How to Get the Most Money From Insurance for Totaled Car

If your car was involved in an accident and declared totaled, you may face an uphill battle. For minor repairs, it is easier to cover some repairs out-of-pocket when necessary if the insurance payout comes up short. This is not the case for a totaled vehicle.

When a vehicle is declared totaled, a vehicle owner hopes to get the maximum settlement amount from insurance to enable them to buy a new vehicle. Unfortunately, the insurance company might table a low offer based on the prevailing market price.

The typical move for an insurance company is to offer a settlement amount that preserves their interests and profits. You can try to negotiate for a higher value to secure the funds for buying a new vehicle, but this may be a difficult task.

Should You Accept the Insurer’s Offer

An insurance company may use the fair market or replacement value to set their preferred settlement amount. However, there’s a high chance your car is worth more than their offer.

While an insurance company will take much convincing to improve their offer, you can change their position by tabling documented evidence that supports your argument, including highlighting aftermarket accessories to your vehicle, including an improved infotainment system, a new paint job, new tires, and a remote starter. Submitting photos and receipts of these improvements can help maximize your payment.

Negotiating for a Maximum Payment After a Car is Deemed a Total Loss

A vehicle owner is typically entitled to much more than what an insurance adjuster offers. It is also ill-advised to accept the first offer from the insurance company. Unfortunately, the insurance company will not improve their proposal because you think you deserve more.

Here are a few strategies for maximizing payout for a totaled car:

Conduct independent Research on the Vehicle’s Worth

Get an independent valuation of your vehicle before accepting any offer from the insurer. You can obtain the car’s value based on many factors, including make, model, year of manufacture, condition, and features.

You can also take the vehicle to different used car yards and evaluate how much they may be willing to offer you. Alternatively, check the value of your car from reputable sites like NADA guides or Kelley Blue Book.

Provide Supporting Documentation

Despite your efforts to perform independent pricing research, the insurance company may refuse to make a better offer. You can improve your chances by providing documents that support a higher value. Provide all the relevant documents, including accident reports, insurance policies, and maintenance records.

Providing the above documents helps establish your car’s pre-condition and supports your claim.

Negotiate With the Insurance Company

Although negotiations with an insurance company are complex and frustrating, it is an essential step for getting the most from insurance for a totaled car.

Here are a few tips for effective negotiations:

• Understand Your Auto Insurance Policy: Read through the insurance policy to understand the coverage limits, exclusions, and all relevant details. More importantly, ensure you know how much you’re entitled to in case of total loss.
• Provide Documents: Print copies of all your interactions with the insurance. These details include email conversations, letters, and phone call logs. In addition, write down all elements of your discussions and any promises made by the insurer.
• Exercise Patience and Persistence: It’s impossible to complete negotiations within a day or a week. Therefore, be patient and persistent with your efforts. It may take several phone calls and meetings to reach an agreement.
• Stay Calm and Polite: Another strategy that works is staying calm, respectful, and polite throughout the negotiation process. Avoid losing your temper, which can delay the negotiations and damage your case.
• Be Clear With Your Intentions: It helps to clearly state your preferred settlement amount during the negotiations. However, provide reasoning and evidence to support your position. For instance, bring copies of the latest valuation report, an independent appraisal report, the policy document, and receipts of aftermarket accessories.
• Speak With a Manager: If you’re not progressing with the company’s first representative, request to speak with the line manager. They often have more authority to make decisions.

If negotiations fail, request an appraisal for a neutral third party on the vehicle’s market value. An impartial appraiser can establish a fair market value and prove that the insurance company undervalued the total loss.

The insurance company may improve the offer to avoid expenses and added time associated with a neutral appraisal.

What is Total Loss?

If you’re involved in a collision, your car could be considered a total loss when its repair cost exceeds its actual cash value. In addition, it is not always practical to repair the car even when the total repair cost is less than its actual cash value.

Your insurance provider can determine whether to repair the vehicle or consider it a total loss.

An insurer uses the following factors when determining a total loss vehicle:

• Vehicle safety
• Quality of repairs
• Cost of repairs
• Vehicle value

The insurer calculates the total loss ratio, which you can obtain using the following formula:

Cost of repairs divided by the actual cash value

Subsequently, the insurer compares the ratio to an industry-set standard of 70-80%. These calculations are also known as total loss triggers, where the insurer begins to view your vehicle as a potential total loss.

The insurance will label your vehicle as an obvious total loss when the cost of repairs is more than the actual cash value. If the cost of repairs is less than 100% of the actual cash value but greater than 70% of the vehicle’s actual cash value, then salvage value plays a part in determining whether the vehicle requires repairs.

There are also questions regarding the value of a vehicle in a total loss situation. Different insurance providers calculate the vehicle value in various ways, including:

• Pre-accident condition of the vehicle
• Number of miles in the odometer reading
• Additional damages not caused by the accident

The insurer also considers the vehicle’s value based on the market conditions in the area where the policyholder lives.

Who Receives Payment for a Totaled Car?

Before making a payment, the insurance considers several factors, including whether it is a lease car, financed, or wholly owned.

Then, the insurer makes the payment as follows:

• Pay directly to you as a policyholder if you own the vehicle.
• Pay directly to the leasing company for people who’ve leased the vehicle
• They can also engage the policyholder to determine the appropriate person to receive payment for a financed vehicle

Whose Insurance Pays for the Damages

In most states, the insurance company for the responsible driver or the at-fault party is liable for accident-related losses. Similarly, your insurance will pay for damages to other people if you’re at fault for an accident.

The collision coverage caters to damages to your vehicle. There are options if the at-fault party doesn’t have insurance or is underinsured. If your policy has collision or uninsured motorist coverage, you can file a claim.

Your options might be limited if you didn’t have an insurance policy when the accident occurred. Lastly, if the responsible driver refuses to admit fault, the insurance company will investigate to determine the liable party.

Disclaimer: The information provided in this article is intended for informational purposes only. It is not meant to be a substitute for professional advice or guidance.

Richard Barnes

“As President of The Barnes Firm, I have dedicated my career to achieving justice in hundreds of cases for the victims of injuries caused through the fault of others. Additionally, I have been honored to have been elected by my peers to serve as president of the WNY Trial Lawyers Association.”

Years of Experience: 30+ years