How to Get the Most Money from Insurance for a Totaled Car

If your car is involved in an accident and your insurance company declares it totaled, they will often offer you a lowball offer to start. This is because insurers give you the value of your vehicle minus the deductible, and they will try to recoup whatever costs they can by selling your car for parts. This is frustrating for vehicle owners because they’re looking for a settlement amount that will allow them to purchase a new car. Here is everything you need to know about how insurance companies determine total loss and how you can get the most money from insurance for your totaled car.

Understanding Total Loss

Your car can be considered a total loss when its repair cost exceeds its actual cash value. Additionally, it’s not always practical to repair your car even when the total repair cost is less than its actual cash value.

Your insurance provider will determine whether to consider your car a total loss based on the following factors:

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

Insurers calculate the total loss ratio, which is the cost of repairs divided by the actual cash value. The insurer then compares the result to an industry-set standard of 70-80%. These calculations are also known as total loss triggers, which means that the insurer is beginning to view your vehicle as a potential total loss.

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. Salvage value is the estimated amount an asset is worth at the end of its useful life.

To  calculate the value of your vehicle in a total loss situation, insurance providers consider various factors, 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 and Whose Insurance Pays

Insurance companies determine who receives money for a totaled car based on whether the car is leased, financed, or fully owned.

The insurer will:

• Pay you, as the policyholder, if you own the vehicle
• Pay the leasing company if you’ve leased the vehicle
• Engage the policyholder to determine the appropriate person to receive payment for a financed vehicle 

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

The payment you receive depends on your collision coverage. If the at-fault driver doesn’t have insurance or is underinsured and 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. If the responsible party refuses to admit fault, the insurance company will investigate to determine the liable party.

Conducting Independent Research on Vehicle’s Worth

Before accepting any offer from an insurance company, get an independent valuation of your vehicle. The make, model, year of manufacture, condition, and features of your car will affect its value.

You can take your vehicle to different used car yards and evaluate how much they may be willing to offer you. You can also consult sites like National Automobile Dealers Association guides, Kelley Blue Book, Consumer Reports Car Value Estimator, etc.

Providing Supporting Documentation

Despite your efforts to independently value your vehicle, the insurance company may refuse to make a better offer. In addition to printing out valuations from reputable websites as supplementary material, you can provide all relevant documents on your vehicle, including the sticker that lists all of the details of your car when it was purchased, accident reports, insurance policies, and maintenance records. These documents establish the condition of your car before the accident and support your claim.

Effective Negotiation Strategies

Negotiations with insurance companies can be complex, time-consuming, and frustrating, but there are steps you can take to streamline the process.

Here are a few tips when negotiating with your insurance for the best offer:

• Understand your auto insurance policy: Read through your policy to understand coverage limits, exclusions, and all relevant details. Most importantly, make sure you know how much you’re entitled to in case of a total loss.
• Provide documents: Print copies of all interactions with your insurer, including emails, letters, and phone call logs. Write down details of your discussions and any promises made by the insurer.
• Be patient and persistent: Negotiations won’t be completed within a day or a week. It may take several phone calls and meetings to agree, so stay persistent in your efforts to get a proper offer.
• Stay calm and polite: Staying calm, respectful, and polite is an effective communication strategy. Avoid losing your temper, which can delay negotiations and damage your case.
• State your intentions: Clearly state your preferred settlement amount, and provide reasoning and evidence to back it up. 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 insurance company’s representative, request to speak with the line manager. They often have more authority to make decisions. 

If negotiations ultimately fail, request an appraisal from a neutral third party on the vehicle’s market value. To avoid the expenses and added time associated with a third-party appraisal, the insurance company may improve its offer.

Utilizing Third-Party Appraisal

An adjuster who is not affiliated with you or the insurance company can give an unbiased opinion on what your car is worth. Once they’ve established a fair market value, they can prove that the insurance company undervalued the total loss.

Making a Counteroffer

Compare the offer given to you by the insurance to the ones found during your research and given by the third-party appraisal. If they’re similar, you’ve probably been offered a reasonable price. But if you feel like you are still being lowballed, decide on an appropriate counter to present to your insurance carrier. Email your provider with all of the documents and information you have compiled to establish the credibility of your offer.

Knowing Your Rights and Next Steps

If you believe you are not getting a reasonable offer after negotiation and making a counteroffer, contact your agent for guidance. In some states, the Office of Consumer Affairs can provide advice.

If the insurer totals your car, they will pay out the car’s actual cash value minus your deductible. Your car will then be sent to a salvage yard for auction by the highest bidder and usually used for parts. Insurance companies keep the money they have for the totaled car.

Maximize Your Insurance Payout for a Totaled Car

If you feel that your totaled car has been undervalued by your insurance company after an accident, it’s important to speak up as soon as possible to get the most money possible. Ask for a copy of the report your insurer put together, including all the information they used to determine your car’s value. Negotiating with your insurer for a proper settlement can often get you an additional $1,000 or more.

If you’ve been involved in a car accident that wasn’t your fault, working with an injury attorney helps your chances of getting the fair and just compensation you deserve. At Steinger, Greene & Feiner, our expert car accident lawyers have been securing maximum payouts for car accident victims for decades.

Even if you don’t think you have a case, we encourage you to contact us for a free, no-obligation consultation. We operate on a contingency fee basis, meaning that you don’t pay a dime until we win your case.