What To Do Next If Your Car Is Declared Totaled By The Insurance Company.

by Tom Zoebelein - Tue, Jul 16, 2013 4:17 PM

Ten tips on how to get the most from an insurance company total loss pay out.

In my last blog I talked about how an insurance company determines whether or not to total your car.  After about 1300 words I began to run out of room but had a lot more to say, so here is the follow up to that last blog, what to do if your car is declared a total loss.

This is not a dig against the Insurance companies, however lets be honest and realize that the ones cutting you a check, have your interest in mind, but their interests at heart. In other words, they are going to work to protect their interests, and they pull a lot more weight than you Mr. or Mrs. Car owner.

So here are some consumer tips to help you fight for what is rightfully and legally yours.

As we stated earlier, if your insurance company determines that your car is a total loss, they will perform research to determine the market value of your car and then offer this amount to you.  The rub here is that this appraisal could be less than you were hoping for and might even be less than is truly fair.

Tip #1: Insurance Companies Perform Research On Their Own Behalf

When your insurance company researches the market value of your car, they often exclude cars that are priced higher than the amount they want to pay.  In other words, they limit the market they research to those cars that are at a lower price.  The number they come back to you with might not represent true market value.  You do have a right to receive a copy of the insurance company report.  Be sure to ask for a copy before agreeing to anything.

Tip #2: Perform Your Own Research

You don’t have to (and probably shouldn’t) accept your insurance companies first offer.  Lucky for you, the internet has made doing car research a real breeze, and you can do your own research to determine the value of your car.  Cars are constantly being sold on the internet and you can look for a car just like yours (same make, model, year, features, etc.).  Make a list of the prices you come up with and average them.

Tip #3: Get the Blue Book Value Of Your Car

Your Insurance company is not required by law to pay you the Blue Book value.  However it is still a good negotiation tool, as it shows a range of prices one can expect to pay for a replacement in similar condition. Once you know the blue Book value of your car, let your insurance company know.

Tip #4: Compare Your Numbers with Theirs

When you receive the copy of the insurance company research report, you might find that your research isn’t a match to theirs.  Send a copy of your research to your insurance adjuster and politely ask them to raise their original offer in accordance with what you found.

Tip #5: Read Through Your Insurance Company’s Report Very Carefully.

The report you receive from your insurance company is supposed to contain comparable vehicles that are available in your local market.  Be sure to go through the listings.  Check to see if any of the listings are old and how far away they are.  Anything over 75 miles away is not in your local market.  Some of the cars may already be sold.  If possible verify all of the listings.  Highlight out of date, unavailable, and/or distant listings and show them to your insurance company.

Remember also that if your car has been totaled, your settlement must include taxes, title and license fee for a comparable replacement. Likewise, the settlement must make clear the value of any deductions taken on account of salvage matters if you’re keeping your totaled car.

Tip # 6: Find out how much your car was worth before the accident.

Claims adjustors from your car insurance company use a combination of dealer surveys, value guide books, online pricing sites and actual private party sales to determine your car’s actual cash value (ACV). They also factor in things like sales tax, registration and title costs of a replacement vehicle to determine this amount. Proprietary as they are, these determinants can vary from company to company and state to state. Ultimately, then, what one company comes up with may not match what another may find, or even what you’ll come up with on your own, using consumer Web sites like Edmunds.com.

Tip #7: Match Options

The options on a car can make a huge difference on the price.  These days most cars come in certain trim levels that can vary the price as much as ten thousand dollars or more.  Your insurance company may not take these options into account when determining the value of your car.  Find out the Blue Book value of your car with the options and then without and note the difference.  Tell your insurance company you want the difference included. In some instances, such as if you have a particularly rare trim level, color combination or special edition of a vehicle, you may know without a doubt that your car is worth more than what the insurance company tells you. Don’t be afraid to present your case and ask them to make an adjustment. If you have a strong position, Insurance companies will probably listen to you. In fact, your insurer is required by law to give you a fair price, and they won’t want to fight you in court if it looks like you could win. But you may have to do the extra legwork of finding an independent appraiser and/or compiling research on your specific car to bolster your case.


Tip #8:  Highlight The positives In Your Car

If there are good aspects about your car, inform your insurance company.  For example, low mileage and never having been involved in an accident can add value to your car.  Also, when dealing with your insurance company, be very polite and respectful.  If their offer is unreasonably low, you can take them to small claims court.

Tip # 9: Learn the Laws in your state

Each state has its own laws regarding how insurance companies must operate. Every state regulates its car insurance companies to some degree in order to protect its citizens from being shortchanged or cheated after filing a claim. Some states are more closely involved with this process than others.  Insurance companies also have a covenant of good faith and fair dealing they must abide by.  If your insurance company violates this covenant or breaks some other law, you may be able to file a suit, so log on to your state’s governmental Web site and search for its department of insurance to find more information regarding the fair settlement of insurance claims.

Tip # 10: Appraisal Provisions

If you are disputing the Insurance adjusters appraisal numbers, check your policy for an “Appraisal Provision” that would allow you to get an independent appraisal of the damage, which would then be reviewed by third party jointly selected by your appraiser your auto insurance company. If the two appraisers can’t agree on an amount of your car’s ACV and damage, the third party steps in, basically to take one side or the other to help resolve the issue. While you have to pay for your appraiser, and share the fee, it may be worth the expense if you really feel that your auto insurance company is trying to give short you what is due.

If All Else Fails, Seek Legal Counsel.

If your insurance company won’t listen to you or treats you unfairly, you may need a lawyer.  If the claim is under a certain value (usually $5000) you will have to go to small claims court.  Often times you aren’t allowed to have a lawyer in small claims court, but a lawyer can advise you and help you prepare.  If your insurance company has breached its covenant of good faith and fair dealing to you or some other law, an experienced insurance lawyer can advise you of your rights and remedies.