Legal FAQ for Property Damage in Car Accidents

While we at Martinson and Beason, P.C. always welcome calls from people with legal questions, we hope this guide will help inform you on your legal rights in the event your motor vehicle is damaged in a car accident. In most cases, a lawyer is not necessary if there are no injuries in the aftermath of an accident, but many people still have questions that can be answered by an experienced attorney. These are all questions that come up often with prospective clients:

Q: What should I do first?

A: Regardless of who’s at fault, and especially if someone is injured, stay at the scene of the accident until it is appropriate to leave. If anyone is in need of medical attention, call an ambulance before doing anything else. Call the police if there is any property damage or any injuries, or if there is any uncertainty regarding these things. Talk to witnesses, other drivers, and passengers to get their names, numbers, addresses, license plate numbers, driver’s license numbers, insurance information, and whatever else is appropriate. Take photos of the accident.

Contact your insurance company as soon as possible, and be sure to cooperate fully and tell the truth as you know it. You should always be as truthful as possible with your insurance company, the police, and your attorney (if you hire one – for most property damage cases, this is unnecessary).

In the unfortunate event that you are injured in a car accident, you should call us at Martinson and Beason as soon as possible so we can ensure you receive the compensation you deserve. Keep track not only of your treatment, but also of time missed from work and activities pain prevents you from participating in fully. This information can be valuable for your legal team.

Q: Should I look at my accident report? How do I do that?

A: You should look at the accident report as soon as possible. If you see any mistakes, immediately contact the officer or department which wrote the report and politely inform them of the discrepancies. Mistakes happen, especially when people cannot give testimony because they were injured and taken to the hospital.

To view your accident report, you can contact the office that wrote the report, whether local, county or state, and request one. This can be a pain, however, so what we at Martinson and Beason do is use the Alabama Law Enforcement Agency accident report database, which consolidates all the accident reports written from across the state. There is a $17 convenience fee, which can be paid by credit card.

Q: Do I need to fill out a SR-13 form?

A: As of Jan 11, 2013, you do not. The SR-13 form used to be required of anyone involved in an accident in the State of Alabama with damages in excess of $250. However, if you are a victim of a crash where an uninsured motorist was at fault, and the accident resulted in death, personal injury or property damage in excess of $500, and you have not been compensated for your losses already, you should file the SR-31 form with the Alabama Department of Public Safety.

Q: What is the difference between a total loss and repairable damage?

A: When you look to an insurance company for reimbursement for your losses, one of the first things they will do is send out an appraiser and make an assessment of the damage to your vehicle.

If the appraiser determines that the damage to the vehicle would cost upwards of seventy to seventy-five percent of its value to repair (a $7,000+ bill for a $10,000 car), then the vehicle will likely be declared a total loss. This means the insurance company will write you a check to purchase a new vehicle of equal value to your vehicle before the accident. More information on your options in this case is provided in this article.

In all other cases, the vehicle has suffered repairable damage, which simply means that the vehicle can be repaired. The company determines the cost of repairs and will either pay the repair shop directly or you for said repair cost..

Q: I don’t think the insurance company gave me a fair estimate of damages. What are my options?

A: If you do not think the company estimated damages correctly, you still have options. Have an independent appraiser come and assess the damage to your vehicle, and inform your adjuster you’d like for them to reconsider the damages to your vehicle.

Q: Who do I file my claim with? My insurance or the other driver’s insurance?

A: If you are involved in an accident and you are not at-fault, you have two options for getting reimbursed for your damages:

  • You can go through the at-fault driver’s insurance carrier. If you choose to go this route, you will not have to pay a deductible; this isn’t your insurance company after all. However, the carrier will likely drag their feet and make absolutely sure they are liable for damages before paying for your vehicle. This process can often take longer than with your own insurance carrier.
  • You can go through your collision insurance carrier. Because you are not at-fault, your carrier will pay you for the damages, and then subrogate the other insurance company for reimbursement. While you have to pay the deductible at first, you will be reimbursed later when your insurance company gets their check. A bonus of taking this route is you don’t have to deal with the at-fault driver’s insurance company – your company takes care of that for you. In addition, your company knows they can subrogate and get their money back, so they will likely process your claim much faster than the at-fault driver’s company would. Because you are not at-fault, your premiums should not go up.

