You vs. Your Car Insurance: How to Negotiate a Total Loss Claim

There are few things more infuriating than faithfully paying your car insurance premiums year after year only to feel that they failed you when you need them most. Why? You struck a deer or got yourself in a car accident, but the insurance company's valuation of your totaled car is way too low. It was hard enough dealing with the loss of your car (read our tips on how to keep a totaled car), and now you’re worried about being underwater on your auto loan and having challenges purchasing a replacement car. You look online and you see that your car is selling for way more than the insurance company's settlement offer, and you feel cheated.

How to Negotiate on a Total Loss Smartly

To best understand how to negotiate a total loss claim, you first need to understand how insurance companies come up with their value of your vehicle. They will first rate the condition of your car, scouring it to see if there are any stains, leaks or dents. Then, they’ll use their software to search for dealers in your area that are selling your vehicle and take into account all of the different options on your car. Averaging together what they find and taking mileage into account gives them your total loss value. However, it’s important to remember that the system isn’t perfect.

Ask for a Copy of the Valuation

First, ask for a copy of the valuation and give a call to the dealers who are selling the comparable vehicles. The valuation can be a little confusing to read, but usually the first page will have a breakdown of your base value, the amount of money taken off due to condition (i.e. the damages it took because of an auto accident) and your actual cash value or ACV. The next page or two will describe any conditioning, and the last pages will list the comparable vehicles in detail.

Look Out for Corrections

Maybe you’ll find that one or more of these wasn’t listed correctly on their website and is actually a base model instead of a luxury model. Maybe this one is on sale because it has a lot of rust or a leaking engine. Getting documentation of this and bring it to your claims adjuster and they may decide to remove one of the comparable cars. Nobody is perfect, so don’t accept the value before you’re sure that everything on the valuation is correct.

Submit Your Own List of Comparable Vehicles

If that doesn’t get you closer to the number that you’re looking for, then you can try to find some comparable vehicles of your own to submit. Just make sure that the car is the same model and submodel of your car with the same options. Your auto insurance company might decide not to add them, though. There aren’t any guarantees at this point, but giving it a try is the best way to ensure that your car is being evaluated fairly.

What if That Doesn’t Work?

Maybe you’ve tried everything above, and you’re still not getting a value that works for you. What is there to do now? What options do you have left?

Check Your Insurance Policy

The next step is to check your policy. Remember, when you sign up for an insurance policy with a car insurance company you’re agreeing to a number of stipulations. Always read it and ask questions about anything you don’t understand. Ask for a copy if you don’t already have one, and read through the policy provisions to see what your rights are under the policy.

Get Independent Appraisal

In most cases, you will have the right to an independent appraisal. What does that mean exactly? It sounds like a lot of jargon, but it boils down to giving you the option to get an outside opinion. You will hire an outside appraiser and your insurance company will hire their own. Then, those two people will come together and come to an agreed car value. They will get together and review your car themselves and repeat the entire process of finding comparable vehicles.

If those two people cannot come to an agreement, an umpire is brought in to settle it. The only caveat to this method is that there is always the possibility that the value will come back lower than what the insurance company originally offered. Plus, in that scenario you will have also had to pay out of pocket for the services of the appraiser. An appraiser usually costs $300 to $500, but if you’re able to significantly raise the value of your car it may easily be worth it.

Offer to Settle for a Specified Amount

Once you know that your policy offers the right to appraisal, you might have a better spot to negotiate. Explain to your adjuster that you plan on having the appraisal, but would be willing to settle for a specified amount. Remember that the insurance company is also aware that they will have to pay for their own appraiser, plus they shoulder the risk that they will have to pay more overall for the value of the vehicle. In many cases, they do decide it’s not worth that risk and agree to a higher value. If they don’t, you’ll have to decide if you’re willing to take the chance yourself and hire an appraiser.

 

Ultimately, your policy contract is important. Even if it’s hard to understand from your adjuster what exactly you’re able to do to get the most for your totaled vehicle, your policy contract spells out your options clearly. In the case that you feel that you’ve been wronged by your insurance company, you’re always free to reach out your state governing body for insurance companies and lodge a complaint. Having information is invaluable, understanding the process and making calculated decisions is the best way to get the highest possible value for your total loss.