Insurance company WANTS to pay out $7200 claim?

[Ignatius]

So I am helping someone work through an insurance claim with the McClone Agency which represents Cincinnati Insurance in my area. The vehicle that is the subject of the claim has $7200 worth of damage as the result of an accident covered by insurance. The part of the equation that is bothering me is that based on the valuation of the vehicle, by the insurance company, it will not be deemed a total loss. They claim the vehicle, before the accident, was worth between $20,000-$25,000.

From having worked in the car business and literally completing thousands of used vehicle valuations this vehicle is more likely worth $10,000 and perhaps as much as $15,000 upon being repaired. KBB and other used vehicle valuation resources agree with my assessment and the insurance company has not provided me with any meaningful information as to how they determined their valuation other than suggesting that this is what a similar vehicle may retail for effectively under a best case scenario.

So what gives me pause is that the vehicle in question is covered under GAP insurance so the auto insurance provider could just as easily deem this a total loss and have GAP insurance take care of it, instead they seem to be adamant about paying out the $7200 claim. What really bugs me is that the insurance company is making a big deal about having to replace more than one tire as a result of the claim (four tires should be replaced, two as an absolute bare minimum) yet they are willing to pay out $7200 instead of putting an actual real world used vehicle value on the car which would result in a total loss and GAP insurance takes care of the rest.

Any thoughts?

 

[The Critic]

Lots of things to consider.

Is the $7200 a preliminary estimate, or a repair estimate that was written after vehicle teardown? The initial estimate is usually low for a number of reasons.

The used car market is nuts right now. Instead of relying on KBB and other valuation resources, have you checked actual transaction data for the vehicle in question? Check autotrader and other dealer listings, you may be surprised on the current market value. Also keep in mind that the insurance's company's formula for totalling out a vehicle is heavily dependent on the salvage value as well.

Different divisions of an insurance company typically do not work closely with each other; they have to function independently. A GAP claim has no relation to a PD claim.

Insurance company's job is to return a vehicle to pre-loss condition; replacing one tire is usually SOP unless you can point to service information that advises against the practice. This sounds like the vehicle in question is a Subaru? In that situation, even if you win the argument, you can probably expect to pay some betterment charges.

 

[Pew]

Insurance company's job is to return a vehicle to pre-loss condition; replacing one tire is usually SOP unless you can point to service information that advises against the practice. This sounds like the vehicle in question is a Subaru? In that situation, even if you win the argument, you can probably expect to pay some betterment charges.

Subbed for this. Insurance didn't want to pay out to replace all 4 tires on the evo when I got in an accident.

 

[skyactiv]

A totaled vehicle varies by company and the state you live in because of state insurance laws. Texas has a 100% threshold while Oklahoma has a 60% threshold.

What are the total loss thresholds in each state?

The total loss threshold refers to a point at which an insurer must legally declare that a car is a total loss and apply for a salvage title.

www.carinsurance.com

 

[ABN_CBT_ENGR]

Whatever the reasoning is you can bet its in the best interest of the insurance company and not the person you are assisting.

 

[Ignatius]

Lots of things to consider.

Is the $7200 a preliminary estimate, or a repair estimate that was written after vehicle teardown? The initial estimate is usually low for a number of reasons.

The used car market is nuts right now. Instead of relying on KBB and other valuation resources, have you checked actual transaction data for the vehicle in question? Check autotrader and other dealer listings, you may be surprised on the current market value. Also keep in mind that the insurance's company's formula for totalling out a vehicle is heavily dependent on the salvage value as well.

Different divisions of an insurance company typically do not work closely with each other; they have to function independently. A GAP claim has no relation to a PD claim.

Insurance company's job is to return a vehicle to pre-loss condition; replacing one tire is usually SOP unless you can point to service information that advises against the practice. This sounds like the vehicle in question is a Subaru? In that situation, even if you win the argument, you can probably expect to pay some betterment charges.

$7200 was the shop estimate after teardown. KBB, Grand Subaru of Chicago, and True Car all give the vehicle an average real time market value of $10,000. True Car is actually nice because they gave a breakdown which stated that this vehicles value WOULD BE about $20,000 in a vacuum, best case scenario taking no factors like mileage, vehicle condition, etc into consideration. I feel like the insurance company is probably using some braindead program that this three year old vehicle in perfect condition would be worth $20,000-$25,000.

 

[The Critic]

$7200 was the shop estimate after teardown. KBB, Grand Subaru of Chicago, and True Car all give the vehicle an average real time market value of $10,000. True Car is actually nice because they gave a breakdown which stated that this vehicles value WOULD BE about $20,000 in a vacuum, best case scenario taking no factors like mileage, vehicle condition, etc into consideration. I feel like the insurance company is probably using some braindead program that this three year old vehicle in perfect condition would be worth $20,000-$25,000.

Are we talking about the 2018 Outback limited in your signature?

