Expert: Richard Hixenbaugh - 10/30/2010

Question
QUESTION: Major hail storm hit Phoenix, AZ earlier this month.  My insurance company has declared my vehicle a total loss. There is a lien on the vehicle, but payment would pay off loan and leave me a bit left-over. I need to keep the vehicle, credit rating bad and cannot get another loan.  Stand-off between lien holder not relinquishing title until loan paid off (understood!), but DMV not wanting to give me salvage title without the lien and insurance company not wanting to pay lien holder without the salvage title from DMV.  How do I resolve this?  I can't be the only person in Phoenix dealing with this right now - it was huge storm.

ANSWER: Hi Jodi,

Insurance companies and lienholders go through this process hundreds of times a day. I'm not sure what the hold up is.

Your insurance company needs to send a letter to the lienholder indicating the amount that they will be paying them once the title is received. The lienholder then sends the title to the insurance company. Once the insurance company receives the titled they issue a check to the lienholder. It's as simple as that. If the lienholder is not willing to do this, you should find out why. Tell them that if they want to get paid, this is the only way it will happen.

As far as you keeping the car, this is not a good idea. When a vehicle is totaled, the title bust be signed over to the insurance company who will then apply for a salvage title in their name. Once that title comes back in their name they will sign it back over to you. Before you can re-title the vehicle back in your name, you will have to have all of the repairs completed and then take the vehice to a state inspection facility to certify the vehicle as roadworthy. Then you can re-title the vehicle back into your name. The new title will have a stamp on it that will say REBUILT SALVAGE. This stamp will then cause the vehicle to only be worth about half of it's standard value. If your car is totaled again, you will only be paid half of its value.

I hope this helps
Richard Hixenbaugh

---------- FOLLOW-UP ----------

QUESTION: Thank you for the FAST reply and the information.  I should have been clearer about why the car was being totalled.  It's not because of the drivability or the safety of the car, but rather because of the appearance.  It took so many direct hits from the hail that it looks like a golf ball with all the pits and divets in the roof, hood, and both sides.  

Answer
Hi Jodi,

Understood why it is being totaled. I have handled many hail damage claims. If the vehicle is declared a total loss, you still have to go through the process I outlined. Of course, each state is a little different. You may want to check with your state DMV to learn the specifics for your state.

I hope this helps
Richard Hixenbaugh