5 Things to Know if your Bike is a “Total Loss”
My client was in an accident and wrecked his beautiful black 2016 Harley-Davidson FXSB Softail Breakout. The bike had over $2,000.00 in mods and upgrades. The insurance company moved the bike to a local HD dealer who said there was over $15,000.00 in damage. The insurance company declared the bike a “total loss” meaning it is not practical to repair. In California the general rule is that is the cost of repair is over 75% of the value of the bike, the bike will be declared a “total Loss”. Now What?
- Total Loss Settlement Offer – The insurance company is required to pay what is called the “Actual Cash Value” (ACV) for your bike. ACV is the fair market value of your bike taking into consideration the mileage, pre-accident condition and options. To do this, almost all the insurance companies will hire a company called CCC One to value your bike. CC One is used exclusively by insurance companies and in my opinion provide biased reports. In fact CC One has been the subject of many lawsuits for unfair valuation of vehicles. Now. CC One will compile a report of 4 or 5 “similar” bikes and then your insurance company will make a “total loss settlement offer”. In addition, the California Department of Insurance requires insurance companies to also reimburse you’re the (up to) 10.75% sales tax.
- If Don’t Agree with the “Total Loss’ Offer – If you don’t’ agree with the “low ball” offer the insurance company will then assign a “Property Damage Inspector” whose sole job is to get you to accept the offer (to save the insurance company money). The new property damage adjustor will argue condition, mileage, depreciation of aftermarket parts and upgrades in an effort to get a discount on the value of the bike. The adjustor will generally ask you to provide documents and “comps” of similar bikes to support your valuation. It’s crazy but insurance companies do not accept Kelly Blue Book values and they discount Cycle Trader bikes (usually by 15%) claiming they are simply asking starting prices. If the insurance company saves just $100.00 from a 1,000 motorcyclist policy holders, they have just made an additional $1,000,000.00. The Allstate Insurance company has a policy of the three D’s “Deny, Delay and Defend” and as a result makes billions of dollars a year in profits.
Unless your bike is custom or collector bike with a special value, it’s best to try and reach an agreement because if you do not you will get screwed in the contractual appraisal process. The terms of your motorcycle insurance contract has an “appraisal clause” meaning if you cannot agree then each side hires an appraiser. This could set you back up to $500.00. Then, if the two appraiser can’t agree (which they rarely do) you will have to hire a third appraiser called an “evaluation umpire” to decide. The cost of the “evaluation umpire” is then shared by the parities (another $500.00). The bottom line is that in the end you could end up with LESS than the original total loss settlement offer.
- Get the Undisputed Partial Payment Now – If there is a “total loss” offer but you cannot agree on the final settlement, by law your insurance company shall immediately, but in no more than thirty (30) calendar days later, pay the amount that has been determined and not disputed, meaning their initial offer. California Code of Insurance Regulations Title X, Chapter 5, Subchapter 7.5, Section 2695(h). This means that your insurance company cannot hold you financially hostage during negotiations.
- Go Through Your Own Insurance – The next rule to know is that, if you have full coverage, you ALWAYS want to go through your own insurance for the repair or replacement of your bike. Why? Because only your OWN insurance company has a contractual and statutory duty to (hopefully) be fair, just and reasonable. California Insurance Code Section 790(h). If they do not it may be considered an Unfair Claims Practice and subject to a lawsuit for Bad Faith and Breach of Contract. This includes:
Low Ball Total Loss Offer – It is an Unfair Claims Practice to compel you to institute litigation to recover amounts due under your insurance policy by offering a substantially less than the amount ultimately recovered in an action brought by the insured when the insured has made a claim for an amount “reasonably similar” to the amount ultimately recovered.
Delay in Payment – California law states that it is also an Unfair Claims Practice for an insurance company “Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims where liability has become reasonable clear company”. In other words, it’s illegal for your insurance company to delay settling your total loss claim.
Forced Appraisal/Litigation – Finally, it is illegal for your own insurance company to essentially force you to litigate your claim by forcing you into appraisal by making a “low ball” offer. This could also be a claim for bad faith against your insurance company for breach of the implied covenant of good faith and fair dealing.
“Every California contract contains an implied covenant of good faith and fair dealing whereby each party promises to not do anything which will injure the rights of the other to receive the benefits of the agreement.” Wolf v. Walt Disney (2008) 162 Cal. App. 4th 1107, 1120.
But yes, if you go through your own insurance company you will have to pay your deductible but once liability is established, your insurance company can “waive the deductible” or you can seek reimbursement from the driver at fault’s insurance. The bad news is that if you have “liability only” insurance you are at the mercy of the driver at fault’s insurance company and they have no duty whatsoever to be fair, just or reasonable. In fact, there assigned “property damage adjustor” may seem nice on the phone but his or her sole job is to pay as little as possible and save money.
- Most Lawyer Won’t Help You– At the Reinecke Law Firm, I usually personally meet my clients at their home or in the hospital immediately after a motorcycle wreck. Within 24-hours, we start working on their case which includes working to get their bike out of the tow yard, opening claims with the insurance companies involved, ordering the Traffic Collision Report and inspecting the damaged bike to work to get the “top dollar” value. After 30 years of doing only motorcycle accident and injury cases, and like you, I also have a pretty good idea as to whether a bike is “totaled” by examining the bike for frame, engine and triple-tree damage.
Sadly to say, but unfortunately, many so called “motorcycle law firms” and lawyers do not even help their client’s with their property damage claim leaving them “high and dry” and vulnerable to the abuses of the insurance companies. And also unlike others, at the Reinecke Law Firm, we never charge a fee, not a dime, to help you resolve your property damage claim.
About Motorcycle Injury Lawyer Tom Reinecke:
Since 1987, Tom Reinecke has been a highest rated California Motorcycle Injury Lawyer and has been named the “Best Motorcycle Lawyer” and the Motorcycle “Super Lawyer” in the Los Angeles Times Magazine. Tom was recently named one of the “Top 100” Personal Injury Lawyers by the National Trial Lawyers (2018, 2019). A graduate of UCLA, former Superior Court Judge Pro Tem, and author of California Motorcycle Law, Tom Reinecke has successfully handled thousands of motorcycle accident and injury cases in California and recovered millions of dollars for his for his clients.