South-Western Legal Studies in Business

Insured Can Be Required to Assign Title to Vehicle to Insurance Company to Collect for Total Loss
Description Appeals court held that when an insurance company pays the full value for a car when it is stolen or totaled in an accident, it has the right to enforce the provision in the policy that requires the insured to assign title to the vehicle to the insurance company as a condition of receiving payment.
Topic Insurance
Key Words Automobile Insurance; Collision; Total Loss; Title
C A S E   S U M M A R Y
Facts Hamby was in an accident. His car was declared a total loss. State Farm agreed to pay Hamby $25,970 minus his $500 deductible as the total value of the vehicle, which has a scrap value of $7,000. State Farm instructed Hamby to assign title to the company, which he would not. Hamby sued State Farm, challenging its right to require him to assign title to the car in order for him to receive payment for the car's actual cash value. The trial court dismissed the suit in State Farm's favor. Hamby appealed.
Decision

Affirmed. The insurer's requirement that the insured convey title of a "totaled" vehicle to the insurer was legal and practical. Since the insurer was paying the full value of the vehicle, it had the right to obtain title to the vehicle, even though it was worth far less than before the accident. The same rule applies to stolen vehicles when the owners are compensated for the loss of their vehicle. The title is to be transferred to the insurance company, if the insured wishes to collect for the vehicle.

Citation Hamby v. State Farm Mutual Auto Insurance, --- SW3d --- (2004 WL 1065210, Ct. App., Tex., 2004)

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