How to negotiate with a car insurance company after a total loss
Key takeaways
- A car is totaled if the repair cost is more than the vehicle is worth, it’s damaged beyond repair or stolen and not recovered.
- You can only get an insurance claim payout if you carry full coverage on a vehicle.
- An insurance adjuster will examine your car to determine how much it’s worth.
- You can negotiate the car’s value with the adjuster or hire an attorney to come to a settlement.
Getting insurance coverage for a damaged car can be a hassle, but things get even more complicated when the car is declared a total loss. While a full coverage car insurance policy covers your vehicle’s actual cash value, you and your insurance company might disagree about what your car is worth. In this article, Bankrate’s insurance editorial team explains how to get the most money from insurance for a totaled car.
Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Compare auto insurance rates
Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
How do you determine if your car is totaled?
Total loss settlements are becoming a more common result of car accidents. According to a recent report by LexisNexis, over a quarter of all collision claims in 2023 were total losses — a 29 percent increase from 2020.
But this increase in total loss claims doesn’t necessarily represent more cars getting destroyed beyond recognition. A total loss is simply an insurer’s way of dealing with damage that would cost more in repairs than the covered vehicle’s actual cash value. With the cost of auto repairs increasing at more than six times the rate of inflation, it’s no wonder that repair estimates increasingly outweigh vehicle values.
If your insurance company says your car is totaled, consider the estimates they used to draw that conclusion. Remember that unless you have specific endorsements like new car replacement, your insurance policy only covers your car’s actual cash value (ACV), which may not match the fair market value you see from sources like Kelley Blue Book.
What is the role of an insurance adjuster?
An insurance claims adjuster investigates your coverage and insurance claim after an accident. Specifically, they will look to see that you have the necessary coverage to pay for a total loss, and they may gather statements from those involved in the accident. If a police report was submitted, the insurance adjuster will also review it.
If the insurance adjuster believes the claim is covered, they will typically inspect the vehicle to determine the cost of repairs (or whether repairs are even possible). If your vehicle is totaled, it means it can’t be repaired, or the cost exceeds the value of your vehicle at the time of the accident.
How to negotiate a car’s value after an accident
If your vehicle is determined to be a total loss — meaning that it cannot be repaired or the cost of repairs exceeds its value — the insurance company will likely send an adjuster to examine it and determine its worth.
However, you may find yourself in a situation where you are offered less than what you perceive the value of your vehicle to be. In this case, you may wonder how to negotiate a total loss payout that’s lower than your anticipated estimate. Here’s what you need to know.
Determine what the vehicle is worth
Before negotiating a total loss settlement with your insurance company, arm yourself with knowledge by independently determining the value of your vehicle. Actual cash value is based on a vehicle’s replacement cost minus depreciation. Your vehicle’s value will depend on several factors, including:
- Make and model
- Year of manufacturing
- Mileage
- Physical condition
- Accident history
- Number of owners
You could get an estimate from a qualified mechanic, but if you just need a ballpark figure, there are online tools that you can use to determine your vehicle’s value for free. The National Automobile Dealers Association’s (NADA) website is typically a useful resource for cash value estimates, particularly compared to sites like Kelley Blue Book, which may overestimate your car’s value.
Keep in mind that your total loss payout will be based on the vehicle’s actual cash value (ACV) at the time of loss — not its market value or the cost to replace it with a similar vehicle. Insurance companies generally use value estimates from a third-party company to determine your car’s ACV; if you have concerns about the amount of your settlement, check the methodology that the company used to arrive at its estimate.
Negotiate with your insurance adjuster
If you feel that the vehicle appraisal from your car insurance company is too low, you can opt to negotiate with your claims adjuster. There are a few things you can do before and after the appraisal process that may improve your chances of success:
- Get a written estimate: Find a trusted professional body shop and ask for a written estimate of your vehicle’s value. You can bring this to your appraiser to work on negotiating a settlement.
- Ask for your Certified Collateral Corporation (CCC) report: Insurance adjusters use a CCC report to estimate your car’s value. Review the estimate and check for details, such as your car’s trim level, that could impact the final settlement amount.
- Look for local listings: Check out local listings for cars with the same make and model as your vehicle to get a sense of the car’s local market value. While list prices aren’t necessarily representative of a car’s cash value, this evidence could help you negotiate if there’s a significant discrepancy with your insurance offer.
By having more evidence to show that your insurance company undervalued your vehicle, you’ll build a stronger case for negotiating your vehicle’s settlement value.
Hire an attorney
If negotiating with the claims adjuster proves unsuccessful, but you still feel you have a strong case, you could hire an attorney. Although likely a last resort, litigation could help you get the settlement you feel you deserve. It could also help to relieve some of the stress surrounding total loss negotiations. An attorney will be more familiar with the process.
It is important to point out that there will typically be a cost associated with hiring an attorney, though. And there is no guarantee that you will win a new settlement even if you hire one. As such, it may be a good idea to ensure that the attorney’s fees won’t outweigh the potential increase in your settlement amount if your insurance company agrees to a higher payout.
Obtain a written settlement agreement
Once you reach a settlement with the insurer, you may want to confirm the terms in writing to verify that everyone agrees. This protects both parties by setting appropriate expectations and helping to ensure they will be met.
Consider using your policy’s appraisal clause
Your car insurance policy should include a clause that allows for a special negotiation process in the case of a claim dispute. If you and your insurance company agree that your total loss should be covered under your policy, but you disagree about the dollar amount that should be covered, you may be able to invoke this clause.
The appraisal clause offers an alternative dispute method to resolve the conflict. Here’s how it works:
- Both parties select their own appraiser: You and your insurance company will each choose an appraiser to evaluate the vehicle’s actual cash value.
- The appraisers choose an umpire: This third party will look at the two value estimates given by the appraisers and make the final call.
- Your claim payout is based on the umpire’s decision: You won’t have an option to revisit the negotiation; the umpire’s word is final.
This approach to negotiating your total settlement isn’t always cheap. In this type of dispute resolution, each party pays for its own appraiser and splits the cost of paying the umpire.
Frequently asked questions
You may also like
Homeowners insurance statistics and facts
What is cash value life insurance?
What is a rebuilt title vs. a salvage title?
Can you get pet insurance for a senior pet?