Property Damage In An Auto Accident

Your car, your motorcycle and your bicycle all have monetary value.

Not just in terms of dollars, or what you’ve paid for it.

Much of the value in your property lies in its utility, convenience, and your means to earn wages or equity.

In a sprawling city like Phoenix and its outlying suburbs of the East and West Valley, your ability to earn wages, run errands, pick up your kids from school and activities centers around your car. It’s natural to feel attached to it.

When you first bought your car, you spent hours searching for the perfect car for you and your family. At the dealership, you slowly ambled a lap around the car, sliding your fingers on its gleaming smooth surface. As you took it for a test drive — savoring the new car smell — you decided it would be the centerpiece of your life and family. You may also have chosen your motorcycle for its convenience and efficiency in Phoenix’s heavy traffic or your bicycle for its environmental and cost efficiencies.

After months or years of driving your car, you feel you know your car — and your car knows you. You feel the same way if your motorcycle or bicycle is also your “daily driver”, your grocery getter, and your transportation to and from work.

And then the unthinkable happens.

You and your car get mangled in a wreck. You can no longer drive it.

The bad news is the things we usually take for granted — the convenience, ease of getting around, transportation to and from work, shuttling your kids from one activity to another — are suddenly gone.

The good news, however, is there are steps to mitigate the disruption in your life caused by losing your car to an accident — one of which is to submit a property damage claim to insurance.

What is Property Damage?

Covered by most auto insurance policies, physical damage to your car is considered property damage. Getting your property damage claim does one of the two things:

  1. Pay you for the cost of your car repairs
  2. Reimburse you for the cash value of the car if it cannot be fully repaired
  3. Pay you for the loss of its use while you are without it

If your car was involved in an accident by someone else’s negligence, the at-fault driver has to compensate you for the repairs, pay you or provide you a rental car for the time you are unable to use it, and/or pay you the cash value of your car.

Aside from getting immediate medical attention after an accident, one of your first priorities is to assess the damage on your car.

Assessing The Damage

A strong way to prove your property damage claim is to take photos of the car on the scene of the accident. Photos show the actual damage on your car and indicate whether airbags had gone off, show any broken glass and other damaged car parts.

Determine whether you can still drive the car after the accident. Is the car damaged badly enough that it is undrivable? Does it need to be towed to an auto body shop?

Choosing an Auto Body Repair Shop

Fortunately, you can get your car repaired anywhere you want provided they are licensed and that their work is guaranteed for 90 days — and the insurer will stand behind the repair shop’s guarantee. If you don’t know which body shop to use, you can also request the insurer to recommend a qualified repair shop convenient to your location.

The insurance company does need to agree on pricing with the shop of your choice. If they cannot agree, they will give you a list of licensed shops who can do the repairs for the price the insurer has set.

If you are not satisfied with the repairs, you are entitled to bring your vehicle back to the auto shop and have it inspected within this 90 day period.

Keep in mind that after a grace period, you may need to pay storage fees to an auto body shop or a storage facility. While your insurance company initially pays these costs on your behalf, they must give you three working days’ notice before they stop paying for storage.

Who Decides Whether Or Not My Car Can Be Repaired?

After evaluating the damages to your vehicle, the insurance company has the option of repairing your vehicle, replacing your vehicle, or reimbursing you for the vehicle’s actual cash value (ACV).

Actual cash value is the amount your vehicle would have sold for on the date of the accident.

If the cost of repairs is substantially less than the ACV of the car, the at-fault driver’s insurance will cover those repairs.

However, if repair costs are close to or greater than the car’s value, the insurer will not repair your car. They will elect to replace your vehicle or reimburse you for the ACV, in those instances where the vehicle is economically impractical to repair.

Motor Vehicle regulations stipulate that a vehicle is considered economically impractical to repair if the cost to repair the vehicle equals or exceeds the vehicle’s ACV.

In most cases, an insurer will deem your car a “total loss” if the cost of repairs is more than 70% of the value of your car. The reason for this is when the shop starts repairing your car, additional hidden damages are often found. Such extra damages would render the vehicle a total loss by definition.

Does The Insurance Company Have To Use New Parts To Repair My Vehicle?


