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Hit by car, insurance tries to pay depreciated value for the bike

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Hit by car, insurance tries to pay depreciated value for the bike

Old 05-19-16, 07:31 PM
  #1  
agenkin
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Hit by car, insurance tries to pay depreciated value for the bike

My bike was damaged in a collision with a car, in which the driver was at fault. The frame and wheels are bent and a bunch of components are damaged. I have three estimates from three different bike shops, each of them totalling over $3,000 in replacement parts and labour (a new bike plus the cost of all the upgrades that were damaged, plus labour to transfer some of the upgrades and accessories that survived the crash).

I am talking to the driver's car insurance, and their position is that the bike's depreciated value is about $750, so that's how much they are offering to pay for my damages. This is totally nuts because the bike is just over a year old, and a 2016 version of the same model retails for $1,750 without the upgrades I made.

Guys at every bike shop where I've gone to talk about this say that the insurance companies always pay replacement value for bikes, not depreciated value. However, the insurance adjuster who is talking to me is dead set that they are only going to pay depreciated value.

Has anyone fought an insurance company on this issue?
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Old 05-19-16, 07:47 PM
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Tell them your lawyer says they need to pay for all replacement costs or else you'll see them in court.
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Old 05-19-16, 08:00 PM
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I would suggest consulting an attorney.
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Old 05-19-16, 09:04 PM
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File small claims against the driver for full amount plus rental bicycle for the time they refuse to pay up.

Claim keeps going up every week they delay, plus drivers get upset at insurance companies that hang them out to dry for the small amount of even a higher end bicycle.

Bump an SUV bumper and the cost is over $3,000 even with no visible damage.
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Old 05-19-16, 09:27 PM
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There's the law and there's general practice.

Under the law, you're only entitled to the cost of repairs or fair market value at the time of the loss -- the depreciated value -- whichever is lower. If this were a car they would pay for repairs up to the Kelly Blue Book value, ot "total" the car, pay you the Blue Book value, and then own the bike themselves.

So that's the law. In the real world, most of these collisions involve some injury to the rider, and ponying up for a new bike is often a good strategy to close the book before the injury side of the settlement becomes acrimonious. So the insurers will gladly pay for a bike rather than litigate, and bear the related costs, and risk of inflating the claim relating to the injury.

Here's your problem, without an injury which can represent significant open ended exposure for the insurer, they can hang tough relating to the bike. Worse for you, without an injury and bigger dollars at stake it can be tough to interest an attorney in your case. However, there are local attorneys who handle these smaller cases, or you can go the small claims route. There isn't a real basis to justify claiming more than the depreciated value, but there is legitimate debate about what exactly that is. The leverage you have is that it can cost the insurer serious dough to argue what the bike is worth, so if you demonstrate your commitment, they might move higher, and if you actually file a claim they have to respond to in court, they will be yet more motivated to put an end to it.

I don't know that hardball will get you what you think you're entitiled to, but it should get you much closer to a fair settlement. In any case $750 is ridiculous, and if they don't move significantly, you have to show backbone and move them.
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Old 05-19-16, 09:50 PM
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Originally Posted by FBinNY View Post
Under the law, you're only entitled to the cost of repairs or fair market value at the time of the loss -- the depreciated value -- whichever is lower. If this were a car they would pay for repairs up to the Kelly Blue Book value, ot "total" the car, pay you the Blue Book value, and then own the bike themselves.
That's how it is in many/most/all(?) US states. The OP is in Canada.
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Old 05-19-16, 09:54 PM
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Old 05-19-16, 10:07 PM
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Originally Posted by Jaywalk3r View Post
That's how it is in many/most/all(?) US states. The OP is in Canada.
I suspect that it's the same in Canada.

Civil process is about being "made whole", ie. returned to the condition one was in before the event. Made whole for loss or damage to a bike, would be about the fair market value (depreciated).
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Old 05-19-16, 10:07 PM
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If the insurance adjuster won't budge it's probably time to look for an attorney to argue on your behalf. With damaged cars the usual practice is to estimate the depreciated value, but there can be exceptions for unusual vehicles where an equivalent replacement would be hard to find. I'd argue that this type of exception should also apply to a bicycle since the used market is not nearly as extensive as it is for automobiles especially since you need to find a replacement bicycle that fits you properly. I.e. point out that there simply are no listings for a bicycle of the right size, make, model, and equivalent components that you would be able to purchase for the offered $750. The insurance settlement is supposed to make the victim whole again - i.e. in the same position as he was before the crash. Having $750 but no bicycle is not in any sense the same position you were in before.
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Old 05-19-16, 11:31 PM
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Thanks for the input, everyone. I am planning to talk to a lawyer once I get the insurance company's position in writing. However, I doubt that it would make sense to hire a lawyer for a case amounting to about $3K. But I may get some advice.

