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.
