Expert: Ron Cercone - 6/2/2009

Question
I was driving my friend's car with permission for personal use in Los Angeles. I totaled the car. She only had liability insurance, which covered the minor damage to the other vehicle. My insurance includes collision, so State Farm settled with her for $4407 (actual cash value + taxes + unused license fees - my deductible). She is arguing that I owe her the $1000 deductible, and is preparing to take me to small claims court. This doesn't feel right on multiple levels, but what is the best legal defense in my case?

One other thing is the vehicle had been totaled a year ago and has a Salvage title (it was rebuilt to the satisfaction of Geiko, who agreed to cover the vehicle liability-only). But for some reason the adjuster did not take this into account when valuing the vehicle; there was no VIN attached to the valuation. (Is this normal?). Anyway, my argument is that any fair value for the vehicle that we might come up with privately would be below $4407, especially taking the salvage title into consideration. For example, the KBB Private Party value of the vehicle is $3400 assuming good condition (which is giving the car the benefit of the doubt).

Answer
Hello Jake,

You should double check this with an attorney in your state. I'm surprised your insurer extended your collision coverage to someone elses car. Most policies only cover "your" car under collision.

Generally speaking, First I would say you would be liable for damages only if there were negligence on your part. And that could be a percentage if the other driver was also partly at fault. If the other driver was also at fault, your friend should sue that driver also. Second, I would say that the vehicle owner is only entitled to the "fair market value" of the vehicle. This is not necessarily what your insurer valued the vehicle at. As to the Salvage title effect on the valuation, I'm thinking 10 to 25% reduction in value, but double check that with some used car dealers in your area.

As to the "Kelley Book" value, the method used for online valuations at their website is completely different than the actual book method, which you can usually see at a local law library or public library. And any guide book valuation, Kelley or NADA, still has to be adjusted for the local market.

Simplest method for starters, get written quotes from three used car dealers of what their opinion of what the car would sell for in your area. If your friend bought the car from a dealer, then she is entitled to what a dealer would sell it for. If she bought it from a private party, then she is entitled to what a private party would sell it for. See if that satisfies her.

A 100% accurate valuation method for you or your appraiser would be a product at UClaim.com http://www.uclaim.com/products.asp entitled "TRADITIONAL SINGLE SHEET AUTOMOBILE AND TRUCK VALUATION
Subtitle:  What a Simple and Effective Appraisal Should Look Like".