Originally Posted by prathmann View Post
the used market is not nearly as extensive as it is for automobiles
This is more or less what I'm thinking. Also, there is no well established Blue Book for bikes, i.e. no standard way to determine depreciated value of a bicycle.
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Old 05-19-16, 11:53 PM
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Originally Posted by agenkin View Post
Thanks for the input, everyone. I am planning to talk to a lawyer once I get the insurance company's position in writing. However, I doubt that it would make sense to hire a lawyer for a case amounting to about $3K. But I may get some advice.


This is more or less what I'm thinking. Also, there is no well established Blue Book for bikes, i.e. no standard way to determine depreciated value of a bicycle.
The small stakes is what allows the insurance company to play hardball. After all, what's the worst case for them?.

OTOH - it might offer you a small tactical advantage. I don't know about Canadian small claims courts, but if they exist and are like those in most states here, you have a play. You can represent yourself, but the insurance company can't. That means they have to hire a lawyer who'll cost them as much as what you're asking, or at least enough that it might be cheaper to offer you an incentive to settle before the trial date.

Unfortunately, you might have to hire an attorney to start the process and convince them that it would be cheaper and smarter to offer you a fair settlement.
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Old 05-20-16, 12:42 AM
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Originally Posted by agenkin View Post
Thanks for the input, everyone. I am planning to talk to a lawyer once I get the insurance company's position in writing. However, I doubt that it would make sense to hire a lawyer for a case amounting to about $3K. But I may get some advice.


This is more or less what I'm thinking. Also, there is no well established Blue Book for bikes, i.e. no standard way to determine depreciated value of a bicycle.
Where I live, there's a team of local bicycle accident attorneys, themselves cyclists. Apparently this situation would/should be a textbook situation for guys like them. See if you can find some attorneys of the like.

Also, regarding an established Blue Book for bikes, what about https://www.bicyclebluebook.com ?? They even account for upgrades.

That said, I wouldn't see how you couldn't represent yourself in a case like this in a small claims setting. A simple receipt and some quotes from mechanics on total costs should easily display how preposterous their current offer is.

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Old 05-20-16, 06:25 AM
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You can probably just get an attorney to write a letter, not even take the case. They're probably fishing for easy money. If they get a letter from a lawyer, probably 50% chance they'll fold immediately.
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Old 05-20-16, 06:43 AM
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Originally Posted by prathmann View Post
With damaged cars the usual practice is to estimate the depreciated value, but there can be exceptions for unusual vehicles where an equivalent replacement would be hard to find. I'd argue that this type of exception should also apply to a bicycle since the used market is not nearly as extensive as it is for automobiles especially since you need to find a replacement bicycle that fits you properly.
If there is no readily established market value for a depreciated used bicycle, vehicle or anything else, I doubt if the insurance company is required to reimburse the claimant the as new value or whatever amount the claimant thinks his used pride and joy is worth.
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Old 05-20-16, 06:44 AM
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That's unfortunate. If you buy a bike for $2k -- then 6 months later some idiot totals that bike -- and they offer you $750 (for something that wasn't your fault) -- why should you be out of pocket $1250 just to replace it with something you already had.

Tell them the longer you talk the more your neck or back starts to hurt.
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Old 05-20-16, 07:00 AM
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I'm in exactly this situation.

I built my bike from a frame/fork using all high-end components...the ins adjuster wants to offer a depreciated replacement value for a similar off-the-rack bike (there's no such animal) which won't even cover the cost of the wheels that got trashed.

after a month of stressful, unproductive negotiations, I hired an attorney who specializes in cycling-related claims.

the OP should do the same. and soon...
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Old 05-20-16, 07:04 AM
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Have you asked the insurance company what kind of depreciation table they used? I would not expect a bike, which can last decades with a modicum of care, to be depreciated at the rate they are trying to do it. Can you look your bike up on the bicycle Blue Book? I guess attorneys in this area are different from attorneys in other locales. No attorney I know wants to get involved in a matter like this.
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Old 05-20-16, 07:06 AM
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Originally Posted by FullGas View Post
I'm in exactly this situation.

