What does the insurance company have to pay?
An insurance company’s obligation to pay a claim for damage to someone’s vehicle or property arises out of the insurance policy. On a typical claim, the insurance company will pay on behalf of their driver those amounts that the driver is responsible for. This includes loss of use of the vehicle, towing fees, storage fees, repairs, diminished value, lost profits caused by loss of use of the vehicle, and other consequential damages which can be proven.
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What is a total loss and how much should I get for it?
The amount that an insurance company must pay for damage to a vehicle is limited to the cost of repairs. The insurance company does not have to pay more than the actual cash value of the vehicle in question. Black’s Law Dictionary (Fifth Edition) provides an excellent definition to actual cash value: the fair or reasonable cash price for which the property could be sold in the market in the ordinary course of business, and not at forced sale. The price it will bring in a fair market after reasonable efforts to find a purchaser who will give the highest price.
What is loss of use?
Loss of use damages arise when someone is not able to use their vehicle. Mississippi law states: loss of use of a motor vehicle or the reasonable rental value thereof is an element of damages which may be recovered. Vining v. Smith, 862, 58 So.2d 34, 38 (Miss.1952). A case citing Vining v. Smith illustrates the point:
Poindexter filed a complaint ¦ seeking compensatory damages of more than $7,000, which included $3,000 for damage to the truck, with the remainder being loss of use, towing and storage fees …. Poindexter suffered a total loss of his vehicle. It has been sitting in storage, with fees accruing, since June 30, 2000. He is unable to use it anymore and is in need of a new vehicle. If Fields is found to have been the cause of Poindexter’s losses, then she will be also liable for these additional expenses. See Vining v. Smith, 213 Miss. 850, 58 So.2d 34 (1952) … As [Field’s] insurer, Southern United is contractually obligated to indemnify Fields for liabilities incurred which are covered under their insurance agreement.
Poindexter v. Southern United Fire Ins. Co., 838 So.2d 964, 964, 974 (Miss. 2003). In this case, the loss of use damages were actually more than the $3000 in damages to the truck! However, it should be noted that Poindexter also has an obligation to try to lessen his own damages. That should be covered in another post.
What is a diminished value claim?
Assuming the vehicle is not worth more after the repairs, diminished value is basically the difference in the value of a vehicle before and after the repairs. It is also called depreciation or diminution in pre-tort value. However, if the repairs make the vehicle the same as it was before it was damaged, then only the cost of repairs can be recovered.