How to negotiate a total loss car insurance settlement

It might sound very unlikely that you might get in an accident that would total your car, but trust us, it could happen. There are over 6 million passenger car accidents each year in the US, and this number is rising as we speak. Out of that 6 million vehicles, a good percentage are totalled each year. So what do you do once your car is completely broken to kingdom come? You cash in on it! But this could get a little tricky if you want to get the best value for your car, or what’s left of it. 

Getting the right amount for your damaged car from insurance companies can be tough not to crack. You may experience having a totalled car perhaps once or twice in a lifetime, but for insurance companies, that’s every Monday. This is what makes it so difficult to get the desired amount. But with a few tips and practices, you can secure a good payout. So here are some tips on how to negotiate a total loss car insurance settlement with your insurance company. 

What is “Total Loss”?

Before we start talking about the negotiations, let’s get into the meat and potatoes of total loss. In an accident, if the car has been damaged so badly that the cost of repairing it and making it operable again will be more than the current value of the car, it is considered totalled. This is the general definition and is applicable in almost every state and for every auto insurance company.

So, if you crashed your old Nissan pretty badly and the repair costs come to around $5,000, but the current value of the car is around $4,000, the insurance company will consider it totalled. It will be a big loss for them if they paid $5,000 for the repairs. So it is better to pay the fair value of the car.

So if everything is perfectly okay, why do you have to negotiate? The negotiation comes when the actual value of your old car, which is the current market value (also called fair value) is calculated. If you think the value of your car is $4,000 but the insurance company says it’s just $2,800, there’s bound to be some disagreement.

Negotiating the Price

Insurance companies are businesses, and businesses not only try to prevent losses but want to make more money. This is the reason why you’ll always get the fair value of your car way less than what you’d estimate. So should you accept whatever value they offer? You can, if you are happy with it, but know that with a little bit of negotiation, you can get more than what they offer. So why not try?

Prepare Before Negotiate

Just saying that you think your car’s value is more than what the insurance company’s experts have quoted will not help at all. You need to back your claims with proof if you want to make an impact and improve the rates. So how to do that? 

Get an expert: The auto insurance company can deny your claims about the car’s fair value, but what about other experts? You can contact garages, and mechanics and ask to provide a written document stating the fair market value of the car. This will surely make it difficult for the insurance companies to counter. But that’s not all.

Modifications: This one could be a hit or miss, but missing won’t cost you anything. If you have added any modification to your car, such as a better music system, seat changes, interior work, spoilers, engine modifications, wrapping, etc, anything that cost you money would push your chances of getting more value a little further. The insurer might deny that these things add value but it shows that the current market value they are putting forward discounts the modification. 

Servicing and damage history: If your car has been serviced at proper intervals, or more frequently, it goes to show that it was in much better condition than other cars of the same age. This adds a lot to your negotiation prowess. Also if you kept your car intact, without any damages or repairs, it would be very helpful in increasing the value of your car. 

How to Negotiate

Both the parties (you and your insurer) would want the value of the car according to their estimates. There cannot be a stable middle ground unless both parties want to meet in the middle. You might not get the value you wanted, but it can save you from a lot of hassle, and you still will get more than what was previously offered. So always have the space to shift a little and meet in the middle. 

Bring your arguments: Tell them what your car means to you and how the amount they are quoting will not be enough to get a new car. Having a civil discussion will always lead to healthy results. Do not argue, or try to prove that the insurer is wrong. 

Show the proof: This is when you show all the documents you have collected, including written statements from mechanic(s) and garages that say your car is worth more than what the insurance company is giving. This will create the most impact. 

Suggest a middle ground: If not initiated by the insurer, you ask them to go up a little in what they’re offering and tell them emphatically that you are willing to come down as well. This creates an “equal sacrifice” situation and helps you close a better deal. 

And that is how you negotiate for a total loss car insurance. Always back up your claims with proofs, and documents and have a civil discussion. No need to threaten a lawsuit or anything. 

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