INFORMATIVE OPINION

Re: Depreciation due to repair
Posted by John Cochran on Sunday, 11 January 1998, at 12:35 p.m.

In general, there are two ways to get compensation for damage to a car. The first is the common law difference between before and after value. The issue would be decided by answering two questions. The first question to ask, "What was the value of the car immediately before the collision?" The second questions is, "What was the value of the car immediately after the collision?"

The difference between these two values is the measure of your damage. Whether you choose to do the repairs yourself, or have them done by some famous custom car stylist or your local Porsche dealer is unimportant. The difference in over all value difference in value caused by the negligent driver.

In contrast, where it is economically feasible to repair the damage, a second theory of calculating damage is available to you. You use the cost of repair, but in addition, you are also entitled to recover for loss of use while the vehicle is being repaired plus any reduction in value of the car caused by the collision. At least this is the theory adopted by a national generally cited legal treatise, The Restatement of Torts 2d. State law may differ where you are.

Economic feasibility is the key in option two. For example, if you were driving a 1982 Cadillac worth $1,000 when someone negligently wrecked your car and if it would cost $6,000 to repair the car, you don't get $6,000. The repair costs exceed the value of the car and makes it economically unfeasible to repair. Thus you have to use the first theory involving the difference in value. Your car would be considered worth probably $300 salvage value and you could sign your car over the insurance company and get $1,000. They would sell the car for salvage and put $300 in their pocket. Or, you keep the car and the insurance company deducts the salvage value and gives you a check for $700.

In general, you will need reliable evidence to prove before and after market value. If you have pictures of the damaged car, I would suggest that you take them to your Porsche dealer and have them tell you (1) what the car was worth before it was wrecked and (2) in its damaged condition. To make a valid pre-collision estimate, your dealer will need to know the overall condition of the car, i.e. -- mileage, tire condition, paint condition (any bra scratches, rock dings etc.), interior condition (rips, coffee spills etc.) You might have to pay the dealer $50 to $100 to get a thorough, well-written report on the dealer's letterhead. This ought to give you something credible to present to the insurance adjuster. The adjuster will appreciate this because it will give him something to put in his file, and show his superiors in order to justify the payment to you.

Next, to collect for loss of use, you will also need credible evidence. What is the loss of use of a Boxster worth on a daily basis? The auto rental company in Las Vegas charges $250 a day rental for a Boxster. You will need to have something similar to show the adjuster. However, some states may not allow recovery for loss of use.

Finally, you are entitled to collect for any diminution in value of the car after it has been repaired. This is something that your dealership could help you with, again probably for a fee, but get it in writing for the adjuster. Diminution in value is especially important where you have to have the title reissued, such as where there is flood damage. In our state, the reissued title has "Flood Damaged Vehicle" imprinted on the title. In addition, the value is reduced because it is well known that flood damaged cars have more future problems. At any rate, you will need to have someone familiar with expertise document this for you.

Be forewarned however that insurance companies train their adjusters to squeeze the nickel and you should be prepared to negotiate. Start by asking for not only the repair bill, the loss of use and diminution in value after completion of the repair but also add in any lost time from your job and the cost of any reports from your dealer. To you, they are all part of the damage caused the negligence of a careless driver and the law generally favors full compensation of damage. In settlement talks, don't expect to get all of every thing you ask for but it does not hurt to start by asking. But keep in mind that, as a general rule, it is far cheaper to settle a case like this yourself that pay an attorney to do it for you.

Be forewarned that many states have "comparative negligence" laws. These laws take into consideration whether one party or more parties were at fault and thus whether fault should be divided. For example, if you parked your car 3 feet from the curb and your local law said it should not be parked more than 12 inches from the curb, the insurance adjuster would say that you were at fault too. The issue then becomes a determination of respective percentages of fault. State laws vary on how respective fault is treated. In some states, if you were each equally at fault (50/50) then your damages would be reduced by 50 percent. In Texas, if your fault exceeds 50 percent, you as the claimant recover nothing. Some states may not have comparative fault law.

If the adjuster starts talking about you being at fault, you might want to call your local bar association. Many have a lawyer referral service where you can consult with an attorney for one-half hour for a modest sum, probably $30.00 or so. This should allow you to at least get a quick primer on your local law.

I trust this post gives you and others that frequent Pete's board some assistance in the event someone negligently damages your Boxster. Keep in mind that these comments are limited to recovery from a third party. You probably also have collision coverage and you can also elect your remedy under your insurance contract. In this event, you need to read your policy and hope your carrier recovers your deductible from the negligent third party.

Good luck and remember during negotiation, you will catch more bees with molasses than dill pickle juice.

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