The dealer near me has this example listed for $22K. Similar equipment but with 90K miles:

Used 2018 Subaru Outback Sport Utility 2.5i Limited Tungsten Metallic For Sale in Walnut Creek CA | Stock: J3228424P

Search for a Used 2018 Subaru Outback Sport Utility 2.5i Limited Tungsten Metallic - VIN:4S4BSANC7J3228424 for sale at Diablo Subaru of Walnut Creek in Walnut Creek, CA. Call 925-937-6900 for more details!

www.diablosubaru.com

And this one is fairly close to you:

2018 Subaru Outback Limited AWD - Meister Import Motors

Safe, secure, and delightful to drive, our One Owner 2018 Subaru Outback 2.5i Limited AWD in Crystal Black Silica is an ideal choice for your on-the-go lifestyle! Powered by a 2.5 Liter 4 Cylinder that offers 175hp while connected to a seamless CVT that helps you manage highway passing with...

www.meisterimportmotors.com

So, the insurance company's valuation may not be as far off as you are claiming. In the event of a total loss, the insurance company must pay enough to allow the claimant to purchase a similar vehicle (at retail) in their local market.

 

[928]

Make sure that cashing the check doesn't close out the claim. They may know that there is likely more damage once it's torn down and want to close out the claim without further liability

 

[dishdude]

What kind of car are we talking about here?

 

[Ignatius]

Are we talking about the 2018 Outback limited in your signature?

The dealer near me has this example listed for $22K. Similar equipment but with 90K miles:

Used 2018 Subaru Outback Sport Utility 2.5i Limited Tungsten Metallic For Sale in Walnut Creek CA | Stock: J3228424P

Search for a Used 2018 Subaru Outback Sport Utility 2.5i Limited Tungsten Metallic - VIN:4S4BSANC7J3228424 for sale at Diablo Subaru of Walnut Creek in Walnut Creek, CA. Call 925-937-6900 for more details!

www.diablosubaru.com

And this one is fairly close to you:

2018 Subaru Outback Limited AWD - Meister Import Motors

Safe, secure, and delightful to drive, our One Owner 2018 Subaru Outback 2.5i Limited AWD in Crystal Black Silica is an ideal choice for your on-the-go lifestyle! Powered by a 2.5 Liter 4 Cylinder that offers 175hp while connected to a seamless CVT that helps you manage highway passing with...

www.meisterimportmotors.com

So, the insurance company's valuation may not be as far off as you are claiming. In the event of a total loss, the insurance company must pay enough to allow the claimant to purchase a similar vehicle (at retail) in their local market.

It must be noted that this is a leased vehicle and retail value, the standard by which the insurance company's valuation may be based upon, is irrelevant as this vehicle as well as its valuation cannot be obtained via retail in its current state under legal contract. A leased vehicle can be traded in, which Kelley Blue Book's valuation represents, or the lease can be bought out, which Grand Subaru's value represents. Subaru actually mandates the inclusion of GAP insurance as a part of every lease contract specifically due to circumstances such as this one which often prevail. True Car actually agrees that this car MIGHT be worth $19,350-$21,550 in a vacuum, best case scenario but again that is not representative of an actual real world circumstance.

Really though the question on my mind is why pay out $7200 instead of not paying out $7200 by way of declaring a total loss and subsequently allowing GAP insurance to take over?

 

[dishdude]

There's no way a 2018 Outback Limited is totaled due to $7200 of damage, even with 100k miles. Are you trying to get out of the lease due to the excessive mileage?

 

[The Critic]

It must be noted that this is a leased vehicle and retail value, the standard by which the insurance company's valuation may be based upon, is irrelevant as this vehicle as well as its valuation cannot be obtained via retail in its current state under legal contract.

--

Really though the question on my mind is why pay out $7200 instead of not paying out $7200 by way of declaring a total loss and subsequently allowing GAP insurance to take over?

You need to consult your policy's coverage form and review the insuring agreement.

This is how my policy reads:

"LIMIT OF LIABILITY
A. Our limit of liability for loss will be the lesser of the:
1. Actual cash value of the stolen or damaged property at the time of loss. An adjustment for depreciation and physical condition will be made in determining actual cash value;
or
2. Amount necessary to repair or replace stolen or damaged parts or equipment of the functionally equivalent design and material necessary to restore the vehicle to its preloss physical condition at the time of loss.

If we pay to replace a part or parts, we have the option to pay for new, used, reconditioned or remanufactured: a. Original equipment manufacturer replacement parts or equipment; or b. Non-original equipment manufacturer replacement parts or equipment.

However, the most we will pay for loss to any “non-owned auto” which is a “trailer”, including its facilities and equipment, is $2000. B. If a repair or replacement results in better than like kind and quality, we will not pay for the amount of the betterment."

My policy will pay ACV, regardless of the current ownership arrangement.
Remember, you made a claim under the Auto Policy, not the GAP policy. There is no coverage being triggered on the GAP policy at this time.

 

[Ignatius]

There's no way a 2018 Outback Limited is totaled due to $7200 of damage, even with 100k miles. Are you trying to get out of the lease due to the excessive mileage?

