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  1. #1
    Join Date
    Mar 2008
    Posts
    7

    Default Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    My question involves insurance law for the state of: CALIFORNIA

    I have mercury insurance currently, and I was in a minor collision which totals about 6k worth of damage. My car is worth about 12k in its condition and mileage, according to kbb, nada, edmunds, and the used car market in general. with only 50% of the value being compromised, my car wont be totaled since this company totals a car at 75%. My car however is a lemon buyback.

    A couple of concerns here. The insurance company never asked me about the title status when i signed up, other than whether or not it was a salvage. Will they look deep enough into the car history, and find out it is a lemon and lower my cars value if I submit a claim? Im afraid they will declare my car a total loss if they take this title branding into consideration. I havent moved forward with the claim process yet, and I feel like if I ask them this question myself that theyll definitely devalue it.

    Secondly, is it standard practice in california to receive a check from the insurance company to pay for damages, or is it strictly sent to the body shop with the adjuster verifying the completed work? They want 4500 just to fix a bumper and fender. I could do it myself for about 800, and put the rest of that money into something more important than shiny paint and body panels.

    Thanks in advance for the advice.

  2. #2
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    If you own the car outright, you could request they pay out to you and not repair it.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    If by virtue of having a "lemon title" your car has a reduced resale value, as I expect is the case, the insurance company can consider that fact when determining the market value of your vehicle. The manner in which your insurance company resolves claims, whether by paying you or the repair facility, depends upon its policies. If you want to try to get them to pay you directly, ask if they'll pay you directly.

  4. #4
    Join Date
    Mar 2008
    Posts
    7

    Default Re: Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    Sure I could ask them about the check payout, I just dont want them looking at me funny and then questioning my motives.

    To clarify the question about the lemon value..heres a situation that I actually brought to my agent herself and she didnt even know:

    Say my car is a lemon and its worth 10k as a clean title (cannot find values on lemon or salvage title vehicles anywere). I get in an accident, and the shop tells me itll be 6k to fix. 6k=60% of the cars value, so not a total loss.

    However,
    Say the insurance company finds out or my car is a lemon. They deduct 25% (what ive heard/read is the standard market value loss) from the clean title value bringing it down from 10k to 7.5k. Now with this new value, my vehicle will be a total loss, with 80% of the value being in repairs.

    This was my thinking anyway.

    I asked the agent if this is the way it works and she told me it was a gray area. I dont like the idea of my money being in a gray area.

    Another scenario...What if my car is a salvage title and it gets in an accident and totals again? What If I bought the car back a 2nd time and get into another accident that totals it for a 3rd time, could my car ultimately be worthless (theoretically speaking)?

    My insurance company isnt being very helpful and i really want to avoid being walked on. Im trying to take these steps carefully so that I end up making the right decision, and i really dont trust my insurance to simply ask about these things. I could either keep the car and fix as is, file the claim or get a total loss check or buy it back. I did a good amount of damage (about 6k of damage on a 12k car, kbb "good" condition), so any of these may be an option. Knowing how insurance looks at these issues will help me decide which route is best to take and which ones I shouldnt even worry over.

    Thanks for any additional insight.

  5. #5
    Join Date
    Sep 2011
    Location
    Oklahoma
    Posts
    232

    Default Re: Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    If you buy a car back after it was a collision total loss, they won't put collision coverage on it. If you buy a car back after it was a comprehensive total loss, they won't put comp coverage on it. The only way you can restore those coverages (which will vary by company and state) is to show that the damage for which it was totaled, has been fully repaired. Then you can put all your coverages back on it. So if it totals a 2nd time (or 3rd, 4th. etc.), they will pay you the original value that you paid for the initial buy back minus it's current salvage value. For example, you total a $10,000 car and buy it back for $2,000. You fully repair it, your company allows you to put collision coverage back on it and you total it again. Your company will now pay you $2,000 for your car. You want to buy it back again? Now it has a $1500 salvage so you get $500 and can keep your car. Sound like a waste of premium? It is. This is why people who do buy backs typically just have liability coverage afterward only.

    It's typical in Oklahoma for cars to be totaled from hail damage. The salvage value is almost nothing because there's no good sheetmetal for the recyclers to bid on. The insured buys their car back for $500 and drops comp coverage. A year later it's totaled in a collision. The insurance company will pay $500 for the car because that is it's value from the previous salvage. The insured has a $500 deductible and gets $0. Why did they pay the premium? Because their agent is too stupid or unethical to say anything.

    Does your car have a lien on it? With my company, we will pay the insured directly up to $2500 in repairs. Repairs over $2500 if there is a lien must be made copayable to the insured and the lien holder or insured and repair facility (tax ID number required). This will vary by company though and I don't work for Mercury.

    You say you don't want to be walked on and you don't trust your insurance company. It looks like you're the untrustworthy person here.

  6. #6
    Join Date
    Mar 2008
    Posts
    7

    Default Re: Will Having a "Lemon" Title Affect My Car's Value to My Insurance Company

    Im not plotting to commit insurance fraud, the re-salvage idea was an example. I now know that if my car where declared a loss that I probably wouldnt buy it back based on this information. Thank you for the breakdown.

    Now if my insurance co doesnt know the title status and they dont care to ask, then why would I disclose it if it means my car would not get fixed? The repair bill is the same regardless, but if they know its lemon then it may bring the value down and reach that total loss zone. Id be much better off getting it repaired then getting a small amount back for it, which for all i know could be the same amount it costs just to repair it.

    Does this make me untrustworthy? I didnt think it was wrong of me to want the best possible outcome out of a claim. I guess theyll have to find someone else to feed their pets while on vacation, since im just not cut out for it.

    Anyone really know how an insurance company treats a lemon vehicle, particularly in CA? My car is a lemon which in california means it had a problem 3 times under warranty and the customer exchanged it for a new car. My car was then fixed again and sold off the dealer lot, at a discount.

    Thanks again.

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