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Auto Insurance Claims/DV and Make Whole Doctrine question


QUESTION: Hi Richard,

My car was sitting in my company parking lot (in the state of California), and a driver smashed into it causing an astonishing $35,000 of damage. The driver fell asleep at the wheel and stepped on the accelerator. Fortunately nobody was hurt.

My insurance company repaired the car and spent $35,000. I am going to hire someone to to a diminished value appraisal, but for the sake of argument, let's say it comes out to $15,000 in diminished value. An attorney friend told me that I should also file a loss of use claim for $10,000 (renting a comparable car to mine costs $250/day and it was in the shop for 40 days). That would mean my insurance company is out $35,000 and I am out $25,000 ($15,000 DV + $10,000 loss of use).

Unfortunately, the at-fault driver has a property damage limit of $10,000. My insurance company said that they will go after the at-fault party's insurance company to recover the $10,000 property damage amount, and then they will pro-rate the $10,000 based on their $35,000 share of costs and my $25,000 share of costs. That means the insurance company would get about $5,800 and I would get $4,200.

However, I read one of your other responses that said the insured has a priority to be made whole before the insurance company. Does that apply in my case? If so, what should I tell the insurance company to convince them that the entire $10,000 should go to me?



ANSWER: Hi Scott,

First let me say that I am not an attorney and this is not to be considered to be legal advice.

My answer is based on my own experience. The made whole doctrine basically states that you have a priority right to be made whole that supersedes your insurance companies right to reimbursement. So in your case, you do not stand equal with your insurance company to receive a pro-rata share of the proceeds. Instead, you stand first and alone to be made whole. Then if there is anything left your insurance company can pursue that remaining amount.

Another option is if you have a sufficient amount of uninsured motorist property damage coverage, you can make the claim for diminished value and loss of use to your own insurance company. However, noticing that you are in California it is unlikely the case.

So to protect your ability to make the claim to the at fault persons insurance company you must send certified letters to your insurance company invoking your right to be made whole and forbidding them from pursuing reimbursement and claiming a first lien against any monies they may receive if they do not listen. Then another certified letter to the at-fault insurance company to inform them of your first right to be made whole and the fact that you have also put your insurance company on notice of this as well.

Although, you send these letters, you should expect push back from both sides. This process is so obscure and rarely pursued that the people receiving your letters will think you have flipped your lid. But you must push back  You must seek written confirmation from your insurance company that they are going t take a back seat in this process allowing you to move forward to pursue your claims.

If you would like to discuss this further please visit our website at

I hope this helps
Richard Hixenbaugh  

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

QUESTION: Thank you, Richard! You have been very helpful. I will take your advice.

I am planning on getting the DV appraisal done after my car gets out of the repair shop later this week, so I don't plan on sending the certified letters until after that. Are there any time limits that I need to be aware of?


Hi Scott,

The only time limit is that you will need to get your letters to both insurance companies before they send there subrogation package. This generally happens as soon as the repairs are done and they have issued the final check.

Richard Hixenbaugh

Auto Insurance Claims

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Richard Hixenbaugh


Auto insurance claims procedure, auto coverage, liability issues, auto damage questions, how to deal with the insurance company, loss of use and diminished value.


I have been involved in the insurance industry for over 25 years. I have experience in underwriting, sales, claims adjusting, auto damage estimating, auto value appraising and diminished value appraising. I have testified as an expert witness over 35 times.

Society of Certified Auto Appraisers

Completed all required courses for the Florida Property-Casualty agents license and the Florida claims adjusters license. I have attended various courses on auto damage estmating, vehicle appraising and am ASE certified in collision damage analysis.

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My company has done work for consumers nationwide.

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