Daily Decisions: How to Value a Totaled Car

In keeping with my earlier post, Lloyd vs. Allstate Insurance Company (Division 1, February 21, 2012) (published April 23, 2012), is a previously unpublished decision that was published on the insurance company’s motion. There really is no new or interesting law here — the plaintiff really seems to have offered no evidence whatsoever — but I suspect that Allstate liked some of the language in the Court’s opinion, and thought it might be useful in future more contentious cases. So they moved to publish the opinion.

Plaintiff Jerry Lloyd totaled his car in 2008; it was a 2005 Chevy Malibu with about 114K miles on it. At the time, Lloyd had a car insurance policy with Deerbrook Insurance Company, for which his claim was handled by Allstate Insurance Company (together, “Allstate”).

Because the car was a “total loss,” Lloyd was entitled to the “actual cash value” of his car under the policy. Allstate enlisted a valuation service to appraise the car.  Its initial valuation was $8500 based on the car being a “typical vehicle.” But typical vehicles had between 27K and 67K miles, so Allstate requested that the appraisal be adjusted to account for the high mileage of Lloyd’s car. The resulting valuation was $5100.

Allstate then offered Lloyd $5100. Lloyd declined, claiming his car was worth more. Allstate agreed to try another valuation method and offered to consider any valuation material Lloyd provided.

The revised valuation, based in part on dealer quotes, was a range between $6600 and $7100. Allstate then offered Lloyd $6600. He declined again, telling Allstate that he needed somewhere between $9000 and $13000 to replace his car. Apparently, in communicating his rejection, Lloyd told Allstate that they would be hearing from his lawyer. (Aside: I mean, if he knew that going in, why didn’t he just say that at the start? Why make Allstate go through multiple appraisals if he isn’t going to accept anything under 9K?)

Through his lawyer, Lloyd then invoked the “appraisal clause” of his policy. Allstate therefore retained an appraiser, who valued the car at $6100. Allstate’s appraiser then met with Lloyd’s appraiser, and the two settled on a valuation of $6600, plus tax and fees.

After all that, Allstate offered Lloyd $6800, which included the taxes and fees but then reduced by the $500 deductible. Then Lloyd decided he wanted to keep his car. So the amount was reduced by the salvage value. Lloyd took the check and kept his car. Then he changed his mind about the car, so he asked Allstate to take the car back and give him a check for the salvage value.  Allstate did that too! All told, Allstate had paid Lloyd $6,815.16 in settlement of his claim.

Just over a month later, Lloyd sued, alleging breach of the duty of good faith, breach of contract, and violation of the CPA. The trial court tossed the suit on summary judgment. The Court of Appeals affirmed.

As you can probably tell, there’s not much to the affirmance. Just from the recitation of facts, you can tell that Allstate pretty much did everything that it needed to do here.

On the bad faith claim, the Court concluded that the adjustment of the first offer was good faith because it was based on an error. There was no need to stick to the first offer based on the lower inaccurate mileage. Moreover, the mere fact that Allstate later offered more money during negotiations was not, in and of itself, sufficient to establish bad faith.

Lloyd also argued it was bad faith for Allstate to lead with an offer at the lower end of the valuation range, instead of the higher end. But apparently Lloyd never made this argument before, so the Court refused to address it on appeal. Lloyd did argue, however, that Allstate should have called back with a higher offer after Lloyd rejected the first offer. However, because Lloyd’s rejection invoked an attorney, the Court concluded that it was reasonable (and indeed required) to avoid contacting Lloyd future. When Lloyd’s attorney later contacted Allstate, Lloyd invoked the appraisal provision of the contract, so it was reasonable for Allstate to conclude that the previous bargaining was over.

Lloyd’s remaining claims got little ink from the Court of Appeals. It was not a breach of the appraisal clause for Allstate to reduce the payment by the deductible amount. And Lloyd was not entitled to damages for delay and expenses related to the appraisal process when he was the one who invoked the appraisal process!