The insurer is only obligated to restore your vehicle to the same condition as it was before the accident.

Sometimes they use original equipment manufacturer (OEM) parts and other times they use aftermarket parts — parts made by a manufacturer other than the original manufacturer.

If your vehicle is being repaired with newer parts, the company doesn’t have to pay for this “improvement”.

For example, if your car’s transmission is five years old, the insurer only needs to replace it with a five year old transmission. If a five-year-old transmission can’t be found, the repair shop could use a new transmission, but you’d have to pay the difference between the value of a five-year-old transmission and a new transmission.

Do I Have To Accept Non-OEM Parts?

No. Although Arizona regulations do allow aftermarket parts as long as they are warranted by the manufacturer to be of like kind and quality as OEM parts, you don’t have to accept them.

The final choice is yours. But if the insurer wants to use non-OEM parts and you decide to use more expensive OEM parts, you may have to pay the cost difference.

The regulations also require the insurer to clearly indicate on the appraisal which parts are aftermarket parts and pay for any modifications necessary.

If Your Car Has Been Totaled

If your car has been totaled – or deemed a “total loss” – the other driver’s insurance company must pay you the “actual cash value” (ACV) of the car prior to the accident.

The ACV is based on what comparable vehicles are selling for in the Chandler area. In theory, you should be able to take the money you’re given in an insurance settlement and buy another car similar to what you had before.

But you don’t have to accept the first offer you get from an insurance company based on its calculation of the ACV.

Instead, you can do your own research using Edmunds or Kelley Blue Book. If the KBB values your car higher than what insurance offered, you can make the case that your car is worth more than the offer.

You can also see what local used car dealers are asking for similar vehicles and check car sale prices online. Keep in mind, however, that the offer price is not necessarily the sales price.

You may also be able to argue that your car is worth more than average for the make, model and year.

I’ve Added Vehicle Upgrades Like New Tires, Alloy Rims and Other Accessories. Can I Recover That Cost?

Possibly. You may have added upgrades to your vehicle such as brand new wheels, tinted windows, a custom paint job, an upgraded stereo, a built in DVD, Bluetooth, or GPS, etc.

All these upgrades add value to your car. For example, the following features add value to your car:

  • Brand new tires or high-end tires
  • Custom wheels and rims (such as alloy wheels)
  • Custom paint or trim (or a new paint job)
  • An upgraded stereo system
  • Satellite radio
  • In-car GPS
  • In-car Bluetooth
  • In-car DVD
  • Back-up cameras
  • Leather upholstery or trim
  • Heated or air-conditioned seats
  • Upholstery that’s been kept covered and is like new
  • New headlights
  • Tinted windows
  • Performance suspension packages
  • Sunroof/moonroof
  • For trucks, things like bed liners and tow kits

However, there is an important caveat. You will have to provide proof that you paid for these modifications. You can try to get compensation by including receipts or invoices in your claim.

Unfortunately, aftermarket parts on a vehicle do not necessary increase the overall value of the vehicle. Thus, an insurance company may initially will offer you zero.

If you can produce a receipt or invoice that’s less than a year old, you improve your odds of recovering at least part of your upgrade expenses.

If you can recover 50% of these costs, you’re doing well.

According to the Specialty Equipment Market Association, the average consumer spends about $2000 on options or modifications during the first year after purchase. You can try to recover at least part of this investment.

You can also get compensated for any recent major repair or maintenance jobs on your car. But you’re probably not going to get insurance to pay for that oil change you had last week.

Additional Compensation for Your Car

Getting your property damage claim fulfilled doesn’t stop at simply reimbursing you for the value of your car or its repairs. You are entitled to additional compensation for those extra costs you had to pay as a result of losing your car for a period of time.

If the accident wasn’t your fault, the other driver should compensate you for:

  • The cost of a rental car for you to drive while your own car is being repaired or replaced
  • The cost of towing your car away from the accident scene
  • The cost of storing your car until it can be repaired or disposed of
  • Damage to personal property in or on your vehicle (such as a bike in a bike rack)
  • The value your car lost because of the accident

The costs of the first four bullets above are easy to calculate, or simply a matter of digging up your receipts or invoices.

