(CBS SF) — Car insurance is supposed to protect you when your car gets damaged.  But, a Bay Area car owner says his insurer gave him two bad choices when he submitted a vandalism claim for his prized 2004 Volvo station wagon – and neither would result in the simple repairs he needed.

One of the options given involved totaling his car, the other involved having the vehicle declared “salvage.”

Rick Kehr’s insurance headache started back in May,  when vandals keyed his Volvo V70R  and broken a rear window.  When he saw the damage “my stomach dropped,”  Kehr told Consumerwatch.

But that was nothing compared to the surprise that lay ahead when Kehr submitted his claim to his insurer,  State Farm.

“I was told ‘we’re looking at totaling your vehicle,’”   Kehr recalled.  In addition, State Farm would give him $7,200, a shock to Kehr, who estimates he’s spent at least $12,000 upgrading the vehicle and keeps it in perfect condition.  Kehr’s improvements include a new motor and radiator, a rebuilt transmission, a premium sound system and upgraded lighting.  “If there’s ever the slightest malfunction, it’s in the shop,” Kehr said.

Kehr’s other choice was to get $5,100 from State Farm and having the vehicle declared “salvage,” a declaration that drastically reduces the resale value.  “It makes no sense at all,” Kehr said.  And just as frustrating, Kehr says State Farm wouldn’t budge.   “They would not negotiate,”  he said.

“An insurance company has an obligation to negotiate,”  according to Nancy Kincaid of the California Department of Insurance.   Kincaid says California law requires insurers to settle claims quickly and fairly.   She also says low-balling is against the law.   “Let’s remember what an insurance company’s goal is – it’s to collect your premium, invest that money, and hopefully never have to pay you on a claim,” Kincaid told Consumerwatch.

Kincaid says consumers who are unhappy with their insurance company’s offer can, and should,  appeal to the company,  and provide documentation that proves the actual value of their vehicle,   like receipts and quotes of similar vehicles.  If that doesn’t work, Kincaid says consumers should file a complaint with the State Dept. of Insurance,  which will investigate.   Kehr says that what he plans to do.   And last week, after inquiries from Consumerwatch,  State Farm told Kehr  it plans to re-evaluate his claim, using a “different valuation.”

State Farm would not comment on Kehr’s case to KPIX5, citing privacy concerns.  But it did issue a statement saying “ Each claim is unique and handled based on its own merits. To make sure that our customer can always reach a team member, State Farm often services auto claims using a team of claim representatives. During the course of our claim evaluation, any information the customer provides us for consideration is taken into account.”


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