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2016 Model S 90D - Property Damage Claim Post Mortem

Discussion in 'Model S' started by dvhart, Jun 16, 2017.

  1. dvhart

    dvhart Member

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    tesla-crash-no-plate-1024.jpg

    After nearly two months, we finally settled our property damage claim after being rear ended in our 2016 Tesla Model S 90D. Insurance claims are something many of us dread about owning a Tesla, a risk we acknowledged going in. I thought I'd share the experience and the outcome in the hope it will help someone else. As I shared earlier, we were rear ended at over 30 mph while stopped and shoved into the car in front of us. To the surprise of the police and fire fighters, all four of us, including my two young children, walked away without so much as a seatbelt bruise (although my wife is working through some physical therapy for a knee strain). Thank you Tesla for building such a safe vehicle, or, as I have taken to calling it, the world's heaviest and most expensive accordion. This post is about the property damage aspect of the claim, with the goal of totaling the vehicle and recovering the full pre-loss appraisal value and avoiding a drawn out repair period (the post, unfortunately, is rather long and drawn out).

    My most valuable resource throughout this experience was my independent insurance agent. He spent hours on the phone and email educating me on the process, helped me set realistic expectations and define decision points along the way. If you don't have one, I highly recommend finding one. I'm happy to recommend one for those local to Portland, Oregon. Besides my agent, the Tesla certified body shop estimator and an independent appraiser and diminished value expert were also invaluable. I let the body shop know from the beginning that I intended to total the vehicle. I paid the appraiser to develop evidence for appraisal, diminished value (DV), and loss of use (LOU). Sadly, Tesla was completely useless - to the point of being counterproductive.

    The other party was found to be 100% at fault. I had the option of filing through our insurance (1st Party) or through the theirs (3rd Party). While my insurance company is at least somewhat motivated to keep me happy, there are contractual limitations to filing 1st party. These come into play specifically on LOU and DV claims. For example, in my case, LOU was limited to $30/day for 30 days, $900 max, and DV was explicitly excluded. There is no such contract with the 3rd party. I would be exercising my legal right to recover losses resulting from damages occurring outside of contract (otherwise known as a "tort"), and the 3rd party carrier is acting on behalf of the at fault party. Unfortunately, the 3rd party carrier was GEICO, who is notorious for refusing to pay for quality repairs and routinely sells cut-rate, low limit policies.

    Because of the high value of a Tesla, the traditional equations governing the decision to declare the vehicle a total loss do not work in my favor. For example, the body shop provided an estimate for $44k to repair the vehicle, including significant structural work. This did not cover issues I observed with the panoramic roof or the more pronounced inconsistent panel gaps between the hood and fenders, or any additional and unseen kinetic damage or supplemental damages I might discover later. To be declared a total loss, the cost of the repairs must be more than the pre-loss appraisal of the vehicle minus the salvage value. In my case: $94k - $35k = $59k. If I were to file 1st party, they would require the vehicle be repaired. In fact, they wouldn't total the vehicle until repairs exceeded $59k. The car would obviously never be the same, and I was unwilling to drive a car that had suffered such extensive damage. Especially one I paid $100k for which had less than 6k miles on the odometer.

    I could repair the vehicle and sell it. Because Tesla will not consider a vehicle with structural damage for their CPO program, the trade value in would be significantly lower. Far fewer private buyers would consider the vehicle, and if I were able to sell it, the average diminished value for a Model S with structural damage is $21k. The timeframe for repair is about six months, including the time to get the estimate, order parts, and complete the repair. For those six months, the LOU damages accrue daily. In the Portland area, the average daily rental for a Model S is $239/day. For six months, that comes to $43k.

    To total the vehicle, I needed to convince the 3rd party carrier that it would be less expensive for them than forcing me to repair it. By adding the DV and LOU to the repair estimate, $44k + $21k + $43k = $108k to repair, versus $94k - $35k = $59k to total (appraised value minus salvage value). This gave me a $108k - $59k = $50k advantage in my favor to convince them to total.