I built my bike from a frame/fork using all high-end components...the ins adjuster wants to offer a depreciated replacement value for a similar off-the-rack bike (there's no such animal) which won't even cover the cost of the wheels that got trashed.

after a month of stressful, unproductive negotiations, I hired an attorney who specializes in cycling-related claims.

the OP should do the same. and soon...
What is the attorney's hourly rate and how much money above what you were offered do you hope the attorney can get you?
Were you injured at all?
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Old 05-20-16, 07:09 AM
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Insurance can be such a crap shoot. I also had a similar situation, but I felt I got treated very fairly by the adjuster.

If I remember correctly, since bikes are kind of an odd category for car adjusters to deal with they usually use a standard depreciation rate table. Something like 30% for one year old and then 10% for each additional year. I'm probably wrong about the %, but it goes something like that. I think my adjuster also looked at some similar equiped bike listings on CL and Ebay to help him get an idea.

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Old 05-20-16, 07:20 AM
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Originally Posted by Paul Barnard View Post
Have you asked the insurance company what kind of depreciation table they used?
They had the bike evaluated by their own mechanic (at a shop that sells budget bikes in a, let's say, less than vibrant area of the city), who came up with the value.
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Old 05-20-16, 07:25 AM
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Your claim becomes worth more when you file a suit. The company will have to figure their lawyer time in valuing the claim. Talk to a buddy who is a lawyer. File a formal demand letter and ask for 100 cents on the dollar. It won't cost much to file a claim and you'll have the satisfaction of tooling around the insurance company. Worse case scenario is you get $750 and you are out of pocket your time and filing fees.

A year old bike simply does not depreciate as much as the insurance company is claiming.
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Old 05-20-16, 07:26 AM
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Originally Posted by bikemig View Post
Your claim becomes worth more when you file a suit. The company will have to figure their lawyer time in valuing the claim. Talk to a buddy who is a lawyer. File a formal demand letter and ask for 100 cents on the dollar. It won't cost much to file a claim and you'll have the satisfaction of tooling around the insurance company. Worse case scenario is you get $750 and you are out of pocket your time and filing fees.

A year old bike simply does not depreciate as much as the insurance company is claiming.
Recovering attorney fees is far from a guarantee.
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Old 05-20-16, 07:27 AM
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Originally Posted by agenkin View Post
They had the bike evaluated by their own mechanic (at a shop that sells budget bikes in a, let's say, less than vibrant area of the city), who came up with the value.
Then tell that shop to deliver a like bike to you for that price!
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Old 05-20-16, 07:29 AM
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Depreciation sucks. Upgrades don't necessarily get covered. It's the same way with cars. If I go out and put shiny rims on my truck and install a 4 inch lift kit, then get totaled by a semi, no way in hell will his insurance cover my upgrades. If I get hit in my 93 Corrado (relatively rare car), I can't expect anything but the blue book value for the car, which is less than a few grand. If you wanted the bike to be covered for what it's worth, you should have had insurance stating so.

It's unfortunate, but that's how insurance works. You don't have a lot of leverage.
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Old 05-20-16, 07:33 AM
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Originally Posted by bikemig View Post
Your claim becomes worth more when you file a suit. The company will have to figure their lawyer time in valuing the claim. Talk to a buddy who is a lawyer. File a formal demand letter and ask for 100 cents on the dollar. It won't cost much to file a claim and you'll have the satisfaction of tooling around the insurance company. Worse case scenario is you get $750 and you are out of pocket your time and filing fees.

A year old bike simply does not depreciate as much as the insurance company is claiming.
Originally Posted by Paul Barnard View Post
Recovering attorney fees is far from a guarantee.
I didn't that the OP can recover his or her attorney's fees. I suggested that if the OP has a friend who is a lawyer, the OP can ask a few questions about filing in small claims court.

The OP can file his or her own claim. There is a real cost to the insurance company if this becomes litigated. A demand letter followed by a suit will drive up the settlement value of the claim.
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