Negotiating a fair deal for yourself
Getting Paid on an Auto Insurance Claim: Part 2
by Gary Foreman
Editor's note: Getting Paid on an Auto Insurance Claim: Part 1
Sooner or later it happens to nearly all of us. An auto accident. You do all the right things at the accident scene. Then you made a few phone calls to get the insurance company to get the claims process started. Now it's about time for the payoff. Who's going to repair your car and how much will the insurance company pay? Let's see if we can't negotiate a fair deal for ourselves.
In most cases you'll need to get an estimate of what it will cost to repair the damage to your car. Remember that your goal is to get your car repaired properly so you won't have problems later. The insurance company's goal is to pay you as little as possible. They may suggest that you to use their 'convenient drive-in claims adjuster'. Or perhaps they'll use a quote from a local repair shop that gets lots of business from them.
Don't go for it. In either case the person providing the estimate is loyal to the insurance company. They have no reason to try to satisfy you. Find a shop that has your confidence. The dealer that sells that make of car is probably the best if they have a repair shop. You may want to get estimates from a couple of different shops. That's your choice. Check your policy. It rarely requires you to go to their shop or to get more than one estimate.
What happens if your car isn't driveable? Then have it towed to the shop of your choice. It's cheapest to do that right at the time of the accident. It's good to have the shop's name and address already available in your car. By having the car to the shop of your choice you've forced the adjuster to play on your home field. He has to respond to their estimate. On the other hand, if the car's in your driveway he can offer to have it towed to his favorite low cost shop. Then he'll have all the advantage in negotiating the price of the repairs.
OK, you've agreed on a shop and the work is completed. So it's just a matter of picking up the car. Right? Wrong! This is your last real chance to get the job done to your satisfaction. The insurance company will have named you on the check. You will be required to sign the check or a repair order stating that the work is completed. You may also need to write your own check to the repair shop for the deductible.
Don't sign off until you've thoroughly inspected the car. And I do mean thoroughly. Look at the bodywork under bright lights. Sunlight is best. Look at the car from all different angles. Is the sheetmetal straight? How's the paint? Try all the doors, windows and anything else that moves in the repaired area. Make sure that nothing is binding or crooked and that everything is properly aligned. Take it for a test drive. It should run and sound like before the accident. No new rattles. Make sure you understand your guarantee. If something goes wrong later you'll be dealing with the repair shop, not the insurance company.
If you've been forced to use a shop chosen by the insurance company, be especially careful to inspect the car. In fact, you probably would be wise to 'drop in' once or twice during the repair to actually see what's happening. Ask to see all the old parts that they were going to replace. They could save some money by repairing a molding or other part instead of buying a replacement part. All shops are not dishonest, but some are.
Suppose that your agent calls and says that you car is a total loss. They want to cut you a check for the value of the car and you just give them the car and title. There are two potential problems. First, your car was worth more to you than anyone else. That's why you were still driving it. Second, how do you determine what the car's worth?
The adjuster will probably use the Kelly Blue Book. They might also include classified ads for similar cars to come up with an offer for your car. Expect them to offer you the 'wholesale' value. That's what the dealer would pay for the car before they add their profit margin to sell it to you. Naturally, you'll end up paying retail. Shouldn't your payoff be at retail?
How can you get a higher price? By shopping! Go to a number of dealers. Read the classified ads for comparable cars. Make a list and give it to the adjuster. If that fails, ask him to find a replacement car for the amount he's offering. He's the one that says it's out there. Let him prove it.
Now's the time that homework pays off. Was your car a low mileage vehicle? That's worth something. Did you keep maintenance records to show that the car was in above average condition? Do you have any pictures or other evidence that your car was a 'cream puff'?
Oh, and don't forget to add in the cost of tax and title. In some places it can be 6 or 8% of the price of the car. In almost all cases that will be hundreds of dollars.
Hopefully, you won't ever need to settle an auto accident claim. But, if you're ever in an accident, knowing how to deal with the insurance company is essential. They expect you to pay your premiums faithfully. It's up to you to make sure that they pay properly on your claim. Nothing that the average driver armed with a little knowledge can't do. And if it ever comes up, so can you!
Reviewed December 2017
Take the Next Step
- Don't miss these 10 tips for getting a fair car insurance settlement.
- Not happy with your current insurer? Use these tips to switch auto insurance companies.
- Use this handy cheat sheet from a 30-year veteran of the auto insurance industry to get the best auto insurance deal that you can.
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Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.