If you are the at-fault party in a car accident, liability is uncertain, or you were involved in a single-car accident, your only option for receiving reimbursement for your damages is to go through your collision insurance carrier.

Q: How does my deductible work if I file with my insurance company?

A: Deductibles work differently depending on the situation.

  • If you have suffered a total loss, say on a car worth $15,000 before the accident, and you have a deductible of $500, the company will simply write you a check for $14,500, subtracting out the deductible. You won’t have to pay anything out-of-pocket. Remember, if you are not at-fault but are processing your claim through your collision insurance company, you will get reimbursed for that $500 deductible when your company gets their check from the at-fault driver’s company.
  • If you have suffered repairable damages, you will end up paying your deductible out-of-pocket. If damages will cost $4,000 to repair, and you have a $500 deductible, you will end up paying $500 to the repair shop, and the company will pick up the rest. Again, if you are not at-fault and you are going through your collision insurance company, you will be reimbursed for the deductible at a later time.

Q: I still owe money on my damaged car. Do I get paid or my bank?

A: This is probably best answered by an example. If you have a car that was worth $10,000 prior to the accident, and the car was declared a total loss, the insurance company will have a $10,000 payout to make. If you still owed money on the car, say $3,000, the company will first pay your lienholder (likely a bank) the balance of your debts, and will pay the remainder ($7,000) to you. The insurance company will keep the salvage (see below for more information).

In the event that your vehicle simply needs repairs, the company will pay the appraised amount of money for you to take the vehicle to a licensed repair shop and make the appropriate repairs.

Q: What if I owe more on my totaled car than what it is worth?

A: This is an unfortunate situation, and because vehicles depreciate in value so quickly, it happens rather often. Suppose you owe $12,000 on a car that was only worth $10,000 prior to an accident, and the accident resulted in a total loss. The insurance company only has to pay the value of the car ($10,000), and, because the lienholder is owed $12,000, all $10,000 goes to the bank, and none of it to you. To make matters worse, you still owe $2,000 on a car you don’t even own anymore.

Fortunately, most insurance companies offer a one-time purchase for gap coverage, and it is usually quite inexpensive. In almost all cases where you hold a sizeable loan on the vehicle, it is a good idea to spring for this. What gap coverage does is ensure the lienholder is completely paid off in the event the totaled car is worth less than the loan the lienholder is owed. In our previous example, the insurance company would pay an additional $2,000 to pay off the customer’s debt.

However, if gap insurance is not held, there is not much more you can do other than continue paying off the debt on the totaled vehicle.

Q: Can I just keep the money the insurance company gives me and not use it for repairs?

A: If you own the vehicle outright, with no loans or lienholders, you can technically do whatever you want with the insurance payout. However, Martinson and Beason strongly recommends you make the appropriate repairs, as it is unsafe for both you and your property when you drive in a damaged vehicle.

If you have a lienholder, i.e. still owe money on the vehicle, you will almost certainly have to use the money for the appropriate repairs.

Q: Should I ask about a rental car while mine is being repaired or replaced?

A: Like many of the answers on this page, this one depends on the kind of accident, and whether or not you are at-fault.

  • If you are in a car accident and you are not at-fault, the at-fault driver’s carrier will likely pay for you to have a rental car. In this case, unless you have paid for “rental reimbursement” on your insurance (more on this below), your only option for receiving a rental car free-of-charge is to go through the at-fault driver’s company. If you have paid for rental reimbursement coverage, you have the option of going through your own insurance carrier, who will subrogate the at-fault driver’s insurance company for their reimbursement.
  • If you are the at-fault party in a car accident, liability is uncertain, or you were involved in a single-car accident, your only option for receiving a rental free-of-charge is to go through your collision insurance company. Again, the company will only pay you for the rental if you have purchased the “rental reimbursement” option on your insurance. More on that below.

For most insurance companies, an option called “rental reimbursement” or equivalent is available for purchase, usually at a premium of between $2 and $15 per month. In general, rental reimbursement coverage will pay a certain amount of money per day for you to rent a vehicle while yours is being repaired, with a maximum limit over the lifetime of the claim. In the event your car was a total loss, there is usually a relatively small window where you can be reimbursed for renting before you are expected to have purchased a new vehicle.

