Getting what you pay for from your insurance company

How to Negotiate an Auto Insurance Claim

by Dollar Stretcher Contributors

An Auto Insurance Claim

My daughter recently had an accident. She was driving our six-year-old Mazda that was low mileage and in very good condition. First, they told us that the car was totaled. Then they tried to get me to settle for a low "trade-in" value. I need to get a check to buy a replacement, but don't want to settle for a lowball offer. Has anyone ever dealt successfully with an auto insurance company?

The Meaning of Totaled

Just because the company has "totaled" the car doesn't mean you have to replace it. If the amount they are offering is enough to fix it up so it's drivable, then you can go ahead and repair it and keep driving it. You just won't be able to carry collision coverage on it anymore.

What Is Most Important to You?

Insurance companies audit their adjusters' files. They must have documentation for the amount they pay a claimant. If you want top dollar for your car, you must prove that the car was worth what you claim. Provide the insurance company with a recent photo of the car to show it was in tip-top shape. If the car was new, give them a copy of the sales agreement showing the purchase price. Provide copies of invoices for additional items you purchased, such as fancy rims, new tires, new paint job, backup camera, radio, security system, etc. It will take time and effort to provide all the information, so consider what is more important to you. Do you want a little more money or the inconvenience of being without a car while you haggle with the insurance company?

Give It a Try

I had a similar situation with an old Honda. I showed them receipts for various things I had replaced or recently fixed (new tires, the battery, etc.) and was able to increase the amount by about 30%. It never hurts to try.

Find Comparable Vehicles in Area

You will have to do a lot of work. Find as many of the same (or as close as possible) model, make, year, miles, and options for sale around you by both private owners and dealers. Call to get specifics on condition. Make a list of the asking prices and specifically what about that car is better, worse, or the same as yours. Once you have a list of several, you can negotiate. Also, specifically ask the insurance company where they are getting their number.

Is the Care Still Drivable?

In May, the area I live in was heavily damaged by a hail storm. My insurance company (USAA) totaled my car. My car is a 2009 Hyundai Accent. It was drivable. There was nothing wrong with it other than cosmetic damage. I checked on KBB website for the amount minus the deductible they were giving me. It was right. I kept my car and bought it back as salvage. The insurance company subtracted the salvage price from the check I would have received. The remaining amount I received in the mail. When I got the title to the car, I took it to the DMV and paid $15 for a title in my name to be mailed to me in 7-10 days. I also changed my insurance to liability. If you can still drive your car, I suggest you tell the insurance company you want to keep it. It can be done.
Erica in South Carolina

Related: 10 Tips for Getting a Fair Car Insurance Settlement

The Key Word Is Comparable

Yes, I can help. In 2010, it is in my experience, in Washington state, that insurance companies must provide the funds to replace the totaled car with a comparable car. That is the term you want to use. The replacement car must be comparable in condition, mileage, quality, etc. My insurance company wanted to give me a low-ball replacement cost as well. I researched cars for sale in my area and presented my insurance company with the information for a comparable car to my low mileage, in great condition, Subaru Forester. The check I got allowed me to buy the car I wanted.

Provide a Valid Argument

If the auto company is a reputable one, they will sometimes listen to a valid argument. When my daughter was hit by another driver, my husband successfully argued that he could not replace her car for what we were being offered. He supported this with Craigslist ads from our area, blue book value listings, etc. He was calm and provided them with evidence that they needed to increase our reimbursement in order to make us "whole." He didn't try to get more than was needed. They increased their offer substantially and I think they were impressed with his arguments.

Cheat Sheet: How to Get the Best Auto Insurance Deal

Insider Report on How to Negotiate an Auto Insurance Claim

As an insurance agent, I have some advice. Insurance companies spend a lot of money hiring firms to come up with values on totaled vehicles. It is well documented and holds up in court. If you disagree with your offer, you have to prove your car is worth more. This means doing some leg work to find other similar cars in your area selling for higher prices. Locate a few of these and submit it to your adjuster. They will usually take a look and might increase your offer.

Contact Your State's Insurance Commissioner

Every state has an Insurance Commissioner to protect/help its citizens. They are more than happy to help the consumer. We had a car that was stolen and greatly damaged. The insurance company said it wasn't worth anything because we couldn't prove the damage that was done to it hadn't been there before the theft. We contacted the Insurance Commissioner (in NJ at the time), and with his intervention, we did get scrap value for the car. We then sold it to a junk yard guy who wanted it for parts. While we didn't get a huge amount of money, it was enough to help us buy our next car. Every case is different but these commissioners are there to help. It doesn't hurt to give them a call.

Never Accept First Offer

Never accept the first offer from an insurance company because it's always the lowest. Insurance companies want to settle quickly because it's cheaper for them. They are in business to make money, not pay out on claims.
Michele in Casco, ME

Maintenance Does Not Increase Value. It Just Retains It.

Well, typically a total loss adjuster will note the condition, options, and mileage of your totaled vehicle and then look for records of the same or similar vehicles being sold in your area over the last few months. A vehicle's value is not determined by a "blue book" or by ads in the paper. What actually determines the value of any car (any product, really) is what the buyer offers and the seller agrees to.

A total loss adjuster will usually find records of about three similar vehicles sold. Then, like an appraiser doing an appraisal on your home, the adjuster may add or subtract from the purchase prices of the other vehicles to account for differences in mileage, condition, or options. Then those adjusted values are averaged to determine the value of your vehicle at the time of the loss.

Note that the adjuster is trying to match your vehicle with similar vehicles in your area, over a roughly similar time. For example, a pickup truck might be worth more to a buyer in a Texas county than in Manhattan.

If this is the process your adjuster went through to determine your vehicles value, it is probably spot on. The courts recognize this process as fair and unbiased. You may, however, be able to get a few more dollars if you can thoroughly document why the vehicle is more valuable (perhaps a new paint job) and calmly discuss this with the adjuster's supervisor.

I have one caveat, however. All the receipts in the world for things like new brakes and oil changes and other maintenance do not change a vehicle's value. Maintenance helps retain value by keeping the vehicle operating. Maintenance does not increase value.

Have Proof When Negotiating

My car was totaled not too long ago. They wanted me to agree to a sum I was not happy with, so I asked them how they derived at that price. They told me they looked online for three comparable sales for the same year, model, mileage, etc. I went online myself and found three much higher selling vehicles. I then negotiated (along with proof) for a higher rate and got it.

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