Hit and Run - brothers car totaled

My brother was involved in an accident about a month ago where another car forced him off the road into a cement barrier. The other driver never stopped.
The insurance company had him take his car to a shop (they claim it is the only shop within 100 miles they will work with) for an estimate. The agent came out to inspect the vehicle and determined it had been involved in a prior accident, before my brother bought it. This accident was not reported on the Carfax report we got when we purchased the car. It was only found on one that the insurance company ordered through another company.
Due to this prior accident, the insurance company claims that the value of the car is significantly less than book value. They totaled out the vehicle. They are not paying him what he needs to pay off the remainder of his loan (a nearly $5500 difference) and are insisting that they must take ownership of the vehicle.
I have a couple of questions here:
Don't you find it fishy that they only have one body shop do the estimate? Should he insist on getting a second or maybe even third opinion?
Is there any legal action my brother can take in this event?
If the insurance company agreed to insure his car as-is, what makes them able to change the rules later on to fit their financial best interest?

Any other advise will be much appreciated.
Thank you for your time,
Nicholas

I'm sorry, I failed to tell you where this happened. He is in Lakewood, WA and is serving in the U.S. Army at Fort Lewis.

You need to check your state auto insurance laws to see what it says when it comes to chosing the body shops for repairs. Here in VA it is the insurance holder who has the choice of where to take the car for repairs. Now, regarding the undisclosed damage to the car, you should consult with an attorney so s/he can review all the paperwork and see if there was misconduct from part of the dealer who sold your brother the car by omitting the prior accident that was not showing in the carfax report.

you also have a good claim to take this up with carfax. Most cars are upside down anyways so he will never get what he owes without gap insurance but if there is diminished value, he may have some recourse since he bought a carfax.

Unfortunately the Carfax guarantee only covers it if the title was branded at one point. It was never actually "branded" as a totalled vehicle as far as I can tell.

-Nick

This may sound strange, but has anyone ever heard of an insurance company working a deal with the customer to split the cost of repair?
For instance, the insurance company says they will pay him a certain amount, but that is not enough to cover the cost of repair. What if my brother offered to pay the difference? Do you think the insurance company would consider the offer?

-Nick

My point is that the undisclosed damage to the car, you should consult with an attorney so s/he can review all the paperwork and see if there was misconduct from part of the dealer who sold your brother the car by omitting the prior accident.

My point is that the undisclosed damage to the car, you should consult with an attorney so s/he can review all the paperwork and see if there was misconduct from part of the dealer who sold your brother the car by omitting the prior accident.

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