You don't get a new car just because you had an accident

There has been an issue that has come up twice in the past week that I think needs to be addressed.  If your vehicle is a total loss, the law provides that the responsible party (or their insurance company) is supposed to compensate you for the reasonable value of your car.  My client was recently offered $750 for his car.  He was furious.  He said, "How am I supposed to buy a new car with $750?"  I told him the law doesn't provide him with a NEW car.  The law says he gets the "reasonable value" of his car when the accident occurred.  I explained his car had 300,000 miles on it and was over 10 years old.  He originally bought it as a salvaged title for only $1700 nine years ago.  We checked Kelly Blue Book online and found $750 was indeed the ballpark value.  He said, "I had no car payment before, and now I'm going to have one!"  He was very upset.

I explained that just because his car was a total loss, he doesn't get to buy a brand new car and have no payments as a result.  I explained he would actually be in a better position than he was before the accident if the law was designed that way. 

Some people believe the defendant (and his insurance company) should be punished for his/her actions.  In other words, to "punish" the at-fault driver, the law should make him buy a new car for the victim. People are often surprised the law only provides for the reasonable value of their car on the date of the accident - NOT what you bought it for.  If they have to go buy another old $750 car, so be it. 

I have the same conversation with prospective clients on a regular basis.  It goes something like this, "John, I know they are only offering you $1000 but your car was 100 years old and was barely functional.  It had over 200,000 miles on it!  The insurance company is NOT going to give you $15,000 to go buy a new car if your car was only worth $1000!  If they did that, then EVERYONE and their brother would go get into an accident with the hopes of getting a new car!"  As for car payments, that's just a reality of life if you finance any car.  If you take the $1000 offer and you go buy a $25,000 car, you are going to have a car payment.  There is no way around it."   

After the clients realize the law doesn't provide them with a new car, then they get upset.  I wish I had great news, but the truth is that accidents are unfortunate events.  I don't have any clients who really "enjoyed" being involved in an accident.  No one ever says, "Wow, that was a great experience.  The insurance company gave me everything I want....including a new car even though I was driving an old clunker!"  So here is the lesson, if you get into an accident, just realize you are only supposed to get the reasonable value of your car ON THE DATE OF THE ACCIDENT - not how much you bought it for years ago.  Even then, they may lowball you.  So do your research and find out what a fair offer is.  They are NOT going to buy you a new car unless your car was new. 

Robert Mansour used to work for the insurance companies as a defense lawyer.  Now he represents victims of serious accidents.  He serves Santa Clarita, Valencia, Saugus, Canyon Country, Castaic, Newshall, and surrounding areas.  Call (661) 414-7100 for a free consultation.