Can you negotiate the insurance payout for a totaled car?

Can you negotiate an insurance payout for a totaled car?

You can negotiate your insurance payout when your car is totaled; if you feel the offer is unfair, you don't have to accept it.

When an insurance company declares your vehicle a total loss, it means the cost of repairing your car exceeds its actual cash valueActual Cash Value (ACV) is the current market value of your car, considering depreciation. It's the amount your insurance will pay if your car is totaled or stolen. (ACV) or a specific percentage of its ACV, as defined by state regulations or the insurance policy terms.

Here's how to negotiate an insurance payout, which we'll illustrate with the example of a policyholder we'll call Miriam.

Miriam's car was stolen, taken on a joyride and crashed. The insurance company tells her it's a total loss.

1. Understand your policy: Know the details of your insurance policy, including coverage limits and deductibles.
   • Miriam reviews her policy. She carries full coverage with a $500 comprehensive deductible. Her insurance will cover the car at its actual cash value.
2. Determine the actual cash value (ACV): Research the value of your car prior to the accident. You can use online valuation tools to get an estimate.
   • The adjuster tells Miriam her car is worth $15,000. Miriam knows her car was in pristine condition with low miles and no scratches or dings. She spends some time researching and determines that the value of her car should be $18,000.
3. Gather documents: Collect as many documents as possible, including your vehicle's service history, receipts for any upgrades or repairs, and evidence of your car's condition before the accident.
   • Miriam has pictures of her car just before the accident. She knows what the odometer read because it recently had an oil change. She gathers this documentation as well as her research into the fair market value of cars like hers in similar excellent condition.
4. Prepare your counteroffer: If you believe the offer is too low, prepare a counteroffer supported by your research and documentation. Explain why you believe your vehicle is worth more than the offer.
   • Miriam uses all of her documentation to create a counteroffer. She presents it to the insurance company along with all of her supporting documentation.
5. Consider hiring a professional: If negotiations are going nowhere, you should consult with an attorney or a public adjuster. They can provide expertise in dealing with insurance settlements.
   • Miriam's insurer offers her $17,500 after review, which she accepts. After her deductible she receives $17,000 for her car. Miriam could have continued to fight, but decides the offer is fair and hiring an attorney would be more costly.

Take your time accepting the first offer, especially if it seems too low. Remember, insurance companies expect some level of negotiation in these situations, so don't hesitate to stand up for a fair value of your totaled car. However, handle the process with clear, documented evidence to support your case.

If Miriam hadn't negotiated, she would have received $2,000 less for her car.

How to negotiate a total loss insurance settlement

There are a few steps to take when negotiating a claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing. with an adjuster.

Determine the vehicle's worth

The value of your car must first be assessed to determine compensation. Several factors are of consideration, including your vehicle’s make, model, body style, and mileage.

The adjuster will use your insurance company's proprietary method of calculating your vehicle's value as it stood prior to the incident. This may not match what you owe on the vehicle or what you believe it's worth.

Get an estimate

A qualified mechanic can provide an in-depth estimate that details all necessary repairs. It's a good idea to get more than one estimate. Your insurance adjuster will also calculate an estimate for repairs.

Review the adjuster's offer

Carefully look over the details of your claim. If you disagree with the settlement amount, tell your adjuster and ask what the insurer's procedure is for challenging the value it has calculated for your vehicle. You will need to provide evidence supporting why you believe the vehicle is worth more.

Get outside help if necessary

If you’re unsatisfied with negotiation efforts, you can hire a professional like a public adjuster or a lawyer. Public adjusters are state-licensed professionals who understand how the claims process works and can negotiate with your insurer for a better settlement amount. Typically, public adjusters work on a contingency basis, charging a percentage of your settlement as payment. They work for you, not the insurance company. If negotiations are still unsatisfactory, you can also hire a lawyer who specializes in insurance issues. Armed with experience and skill, your attorney can help you fight for the settlement amount you think you should have.

Get everything in writing

When you and your claims adjuster agree on a settlement, be sure to spell out these terms in writing to validate the agreement. It ensures that everyone understands their financial obligations and is on the same page with expectations.

“In general, the best practice is to arm yourself with a wide base of information from a variety of sources as to value the vehicle prior to engaging in any negotiation,” says Sawan. “Additionally, the market for used car sales can sometimes lead to higher offers. For example, in 2021 alone, used car prices were estimated to have surged nearly 48%. Depending on how skillfully this is worked into the negotiation, it can often result in a much higher offer.”

