How to Value Total Losses?

Your contractual responsibility is for the full value of the vehicle. We determine the Fair Market Value for the vehicle prior to the accident and charge this amount. Both the rental contract and negligence law requires that the rental agency be put back into the position that they would have been if the damage had not occurred. The question is what value will appropriately put them back in to this position.

Fair market value is defined as "The amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts." Black's Law Dictionary The purpose of determining fair market value is to ensure that the injured party is made whole or put in the position that they would have been in if the damage had not occurred. The inured party can not receive a windfall due to their damages. The goal is to determine what the property is worth in the open market.

PurCo will evaluate the Manufacturer's Suggested Retail Price (M.S.R.P. ), the Kelly Blue Book Value, the National Automobile Dealers Association (N.A.D.A.), or the M.S.R.P. less a mileage depreciation. There are various ways to determine the Fair Market Value of the vehicle. Used car guides can be implemented to determine a value. However if the vehicle is too new to be in the guide this will not be applicable. The M.S.R.P. can also be implemented if the vehicle is brand new. C.C.C. are also available but are traditionally low as the data is recovered by inquiring the lowest amount that the dealership would sell the car for. This does not fill the definition of Fair Market Value.

This value is not connected to the amount originally paid for the vehicle. That figure can only demonstrate what the value was to the parties involved at the time of purchase. The fair market value is also not connected to the amount that the injured party owes on the vehicle. Clearly, any amount owed on the vehicle only demonstrate what someone was willing to loan with the vehicle as collateral.

Both the rental contract and negligence law requires that the rental agency be put back into the position that they would have been if the damage had not occurred. The question is what value will appropriately put them back in to this position. "Whether the retail or wholesale price will govern when calculating damages depends on the replacement market available to the injured party." 4 J. Nates et al., Damages in Tort Actions §37.01 [1][b], at 18 (1994).

In the case of United Truck Rental v. Kleenco Corp., 929 P.2d 99 (Hawaii App. 1996) the court looked at replacing a rental truck and determined that the retail value was the appropriate value.

"Because United was a rental company it is not strictly a consumer or a trailer….There was no evidence that a single vehicle replacement could be purchased by United at the wholesale price. Hence the evidence supports the conclusion that unless United was buying in 'bulk' the wholesale market was not available to it. As a result the market price which would accurately or as precisely as possible compensate United for its stolen truck, under these circumstances, was the retail market price. See Richards, 10 Haw.App at 623, 880 P.2d at 1238-39 ("All of the difference measures for damages to personal property are merely guides to common sense, and the question in each case is ultimately a question of fully compensating the injured party. Thus, the various measures should be adjusted as required to meet the goal of compensation. It follows then that no mechanical rule can be applied with exactitude in the assessment of property damage and each case must rest on its own facts and circumstances as supported by the proof in the record.)

The rental agency is limited to the wholesale price only if they can replace the vehicle at the time of injury with a wholesale price. Since your clients can not regularly replace their vehicles at a wholesale price, then in order to put them in the position that they would have been in if the accident had not occurred, they will have to be compensated with a retail value of the property lost.