Everyone has heard those unmistakable sounds associated with an automobile collision: screeching tires, crunching metal, and breaking glass. But if you are the owner of one of the vehicles involved in the collision, you are not at fault, and you are lucky enough not to be injured, those sounds still mean inconvenience, headaches, and frustration. Unfortunately, those are the handmaidens that tag along when you are dealing with an insurance company on a property damage claim.
Under Oregon law, the measure of damages to personal property is the difference between the property’s value immediately before and after the injury (collision). Powell v. Hartman, 37 Or.App. 455 (1978). This legalese means you are entitled to one of two things: either having the vehicle repaired, or, if the cost of repairing the vehicle exceeds its “fair market value”, then you receive the vehicle’s fair market value. And if you have an older vehicle, you are usually stuck with fair market value.
Fair market value is one of those inexact legal terms that frustrate the ordinary consumer in dealing with a property damage claim. In the realm of United States tax law, the US Supreme Court has defined it as: “The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. United States v. Cartwright, 411 U. S. 546, (1973) (quoting from U.S. Treasury regulations relating to Federal estate taxes, at 26 C.F.R. sec. 20.2031-1(b)).
In everyday language it means this: If you could have sold your vehicle one minute prior to the collision to a disinterested person, what would you have gotten for it taking into account the mileage, wear and tear, and any pre-existing damage.
There are a number of different ways to get an idea of what your vehicle’s fair market value is if it becomes an issue with an insurance property damage adjuster. Current newspaper ads for the same year, make, model and condition are one source. Others include, used car dealership ads, auto trader magazines, Kelly’s Blue Book or Edmunds.com. The key thing to remember is that there is no definitive price, because you didn’t sell your vehicle one minute before the accident. The best you are going to be able to do is find a duplicate of your vehicle, i.e. same year, make, model & condition, that has recently sold or is being offered for sale.
If an insurance adjuster tells you that the fair market value of your vehicle is “x” dollars, make sure and ask him/her where they got that figure. Then, ask them to provide you with copies of whatever documentation they used to base their figure on. Never accept a statement from an adjuster as to what the fair market value of your vehicle is that is not backed up with documentation.
In addition to the above, Oregon law (ORS 742.544) requires any insurer who declares a vehicle a total loss and offers the claimant a cash settlement to provide the claimant the following documentation:
(a) Information about total loss, vehicle valuation and the duties of the insurer; and
(b) The manner in which and under what circumstances the insured may contact the Insurance Division of the Department of Consumer and Business Services.
So before you decide to accept the insurance company’s fair market value offer make sure you see the documentation. Then, compare their documentation with the figures you have been able to find.