Since insurance laws are different everywhere, I’ll start by saying this happened in North Carolina. Both drivers live here, and both cars were registered here.
I was involved a few months ago in a rear end collision where the other driver was at fault. The police report placed 100% of the fault on the other driver, it was very cut-and-dry, and his insurance company didn’t fight it when I filed the claim. I took the car to the body shop and had the estimate completed, which initially was not enough to total the car, so it was approved by the other driver’s insurance company, payment was issued, and repairs commenced.
Flash forward to now, the body shop has found additional damage on the car (as they commonly do) which is quite extensive and now brings the repair cost high enough for the car to be totaled. The other driver’s insurance has been very fair with the value of the car, I have no issue with it. It’s plenty to cover what I still owe on my lien, and should give me a nice downpayment on something new. HOWEVER, the insurance company just told me that they’ll be deducting what they’ve already paid to the body shop to attempt the repairs from the payout I receive, effectively making what they decided to pay out to the body shop before totaling it my responsibility. I’ve never heard of this happening before, but I don’t know many people who have had their cars totaled after initially going in for repair. Is this legal? Or is this just normal practice and I’m screwed?
The way I see it, it wasn’t my decision to repair the car over totaling it in the first place, the insurance company made that decision. It wasn’t my decision to continue making payments to the body shop until the repair costs got so high that they had to declare it a total loss, the insurance company made that decision. The insurance company should owe me what they valued the car at and whatever they paid the body shop to attempt to repair it should be between them and the body shop to settle. I can’t find anything online about insurance companies deducting repair costs from total loss payouts.
TL;DR – At-fault driver’s insurance company tried to repair my car but ended up having to total it. Now they want to deduct what they’ve paid to the body shop from the payout of the total loss settlement, effectively making the costs of their attempted repairs my responsibility.
Total Loss Payout Deductions
byu/MacOfAllTrades47 inInsurance
Posted by MacOfAllTrades47
1 Comment
At minimum, the labor is owed to the shop for the tear down and what’s been done.
If the shop has parts that they haven’t installed, they *should* be able to return them.
I agree with you that this should be between the shop and the insurance company, but it’s tricky. Especially if you chose the shop.
Did the insurance company ever do an in person inspection of the vehicle? Were they ever sent pictures of it completely torn down before work started?
The way a claim should go is:
– initial estimate is done, either with photos submitted or with an adjuster in person
– shop tears down the vehicle
– shop submits supplement for additional damage upon tear down
– insurance either sends an adjuster out or accepts the supplement
– photos should have been taken at every step of this process
– ideally, the vehicle is as broken down as it needs to be so there’s only one supplement
– no work should begin until the supplements are done
At some point, the body shop would have known it was cutting it close between the estimate and the value of the vehicle. They shouldn’t really have started working on it if it was close, either. The shop should have discussed this with the insurance company. If they found extensive damage after starting work, that’s a shop issue. They should know better.
The shop is owed for the work they’ve done, yes it comes out of the settlement, but the amount…that’s tricky. If this was an in network/preferred shop the insurance might just eat the cost, depends on how much it is.