EAST LYME, Conn. -- When Mark Dalton received the call that his son crashed the family car, he, of course, feared for his son's safety and wasn't worried about the car.

"The insurance company talks about risk management. We managed our risk by having the car insured and thought we were doing everything proper along the way," Dalton said. "It turns out, we were blindsided."

Dalton discovered his 1998 Audi A4 had a salvage title, which means it was involved in a crash before and was rebuilt.

Car Owner Could Lose Almost $5,000

Channel 3 I-Team reporter Eric Parker reported the trouble began when insurance adjusters from Esurance found out the car had a salvage title.

"The insurance company came out with this term -diminished value, which meant we were only going to get 50 percent of the value," Dalton said.

So, when Dalton gets paid for the value of the car, he will lose about $5,000. Dalton was surprised because he knew the car was rebuilt all along. When Dalton first contacted Esurance, the company didn't ask about the title, and he paid full premiums for full coverage.

"I took it to a mechanic and he put it up on a lift and checked to see if there was anything that would have made it unsafe," Dalton said. "We satisfied ourselves it was OK."

Records from the state Department of Motor Vehicles indicate the work involved new headlights, a new hood and a new front bumper.

Both Esurance and the state's Insurance Departmentacknowledge that had Esurance known about the title, the company would not have provided full coverage. Still, Dalton paid full-coverage premiums the entire time he was covered.

Official: Consumers Responsible For Notifying Insurers

The Channel 3 I-Team contacted an Esurance representative, who said Dalton should have checked the "Learning Center" section of the Esurance Web site to read about actual cash value of a car. The representative said Dalton would have been able to figure out for himself that the rebuilt title would impact the car's value.

The Esurance representative said, "Because Mr. Dalton's vehicle was salvaged prior to the accident, the pre-accident actual cash value of his vehicle was lower."

Connecticut Insurance Commissioner Thomas Sullivan said one of the biggest complaints his office receives is about how totaled cars are valued. Sullivan said that while Dalton's case is somewhat unique, it is legal for insurance companies to consider the type of title because it does impact value.

"There's a Chevy that was previously totaled and one that was not; They're going to pick the one that was not previously totaled, and the whole reason we stamp titles 'salvage' is to protect consumers," Sullivan said.

Sullivan said other consumers with "salvage" or "repair" titles should tell their insurance company up front about the title to avoid a dispute later.

Dalton said it never occurred to him, and Esurance didn't ask about the title. Esurance has offered Dalton $4,100. Four months later, Dalton has hired an appraiser to fight for a higher settlement offer.

"The insurance company gets an independent appraisal, I get an independent appraisal, and if those two don't agree, it goes to a third party, to an umpire," Dalton said. "We certainly will make out better than if we just folded the tent when it happened."

Another reason this issue might be so important is that this car, even with all its damage, could be rebuilt again, and someone else could have this same issue, Parker said.

"The auto body repair shops are in business to put these cars back together," Dalton said.

The state also offers an arbitration process to settle disputes between consumers and their insurance company. Insurance officials recommend consumers who are worried about the value of their car to check the department's Web site or call them via 800-203-3447.

More Car Insurance Information

• Auto Insurance FAQs
• CT Insurance Department: Automobile Coverage Information
• Non-Standard Auto Insurance Information
• Saving Money On Auto Insurance
• Complaints Against Insurance Companies

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