Insurers often have upper hand when haggling over car's value

David Mattera's 1998 Mercury Mystique sits crumpled outside his Ipswich home, the car's insured value still unclear nearly nine months after the accident that left it totaled.

The insurance company of the driver Mattera alleges caused the accident offered a settlement of $3,600, but Mattera said his research found the Mystique was worth $4,600, and possibly as much as $7,100. A clerk magistrate called in by Mattera to settle the matter sided with the insurance company, deciding it owed nothing. It's a bizarre tale that illustrates how negotiations over a car's value can quickly become contentious.

Many companies are in the business of estimating what a used car was worth prior to it being involved in an accident, but their approaches vary and their numbers often differ, sometimes significantly. Consumers are often at a disadvantage in negotiating with insurers over the value of a used car because they typically don't have access to as much information, making it difficult to determine whether the insurer is undervaluing their vehicle.

"They can come up with any value they want," Mattera said of insurance companies. "They're holding all the cards."

Bruce King , owner of King Collision Centers and a member of the Massachusetts Auto Damage Appraiser Licensing Board, said consumers have to do their homework and be skillful bargainers.

"This is a business. It's not a conspiracy," he said. "Obviously, an insurance company wants to settle for the lowest amount possible."

Most of the pricing guides familiar to consumers -- including the Kelley Blue Book, Edmunds.com, and the guides issued by the National Automobile Dealers Association -- provide national average retail prices for vehicles in good condition. But a host of other companies -- including CCC Information Services Inc. of Chicago, Mitchell International Inc. of San Diego, and Audatex of San Ramon, Calif. -- cater almost exclusively to insurers and repair shops and customize data for specific regions of the country.

The difference in approach between the consumer-oriented pricing guides and the databases used by insurers almost guarantees conflicts.

Mike Stanton , vice president and chief operating officer of the NADA Analytical Services Group, publisher of the Official Used Car Guide, said differences also arise over the condition of the vehicle being appraised.

"Usually, the insurance company starts low and the consumer starts high and they end up somewhere in between," Stanton said.

After his car was totaled last October, Mattera, an Ipswich resident, consulted the NADA pricing guides with the help of his insurance agent. The guides indicated his car, with 77,000 miles, had a retail value of $4,600. The Kelley Blue Book's retail value was slightly higher -- $4,730.

Premier Insurance of Worcester, the company that insured the driver Mattera says caused the accident, referred the case to a wholly owned subsidiary called Precision Damage Control Services. The Danvers company bases its estimates on data supplied by Audatex, a subsidiary of Solera Inc.

Audatex bases its price estimates on ads for the same car or similar cars in the area. In Massachusetts, an Audatex spokesman said, the company reviews 1.4 million vehicle ads annually from 300 sources.

Precision Damage Control estimated Mattera's car was worth $3,300, a figure that was increased to $3,600 once he produced repair receipts from the last two years for such items as a new transmission, brakes, catalytic converter, alternator, and tires. The data indicated cars similar to Mattera's Mystique had sold in Massachusetts for well below $3,300.

Officials at Premier and Precision Damage Control declined to comment on Mattera's case. But Susan Scott , Premier's legal counsel, said Audatex is "a recognized source of value information that's used throughout the industry and approved for use in many states."

Mattera had never heard of Audatex or Precision Damage Control and was skeptical of the price estimate. He pressed for the higher NADA price and says a supervisor at Precision Damage Control ultimately agreed to pay him $4,600. But by that time Mattera was so angry that he decided to push for more money, a decision he said he now regrets.

State law says the value of a totaled car should be based on several factors, including its "retail book value," the price paid for the vehicle plus the value of prior improvements less depreciation, prior damage, and sales of similar vehicles. Mattera interpreted the law to mean he was owed the retail value of the car plus any depreciated improvements. He said his receipts warranted a $2,500 increase in the retail price.

Consumers at odds with insurers over the value of a car are entitled to take their case to arbitration, but only if the consumer is a customer of the insurer. In this case, Mattera was not a customer of Premier, so he filed suit in small claims court.

Mattera said the case centered on what level of compensation was appropriate. The magistrate ruled in favor of Premier and held that "the defendant does not have to pay the plaintiff any part of the claim or costs in this claim."

Mattera is trying to get back into small claims court to resolve the situation. And he has received nothing for his totaled car.

Mattera said other consumers could avoid the aggravation he has faced if insurance companies were required to tell customers the estimated value of their cars annually when their policy renews. That way, Mattera said, consumers could know ahead of time the value of their vehicle and also make an informed decision about whether collision coverage is worth buying.

"They tell us how much we have to pay for coverage in case our car gets wrecked," he said. "Why can't they also tell us how much we are going to receive if our car gets wrecked?"

Bruce Mohl can be reached at mohl@globe.com.