Monday, November 20, 2017

Klem v. Access Ins. Co. (Cal. Ct. App. - Nov. 20, 2017)

I do feel a little bit bad for people who drive objectively terrible vehicles and are then involved in accidents.  Maybe that's in part because I drive a 2000 Nissan Altima -- one that has rust holes in it that are covered with duct tape and that leak water when it rains.

Kelly Blue Book says that the trade-in value of my vehicle is . . . $335.  And that's after totally lying and saying that it's in "good" condition.

Here's the problem:  Let's say that someone rear ends me.  Not hard, but enough to make it (1) look even uglier, and (2) unable to move.  They're at fault, so their insurance company has to pay.  It'll cost, say, $5000 to fully repair the thing.

Obviously, the insurance company shouldn't have to pay me $5000.  That'd be a windfall.  I'd surely keep the money and not repair the car.

But, on the other hand, geeze.  I had a working car.  Now the insurance company is going to pay me a whopping $335.  What the hell am I supposed to do with that?!  I can't (really) buy another car.  That would cost, in reality, more than $335.  I doubt there's even a clunker that runs that costs $335, and even if there was, we all know it'd run for around two weeks before it stopped.  That's why they're selling it.  If it still ran, they'd keep driving it.  Just like I did with mine before I got rear ended.

So what am I supposed to do?  Particularly if I don't have an extra grand or so sitting around that'll enable me to get an actual (albeit crappy) working car?

What am I really likely to do?  I'm likely to fix up my existing, rear-ended car.  Not enough to get it back in "perfect" (i.e., $5000) shape.  But just enough to get it to run.  Say that'll cost $800.  It'll look even worse than before; huge smashed parts, wrong color back panel, etc.  But it'll get me where I want -- or, more accurately, need -- to go.

But we don't require the insurance company to pay this amount.  We only make 'em pay the $335.  And then, to add insult to injury, after they declare the vehicle a "total loss", they report that fact to the DMV and I get a "salvage title".  Which declares to the world that my vehicle is worth nothing.

Thanks a lot.

That's the world in which we live.  And it's a terrible one -- at least for the person who's rear ended -- but you see why that's also our rule.  We don't want to make the insurance company pay the $5000, because that'd be crazy.  Even if the guy wanted $5000 in repairs.  It's just not socially optimal to pay that amount to repair the thing.

And, yes, in the perfect world, maybe we'd create a rule that says the insurance company has to pay, say, whatever is the "minimum" amount to get it running, if the owner really was going to repair the thing.  But that leads to extortionate demands, difficulties about figuring out what a "minimum" repair job would be, etc.  So that's too difficult a rule to apply in the real world.  That might be what we'd do among friends.  But as a principle of insurance law, it doesn't really work.

Which leave the innocent, poor person who's been rear ended up the creek without a paddle.  Or, more literally, down the road without a car.

So it's a social problem.

Nonetheless, it seems to me that the Court of Appeal gets this one right.  An insurance company is permitted to do all of the above; in particular, to declare the vehicle a "salvage" job to the DMV, even if the owner -- as here -- actually ends up repairing the vehicle.  Yes, that's a bummer to the owner.  Amongst the many bummers of the whole experience.  And, yes, no one's likely to buy a car that only has a salvage title.

But it's not the salvage title that makes the car worth squat.  It's the fact that the car stinks.  The two are correlated, to be sure.  But the one doesn't cause the other.

Hence the anti-SLAPP motion here should have been granted.  Because reporting to the DMV is a protected act, and the plaintiff isn't likely to prevail.

Notwithstanding my profound and personal sympathy with his situation.