It is usually best to let the insurance company, whether yours or the at-fault driver’s, arrange the rental for you. This is because they likely will have a deal set up with a major renter that can save you a fair amount of money. If you are particular about what kind of car or renting company you would like to do business with, you can pay upfront and send the bills to the insurance company for reimbursement. However, be sure to check with the insurance company before doing anything.

Q: My car has been in an accident and was fully repaired, but it is still worth less than if it were never in a wreck in the first place. Can I be compensated?

A: If there are two cars available, and the only difference between them is one has been in a wreck, any reasonable consumer will buy the undamaged car. Even if the repairs were done flawlessly, wrecked cars lose value. This phenomenon is called diminished value. So can you make up the difference?

There isn’t much case or statutory law in Alabama regarding diminished value, but there are still options. Take the car to the dealership where you purchased it, or to a dealership which sells the same car, and ask them what they would pay for your vehicle now, and what they would pay if it had the same make, model, and mileage as yours, but had no accident history. Take that appraisal to your insurance company, and simply ask if they will make up the difference. They will rarely pay the whole value, but they might pay part.

Likewise, if you were involved in an accident and weren’t at-fault, you could take the same approach with the at-fault driver’s company.

In general, insurance companies in Alabama are reluctant to pay any more than the cost for parts and labor to repair a damaged vehicle, simply because the law here has little teeth to make them do so. In Georgia, for example, insurance companies under certain conditions can be forced to cover diminished value. Still, we recommend you take the steps above and file a diminished value claim.

Q: What if my personal property was damaged in the accident?

A: In a motor vehicle accident, the car might not be all that is damaged: Laptops, cell phones, and other valuables can all be damaged or destroyed. Fortunately, the process for receiving compensation for your personal property is similar to the process for filing a claim on a damaged vehicle. Take photos of the damaged items and make copies of the receipts or other documents that would help estimate the replacement cost, and submit these to the insurance carrier to process the claim. The company will likely pay a depreciated value of the item.

As with a damaged vehicle, you can file your claim through the at-fault driver’s insurance carrier, or, if you have full coverage, through your collision insurance carrier, although your particular situation may vary.

It is important to note that if you have a child’s car seat or booster seat in your vehicle when the accident occurred, regardless of whether a child was in the seat at the time, you can no longer use that car seat. Even if no visible damage occurred to the car seat, the integrity of the seat may be compromised and could put your child at risk in the event of a future accident. You can file a claim to replace it following the process for any other damaged piece of personal property as outlined above.

Q: In the event that my car is totaled, can I keep and repair my damaged car?

A: The answer is a conditional yes, depending on your insurance company’s policies, but it’s more complicated than you might expect. Under most insurance plans, the company will get to keep the totaled car, and will likely sell it for scraps to help cover their losses. You can ask your company to let you keep the vehicle; they might allow you to do so, but they will likely subtract the salvage value of the car from your payout.

However, you should think carefully before doing this. Even if you believe that your vehicle can be fixed for less than the insurance company claims, this will not be an ordinary vehicle repair project. When a car is declared a total loss, it is no longer legal to drive it on the road, even after it is perfectly restored. In Alabama, you will be issued a salvage title for the vehicle; this means you cannot have a license plate for the car (in the event the title is not issued to you, you can apply for one with form MVT 41-1 from the Alabama Department of Revenue Motor Vehicle Division).

From here, you can sell for scraps, or you can restore the vehicle. If you restore, you must apply for a rebuilder’s license (you can call 334-353-7827 for more information). To do so, among other things, you must post a $10,000 surety bond before receiving the license. After the conditions of the license are met, you must apply for a salvage vehicle inspection. This is for the state to be sure no illegal parts were used and that the car is safe to drive. Be sure to keep all Bills of Sale for parts, and be sure that Bills of Sale for all major parts are notarized. Additional information on the paperwork required is in this pdf from the State of Alabama.

Only when all of this is complete will you be able to receive a rebuilt title, and a rebuilt identification plate which will be attached permanently to the vehicle.

In other words, unless you are a serious gearhead and are willing to spend a lot of time and money to repair the vehicle, or unless you know a licensed rebuilder, it is best to get the salvage vehicle out of your hair by either selling it or letting the insurance company keep it.

If you have any other questions regarding property damage in car accident cases, please contact our team of experienced attorneys today.