I am glad you asked, actually they were working out a deal to finance this vehicle with their local credit union prior to this accident. Now the concern is that of the $7200 of damage, about $6000 of it is underbody in the area of the engine and transmission. I feel like it sets the stage for future issues that are currently undiagnosed or addressed. Again I have dealt with this exact same issue before with a 2001 Honda Civic that I held onto for two years after the initial accident in which the car should have been totalled and it was a tremendous headache the entire time.

My policy will pay ACV, regardless of the current ownership arrangement.
Remember, you made a claim under the Auto Policy, not the GAP policy. There is no coverage being triggered on the GAP policy at this time.

The bank financing the vehicle included GAP as part of the lease contract to be used in the event that the vehicle is deemed a total loss. So in this instance the auto insurance provider is not handling anything related to GAP.

 

[The Critic]

The bank financing the vehicle included GAP as part of the lease contract to be used in the event that the vehicle is deemed a total loss. So in this instance the auto insurance provider is not handling anything related to GAP.

It sounds to me that you are not in agreement with how the insurance company valued the vehicle. I already provided two examples showing that their valuation of the vehicle is right in-line with current market value, so I think their job was done properly.

The vehicle being leased does not have any influence on whether the insurance company decides to total the vehicle. Sorry, but I don't think you have a valid argument in this situation...

 

[Hall]

Cincinnati Insurance

As soon as you said that, I knew. They are not your normal insurance company. They take care of their customers. I know some of you will laugh.... Also, when I say they're not your normal insurance company, you can't just call them and get coverage. They approve you first, then give you coverage. Many people simply don't qualify with them.

Make sure that cashing the check doesn't close out the claim.

Cashing that check, 99% of the time, closes the claim. That's completely standard.

 

[97prizm]

I'm surprised your wanting it totalled as way to many vehicles in this country end up scrapped and recycled unnecessarily. I had the opposite problem, my insurance adjuster lowballed me by $1,700. I had to go to his boss and show the local market prices.

 

[RhondaHonda]

As soon as you said that, I knew. They are not your normal insurance company. They take care of their customers. I know some of you will laugh.... Also, when I say they're not your normal insurance company, you can't just call them and get coverage. They approve you first, then give you coverage. Many people simply don't qualify with them.


Cashing that check, 99% of the time, closes the claim. That's completely standard.

That is wrong. Supplements for additional damage occur and are paid all the time.

 

[Andrew1972]

You state .... upon being repaired. The key flaw in your thinking is the valuation is done BEFORE repair/diminish value to make you whole as best as possible for given value. The car is likely worth near 20k especially if Subaru is hot market locally beyond the odd used car market driving prices up. What the car is worth once repaired is irrelevant and does matter since a lease anyway. My only guess reading between lines is you are way over mileage and want to buy this thing and trying to wiggle out?

 

[Ignatius]

As soon as you said that, I knew. They are not your normal insurance company. They take care of their customers. I know some of you will laugh.... Also, when I say they're not your normal insurance company, you can't just call them and get coverage. They approve you first, then give you coverage. Many people simply don't qualify with them.

Interesting take, I have read many customer reviews of Cincinnati Insurance and most have not been too good in recent years. The review site I am linking below has nothing above a 2 out of 5 star review dating back to 2014.

Cincinnati Insurance Companies Reviews: 132 User Ratings

Cincinnati Insurance Companies reviews, contact info, quotes & FAQ. Get the full story from fellow consumers' unbiased Cincinnati Insurance Companies reviews.

wallethub.com

I was with Esurance between 2008 and 2013, I spent 5 years doing nothing but allowing them to collect my money with no claims, police stops, or anything that would raise my rates. In January 2013 on a Sunday night during a blizzard I was driving on a main street in town and a man under the influence rode his bicycle out into oncoming traffic and my car just happened to be the one that came in contact with him, I had no time to react and stop or otherwise avoid collision.

I had to go to court over this, the judge and state's attorney dismissed the case in my favor. Nonetheless Esurance decided that as a result of this incident they would raise my rates 40%. I called them and they gave me no real explanation as to why my rates jumped so suddenly and drastically. I decided to shop and ended up going with Amica who I have been with to the current year. Some people I previously worked with at the Illinois Department of Insurance informed me that most insurance companies that advertise excessively are also the ones that have the lowest ratings and highest customer turnover. They tend to be good at collecting money but come up short at rendering service.

 

[JHZR2]

I don’t think it was ever confirmed if it was the 2018 Subaru with 100k in the OP’s signature. I’d be surprised if it was because I can’t say I’ve ever seen a lease with terms that allow such mileage. Any Ive seen are more like 10-12k miles/yr or else you pay a ton for miles.

Theres also a cross section of the fallacy that cars lose 50% of their value when they drive off the lot kind of thing. Perhaps if you allow a dealer to strip all value from it as a trade in.... but not otherwise IME.

It isn’t sensible that $7200 would total that vehicle. Being concerned with long term is valid, but since it’s a lease, the owner gets to trade it back in. Notionally the owner could sue the at fault driver for diminished value, or else allow the gap insurance to pursue that.