While the process may differ slightly based on claim value, your local insurance agent can work with you to provide support and receive the settlement to which you feel entitled.

Do you have to accept an insurance offer on a totaled car?

No, you do not have to accept the insurance company's first offer on a totaled car. You can negotiate the offer if you believe it does not reflect the actual cash value of your car. Conduct your own research on your car's value, present your findings, and negotiate accordingly. If you cannot reach a satisfactory agreement, you have the option to reject their offer and seek further negotiation or legal advice.

Should you accept the first offer from a car insurance company?

You don’t have to take the first offer you receive, says Alan Himmell of Florida’s Allstar Adjusting.

“As a claim adjuster and a doctor who has seen first-hand the insurance claim process for totaled vehicles, I can say that no, you don't have to accept the first offer that comes in for a totaled car. Remember, they need you to sign a release which states that you are in agreement with their offer,” Himmell says.

If you’re offered a lower value than you expected, you can work with your claims adjuster to negotiate the total loss value. Written estimates can help bolster your argument to improve your chances of approval.

“Sometimes, I have noticed that the insurance company is spot-on with their offer,” Himmel says. “However, you never want to assume the offer is fair. You can do your own homework. The real trick to getting the highest number is simply going onto the marketplace by checking local dealerships and listings. This will tell you what it will cost you to actually purchase the vehicle with real-world accuracy. Collect this documentation, and this is what you will present to the claim adjuster. I have had several patients with totaled cars get more money, thousands more in fact, by doing this.”

Once you accept an auto insurer claim settlement, it typically takes about 30 days to get the check.

When do you need to negotiate a total loss settlement?

Your insurance policy is a contract between you and the insurance company. Your policy’s declaration page itemizes the specific damages and incidents covered under your policy as well as the limits of that coverage and deductibles you will need to pay.

When you file a claim, the representative from the insurance company will gather information about the incident and may decide the car is a total loss, which means it costs more to repair than it's worth. The adjuster will determine your vehicle's ACV and then make you an offer.

Sometimes, an insurer may offer far less than you expected, but there is still room for negotiation.

“Simply put, any insurance claim is a negotiation,” says Dennis E. Sawan, a personal injury and insurance lawyer at Sawan & Sawan in Ohio. “Some aspects of a claim may be a bit less negotiable. Also, often, insurance adjusters are not provided much flexibility by their company. However, in our view, it’s always worth trying so long as the request is well-supported and reasonable. As the saying goes, you don’t get what you don’t ask for.”

If you aren't happy with the settlement offered you have the right to negotiate and ask for more money.

What happens if you don't agree with a total loss adjuster?

If you don't agree with a total loss adjuster's assessment or settlement offer regarding your property, you have several options.

• Negotiate: Present evidence to negotiate for a higher settlement.
• Independent appraisal: Use your insurance policy's appraisal clause to have an independent appraiser determine the value.
• Mediation: Some insurance policies allow for mediation, where a neutral third party helps you and the insurer reach an agreement.
• Hire an attorney: If the dispute cannot be resolved, hiring an attorney to represent your interests might be necessary.
• Complaint: File a complaint with your state's insurance department. They can offer assistance or intervene on your behalf.

It's important to communicate effectively and keep detailed records throughout the process.

“It’s important to remember that you are never forced to take a settlement offer,” Sawan says. “If you feel as if an insurance company is treating you unfairly or unreasonably, it’s wise to speak to a lawyer as soon as possible. However, remember that time is of the essence as most legal claims are governed by strict time deadlines.”

How to get the most money from insurance for a totaled car

To get the most money on your total loss settlement, come prepared to prove that they car is worth more than what you've been offered. The more evidence you can provide, and the more detailed that evidence is, the better your odds of winning a higher settlement.

Prepare a counteroffer that shows proof of your vehicle’s value and includes receipts or estimates for any recent work done on your vehicle within the last few months.

What do you do if car insurance doesn’t pay enough for a loss?

As noted above, you can negotiate your settlement should negotiations fail and you feel you're not getting a fair market value for your car, there are further steps you can take.

There is an appeals process for car insurance claims that can include bringing in a third-party mediator to review both sides and determine which settlement amount is fair. If you're not sure of your rights, check with your state's insurance department. You may also want to consult with a lawyer.

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