 which is $6,500 under the actual trade in value of the car ($18,500). I brought this estimate up with GEICO claims adjuster and he said it was not strong enough of a case for diminished value and that he needed data that suggested that the same vehicle with similar damage was being sold on the dealer’s lot for $6,500 under the value, what!?! I pleaded with the GEICO adjuster, and said that I was stuck with this RAV who would buy it. His answer was that I didn't need to disclose the accident. No, I don't legally, but I think I do morally. Just because GEICO is screwing me should I then go screw someone else!?!

I contacted the dealer and they of course said they don’t keep that data. How do I get this vehicle to be claimed a total loss, or at least get diminished value. I am certain that it has lost substantial value and that it will never be the same. I noticed those companies on the Web that run diminished value estimates, will GEICO accept their reports? Should I demand the original dealership buy it back, because they felt their shop did such a good job. Do I need to hire a lawyer?

---

Answer

Hello there,

Wow… You are in a bad spot (we are sure you know that). There are couple of things you can do. You car clearly should have been totaled, there is no question about that, $16,000 worth of coverage is way too much to try to patch together. We have had several disputes (lawsuits and negotiations) and the common theme is the insurance carrier swearing up and down that the car can be put back in the same position it was before. We think that is simple impossible. So what can you do?

Well, we are assuming GEICO is your own insurance company. Colorado is one of those states that allows for diminution of value (or diminished value claims) for first party insureds (so you do have a claim even if GEICO is your own insurance company).

Documenting a diminished value claim can be difficult, there is a lot of footwork involved, but in your case it might be very well worth it.

You should disclose the fact that you were in an accident. Most dealerships will notice anyway (they will inspect the vehicle), and many will take your car and resell it in an auction and not in the dealership because the liability problems that can arise. You might not only have a moral duty to disclose, but you can be held negligent or if you can be held to act in bad faith (a material misrepresentation).

The starting point should be getting your CARFAX report. Make sure that your accident was indeed reported (it probably was). This way, you do take away the argument that you do not need to disclose, the accident and the damage has become “public” record. Once something is public record, you can argue that the public will know about the damage.

GEICO will argue that you need to show that a car with the same damage sells for less. This is simply inaccurate. It is virtually impossible to find the same car, with the same damage, fix in the same fashion, in your local market. Nevertheless, they will push the line. You do need to contact a Toyota dealership. Talk to the general manager and explain your situation. Tell them that you will be soon looking for a new Toyota (this usually makes them very nice to you). Tell them that you need them to look at your car and evaluate how much they would take for the vehicle even though of the accident. You need them to put his in writing.

A simple letter singed by the General Manger or a supervisor showing that your car would be worth X dollars but because of the accident they will only give you X dollars.

If you can do this in two or three different dealerships then you have a better case. Try to also do this in a used vehicle dealership. You can also contact an independent third party and have them write a notarized letter to the insurance company telling them their willingness to buy a vehicle for X dollars less because of the accident.

Another option is to have an independent appraisal of the car (an appraiser picked by you and paid by you). Some times public adjusters will do this also. You can contact them, but they are sometimes expensive ($250 to $500).

GEICO might very well look on the other direction (Most insurance companies do). Your next step is going to be either hire a lawyer or take your insurance company to small claims court. Colorado’s small court claims threshold is $7,500. So unless you are looking for more than that, you could take the insurance company to court for breach of contract.

Be careful, read your policy first, make sure that taking your insurance to court is allowed under the policy (read the portion about disputes between the insured and insurer). Some insurance policies require you to go to mandatory arbitration first, but some times you can simply file a small claim lawsuit. You can always file and they must raise the contract language as a defense if not they waive the defense.

Showing a judge the letters outlined above will support your position can get you a good binding award.
If you can get your hands in the following cases, this should lead the way:
Hyden v. Farmers Ins. Exchange, 20 P.3d 1222 (Colo. App. 2000), the Colorado Court of
Appeals held:

“When an automobile insurer promises to provide an insured with a vehicle ‘of like kind and
quality,’ the insurer must provide the insured, through repair, replacement, and/or
compensation, the means of acquiring a vehicle substantially similar in function and value
to that which the insured had prior to his or her accident.”

Also see, Heritage Village Owners Ass’n, Inc. v. Golden Heritage Investors, Ltd., 89 P.3d 513 (Colo. App.2004), where the court allowed for recovery of diminution in value for damage to real property.

Good Luck.