But the last point about the lost (diminished) value of your car is understandably vague, so we’ll expand on that below.

What You Need to Know About Diminished Value On Your Car

If your accident was fairly minor, then a car will be worth roughly the same after the repairs. But if the damage was major, such as frame damage, an experienced appraiser can detect this and figure how much the damage reduces the resale value of your car.

The reduction in resale value due to the accident is called diminished value. A claim for reduced value is called a “diminished value claim”.

There are three types of diminished value claims:

  • “Inherent” diminished value means the reduction in value due to the car being in an accident, even if the repairs were done properly.
  • “Insurance-related” diminished value means the insurance company only paid to have your car repaired using inferior parts and procedures (for example, it didn’t replace your expensive alloy rims).
  • “Repair-related” diminished value means the auto shop failed to do the repairs properly.

To make a claim for diminished value, you’ll need to get a diminished value report from an expert – not just from your local used car dealer.

However, you cannot always receive the diminished value of your car. If your vehicle is 6 years or older, you no longer have a diminished value claim in Arizona. Arizona only recognizes the diminished value claim for vehicles that are 6 years or newer.

If you are right at that 6 year mark, take a look at your VIN number and determine your vehicle’s manufacturing date because the at-fault insurance carrier will go by the earlier date.

What To Do If The Other Driver Is Uninsured or Underinsured

If you’re dealing with an uninsured or underinsured driver, your own insurance company will be paying for all or part of the repairs or replacement.

In this case, you probably have an appraisal clause in your auto policy.

You should get an appraiser to determine the true value of your car. It would be best if you hire your own appraiser from a third party, rather than using the appraiser suggested by your insurance company. This way you will take comfort in knowing the appraisal will be not be biased in favor of your insurance company.

According to the appraisal clause, if you and your insurance company can’t agree on the fair market value of your car, you can always submit the dispute to binding arbitration.

Can I Get My Car Back Even If It Was Totaled?

You may request to get the car back even after it has been totaled, but the insurer may not grant your request.

Once the total loss is settled, the insurance company assumes the rights to your car and can dispose of it however they wish including selling it or its parts for salvage.

They can, at their discretion, let you keep the car and let you try to salvage it yourself. If the insurer lets you keep your car, they will deduct its salvage value from your total loss settlement. In which case, you have the option to restore and/or sell it.

However, by Arizona law, any car that had been deemed a total loss by an insurance company must have a salvage title. You can get a salvage certificate from the Arizona Motor Vehicle Department (MVD) and register your car as a salvaged vehicle.

Once the necessary repairs are complete, the car would need to be presented to the MVC for a special inspection before it can be deemed fit to drive on public roads.

Keep in mind that some insurance companies may offer limited or no insurance for a car with a salvage title.

What If I Still Owe A Balance On My Car Loan After My Vehicle Was Totaled?

You can use the insurance cash payout to pay down the balance of your loan.

If the cash value of your car is more than the balance of your loan, you can fully pay off your car note once insurance sends you a check for the fair market value of your car.

Unfortunately, in some cases, especially if your car is new, the loan balance will be higher than the insurance payout. In these scenarios, gap insurance can help you cover this shortfall.

Gap insurance is also known as loan-payoff coverage, which can protect you financially particularly if your car is new and you are making car payments on it.

If a total loss occurs, gap insurance will pay you the difference between the actual cash value of your car and the outstanding balance on your car loan.

For example, in a total loss situation, if the insurance pays you an actual cash value that is less than what you own on the car loan, you’re left with a financial shortfall — or a “gap” — in the amount that you still owe.

Gap insurance protects you from this financial shortfall.

For example, if your totaled vehicle was worth $18,000 at the time of accident, but you still owe $20,000 on the loan, your gap insurance will pay you $2,000 to cover this “gap”.

Protect Yourself Financially From a Total Loss

We hope this article gave you enough actionable information to manage your property damage claim.

But if you somehow get stuck somewhere along the way, or insurance is being difficult with you, our attorneys at the Thompson Law Firm can help you seek fair compensation for the damage on your car.

We work on a contingency basis – we don’t get paid unless you get paid. When you’re ready to move forward with your claim, please contact our office at (480) 634-7480 to arrange a free initial consultation.