    It took four weeks to get all these numbers together. Once I had them, I contacted the 3rd party carrier and presented the case. They took days to return calls. They refused to provide email addresses. They argued every point they could. They tried shorting the estimate by $15k, they argued reduced LOU, and pushed back on DV. The critical factor was having educated myself and calling them on every lie they told me. Every. Single. Time. Interrupt them, mid sentence, and explain to them why what they're telling me is a lie. They have to use qualified labor. There are no used or aftermarket parts available. The LOU solution has to be available (a $50 offer in New York doesn't count in Portland, the price of the lease doesn't count because you can't lease it for 6 months, etc.). They insisted the vehicle had to be repaired, not totaled. I made it explicitly clear that I would not drive the vehicle again, and if they forced me to repair it, I would hand over all aspects of the claims to the attorneys, and the attorneys wouldn't stop at seeking a total loss, and I would have to let them maximize damages in order to cover their fees.

    They tried to say they were approaching policy limits and I would be better served filing 1st party. Unfortunately for them, I happened to know they had paid out the claim of the vehicle in front of us in full. Having done so, they put themselves at risk of operating in bad faith as they could have attempted to settle all claims within limits of the policy, but did not, thereby exposing their client to excess damages. If this went to court and they lost, they would waive their right to the limits and be responsible for all damages ($108k+). To decide how to proceed, I needed to know the limits of the policy. They are not obligated to disclose this except through discovery during a lawsuit. As I didn't want to have to involve an attorney, I convinced the carrier to reveal the limits through threat of legal action and higher damages. Knowing the limits, I demonstrated that when accounting for salvage, the total loss route enabled them to settle within limits, and would not expose their client to excess damages. I emphasized this point strongly and repeatedly - no carrier wants to be found to have operated in bad faith.

    It was brutal and I hated every second of it. It was a stressful two weeks. My hands shook. I was short tempered. I couldn't eat or sleep. I was less productive at work. I started researching the adrenaline response to learn how to minimize the symptoms. I hated the lies and the disingenuous nature of the carrier's representatives, and I hated how I had to respond to protect my interests. I struggled daily with what I would do if the driver's policy limits couldn't cover the damages - would I be willing to sue them personally? It was awful.

    In the end, the insurer countered my proposed settlement options, which had $10k of negotiation room included, with a full value total loss of $94k, minimal LOU of $3k, and up to $2k in shop fees (partial tear down estimates and storage for six weeks are expensive), for a total property damage settlement of $99k, leaving me with a nearly $6k shop bill, for a net settlement of $93k. They verbally communicated the settlement to me on the same day I picked up my new inventory 2017 Tesla Model S 90D, and we picked up the final check today (about a week later).

    I have seen a number of collisions posted in this forum and several comments about suing for DV or LOU, but I have seen very few accounts of the final result of such negotiations. I hope this account will be useful to others finding themselves in this situation.
     
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  2. NikeWings

    NikeWings Active Member

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    @zackmilo you might be interested in this post ^^^^^
     
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  3. zackmilo

    zackmilo No chrome for me!

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    YEP! Just read it. Thanks. They said it is pretty much totaled I have $48k of damage on a car with a $65k value.
     
  4. dvhart

    dvhart Member

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    I should think you would be able to get that totaled even through 1st Party, you should only need a salvage value of $17k. If that doesn't do it, you might be able to make an argument for risk of supplemental damages. Was it your insurance or the body shop that said it was pretty much totaled? The shops sometimes itemize, but don't account for "overlap" and the insurance adjusters will push back on that. But unless your salvage is really low, you still have some room for the repair estimate to go down and still meet the threshold to total. Good luck!
     
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  5. zackmilo

    zackmilo No chrome for me!

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    Body shop. It should have a salvage value of at least 17k.
     
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  6. zackmilo

    zackmilo No chrome for me!

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    So sorry about your car. Didn't mean to hijack your thread. EVERYBODY START POSTING ONLY HIS S90D ON THIS THREAD. POST ABOUT MY CAR ON MY THREAD (Accident and Repairs)
     
  7. dvhart

    dvhart Member

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    Heh, no problem. The point was to share the experience in the hope it would help others.
     
  8. SageBrush

    SageBrush Active Member

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    Thanks for the informative post. DV was known to me, but LOU is an ace in the hole.
     
  9. cab

    cab Member

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    Awesome post. I have experienced the same thing in the past with another vehicle although the stakes were much lower. It is sad how all the reps are basically trained to deny everything and even pretend to have no clue about stuff like diminished value. I also noticed how they don't want to put ANYTHING in writing - it is always phone calls. i did notice that as long as I hadn't settled on the medical part of my claim (which is always where their maximum exposure is) they tended to be a bit more "tolerant" (or perhaps "fearful" is a better word).

    My claim on that vehicle took a year to settle (while I waited to be sure I was ok). One funny item I remember is that since it took so long, I went through 3 separate reps on their side and as a result I would have to educate each one on where we were at. During one such conversation, I got to the part about Diminished Value and the rep IMMEDIATELY interrupted me and said "We don't pay that!"... I politely responded "Look at my file...you guys already did, let's move on.". At which point she sheepishly stammered something like "um, er, uh...ok".
     
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  10. dvhart

    dvhart Member

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    Note that both DV and LOU are something you have to negotiate, and I haven't seen anyone recover these kinds of damages. I considered them as "unknown liability" for the 3rd party carrier which I could use as leverage to convince them to settle with a total loss.
     
  11. cmd_keen

    cmd_keen Member

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    dvhart,
    Just bookmarked your thread. "Knock on wood," hopefully I never have to go through the same experience, but thank you for sharing such a detailed and well written post. Glad it worked out for you in the end, despite the time and energy wasted dealing with the insurance carriers.
     
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  12. Canuck

    Canuck Active Member

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    #12 Canuck, Jun 17, 2017
    Last edited: Jun 17, 2017
    It's unfortunate that you had to go through all the stress because of an insurer playing games with you but I'm glad it got resolved to your satisfaction. Good work on the bad faith aspect. To expand on that issue further, if Geiko exposed their insured to an over limit claim, when it could have settled within limits, you would take an assignment from the at-fault driver of his cause of action against his insurer, in exchange for not pursuing him personally for the amount in excess of his policy limits. Then you would sue in his name and not only seek full compensatory damages, but also punitive damages. Because punitive damages are intended to punish bad conduct, they can be quite high when it comes to a large insurer. That was a really good strategy on your part. I'm just surprised about the low third party liability limit. We have a minimum $200k in BC, which is still really low if you're seriously injured but is usually sufficient for property damage. Everyone should buy uninsured and underinsured motorist (UM/UIM) coverage. This pays for your injuries — not vehicle damage — when someone with no or little insurance crashes into you. I bought a policy that covers everyone in my household for up to $3M regardless of what vehicle they are in when the accident occurs. It's not that expensive either. Hopefully you have UIM coverage if your wife is pursing damages for her knee injury since it sounds like there's not much left of the torfeasor's limits.

    Lots of people recover diminished value claims despite it being called the "best kept secret" in auto claims. I got $5k in diminished value after my daughter was rear ended in our Leaf. I had to threaten to sue to get it though because insurers strongly resist this head of damages.

    While the term, diminished value, may be a relatively new one to consumers, insurers are well aware of its existence, having paid claims to both insureds and claimants for more than eighty years.
    ...

    Some states' statutes acknowledge diminished value and provide the ability for consumers to collect first party claims of DV from their own insurance companies under their own policies. Most states allow the consumer to collect third party claims from the at-fault driver's insurance company.[1] Some states recognize liability for third party claims but not first party claims.[2]
     
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  13. SMSMD

    SMSMD Active Member

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    Very Informative..learnt something today..Thanks for Sharing your Stressful/Traumatic experience, good way to debrief as well.. Sorry for your loss.
     
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  14. TJtv

    TJtv Member

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    Great informative thread, thanks for posting your experience. However, can you explain the above quoted paragraph in a little more detail. The first sentence is very long with lots of commas and is difficult for me to understand what their true final offer was. Were you stuck paying a $6k shop bill out of pocket?
     
  15. Az_Rael

    Az_Rael Supporting Member

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    That is what makes it hard - having to threaten to sue. I got screwed out of my diminished value claim because I was involved in an accident with an uninsured party (they were 100% at fault), so I was making the claim against my own insurance. They refused, told me I would have to go after the uninsured (who my insurance company had already given up on getting their money from). I believe I still had a right to the DV claim under my uninsured motorist in California, but I decided the few grand wasn't worth hiring a lawyer, an appraiser, etc. and delaying my sale and purchase of my Tesla. So I just ate the losses and enjoyed my P85.
     
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  16. Canuck

    Canuck Active Member

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    #16 Canuck, Jun 17, 2017
    Last edited: Jun 17, 2017
    He got $99k total but has to pay $6k in shop/storage fees so he netted $93k to put towards his new Tesla.

    He can correct me if I'm wrong but since he has first party insurance, and Geiko is on for the at-fault driver, I doubt he has to pay the $6k shop/storage bill up front. Those invoices often wait until the insurance issue is sorted out. That salvage has value and it won't be leaving the shop until the bill's paid. Actually, it might because they know they'll get paid but you get my point. He would have to pay up front for a rental car though if he doesn't have his own loss of use coverage, or if he decided not to present a first party claim, which is how I read his post. My policy only provides for $500 loss of use which is common unless you specifically increase it and pay extra. When I went to the Tesla approved body shop after a minor accident with my Tesla the first thing he did was point out my limit and tell me about the long wait for parts from Tesla and to up my loss of use limit in case I'm involved in a more serious accident. I have another vehicle so it's not necessary for me to up my limit. Remember that limit is with your own insurer (so it's called a "first party" claim) whereas the claim against the at fault driver is a "third party" claim that arises by way of tort law -- your first party claim is contractual and thus governed by the terms of your policy which has limits. The damages recoverable in tort are what are reasonably required to put you in the position had the accident not occurred, and thus it's arguably reasonable to claim the costs of renting a Tesla. However, you can't profit from the loss in tort law, so you can't pocket the money and not rent a Tesla -- but since the at-fault insurer is at risk of paying this amount should you rent one, you can use it for leverage or as a bargaining chip and get more money to buy a new vehicle, as it seems the OP did. He did the same thing with diminished value, saying if they fix it, he will sue for DV so it didn't make sense for them to fix it to try to save money.

    You don't necessarily need to hire a lawyer or get reports from appraisers to get paid. After my daughter's accident in our Leaf I attached gas receipts and other expenses I would not have incurred had it not been for the accident to a without prejudice email to the insurer with links to ads for salvage/rebuilt Leafs vs. similar no-accident Leafs. I took the position that my vehicle appears much the same as a rebuilt salvage to a prospective buyer. I then said I would take $5k for DV but if they forced me to sue I would be sending them a Small Claims Notice of Civil Claim for $10k DV, plus I would be forced to hire an appraiser, and claim those costs, plus filing fees, interest and expenses. They sent me a cheque. And it only took me 30 minutes or so to do. If they didn't pay, it's easy to get a report (they cost $350Can here) from a qualified court expert who routinely prepares these reports. It's also easy to sue yourself in Small Claims court. If my Tesla sustained the same damage as our Leaf I would have paid for a report and sought a lot more, of course. The cost of the report is a recoverable expense so you get reimbursed for it anyway.

    The limit here is two years to commence an action in tort so you may still have time if your accident date is still within your jurisdiction's limitation period.
     
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  17. Az_Rael

    Az_Rael Supporting Member

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    I am outside the time period now. I was still within when I sold the car, and I hadn't previously claimed DV during the initial accident because I mistakenly believed that since my car didn't have a record on CarFax or Autocheck, that I would be good. Repairs were detected anyway, so I got the reduced offer when selling. No loss of use in my case, since it was a Volt and I was provided an equivalent rental during repairs. I could have sold private party because the car had a clean record, but again, I was just ready to be done with it all at that point.
     
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  18. dvhart

    dvhart Member

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    Sorry about that - the whole experience was long with lots of commas :) GEICO paid me $99k (94k + 3k +2k). Out of that I paid the shop fees (~6k) and the loan, although that doesn't really factor in here. The way I look at is I needed to recover $93k (the pre-loss appraised value) for it to be equitable. 99k - 6k = 93k.
     
  19. dvhart

    dvhart Member

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    The .us has laws which separate property damage from bodily injury. In my experience, policies have separate limits for each (although I believe there are some exceptions). The minimums are also separate, and vary by state. In Oregon [1], minimum property damage coverage is $20k. While in California [2].... get this... it's $5k. Awesome.

    1. Oregon DMV Insurance Requirements
    2. California Insurance Requirements
     
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  20. dvhart

    dvhart Member

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    Good and accurate summary Canuck, a few clarifications:

    GEICO was difficult on the order of things. They wouldn't pay off the loan or write me the check until they had the salvage, which meant the shop fees had to be paid. I conferred with my agent, and decided to just pay the fees to get the process moving forward. Arguably GEICO should have paid the fees and recovered them from salvage (which the shop says is common practice). But, honestly, I was out of fight by this point and it didn't make a difference in the total net outcome.

    I'm fortunate to work from home, so it wasn't critical that I rent a car. I was advised that if I submitted a claim for a rental car, it would absolve them of LOU. Since, as you say, I didn't want to recover loss of use, I just used it as leverage, I never rented a car. Had I needed to, I would have paid for it out of pocket.
     
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