Negotiating a Fair Car Insurance Settlement
Clearsurance.com recently published a guide for drivers settling a claim with car insurance providers.
According to Clearsurance, drivers can take five steps to negotiate a better settlement with an insurance provider if their vehicle is declared a total loss.
Total Loss Qualification
Insurance companies set a threshold for declaring a vehicle a total loss. Many insurers set the threshold of damage at 80% of the vehicle’s value. For example, if a vehicle worth $50,000 sustained damage that would cost at least $40,000 to repair, the vehicle would be declared a total loss.
A few companies set the threshold as low as 51%, but most decided on a threshold between 70% and 80%.
The type of damage doesn’t matter to an insurer as much as the cost of repairs. So, a vehicle that sustains strictly cosmetic hail damage could be declared a total loss but remain reliable for years. A vehicle with a severely bent frame could also be declared a total loss and may never be functional again.
5 Steps to Settle a Car Insurance Claim
Insurance companies want the claim settlement to be in their best interest, and drivers want the settlement to favor them. So, negotiation is often necessary.
Clearsurance.com recommends taking the following five steps.
Step #1 – Provide Proof of Vehicle’s Purchase Price
The purchase price of a vehicle is most relevant when the vehicle is purchased within the last year.
Still, the purchase price can help drivers prove information related to a vehicle’s value. Cars with more features and upgraded trim will cost more to purchase, and insurers should compensate drivers for that extra cost.
Keeping track of upgraded features can help a driver argue for a higher insurance settlement.
Step #2 – Prepare for a Counter Offer
When an insurance provider gives a driver a settlement offer, the driver should wait before accepting. This advice applies to both car insurance and home insurance offers. The offer may be good, and the driver may decide to take it, but the driver should examine it first to determine if it’s fair.
Kelley Blue Book and NADA are good sources for determining a vehicle’s value. Additionally, drivers should provide proof of any significant repairs or replacements from the past year. New tires can help boost settlement value.
Step #3 – Pull Regional Comparables
Vehicle values can vary depending on location. In some areas, cars cost more than the average price nationwide.
Drivers can check out local dealers and websites featuring local sellers to determine and prove their vehicle’s value.
Step #4 – Procure a Settlement Offer
When an insurance provider offers a settlement, request that they send their entire report to you, outlining how they determined the vehicle’s value.
With that information, a driver can check the accuracy of the value. For example, if the report says the vehicle is in average condition, but it is in good condition, the driver could argue for a better settlement.
Drivers should look for sales tax to be included in the offer because that goes into how much a vehicle costs.
Step #5 – Put Together a Counteroffer
Drivers can use the information they used when preparing a counteroffer and then update that information with anything that needs to be clarified in the insurance company’s offer.
Including supporting documents as proof of the vehicle’s value and money spent on repairs can strengthen an argument.
Car Insurance Settlement Considerations
Melanie Musson, a nationally recognized insurance expert with Clearsurance.com, urges drivers, “Remember that drivers don’t have to accept the first offer. There is no guarantee that an insurance company will give anything up in a negotiation, but if a driver feels the settlement isn’t fair, there are steps they can take to help make a strong case for more money.”
Some drivers consider keeping their vehicle. Insurance providers will provide drivers with a buy-back value. Sometimes, it’s worth it for a driver to take the settlement, buy their vehicle back, and pay for repairs to get the vehicle in working condition.
Read Clearsurance.com’s entire report here: 5 Tips to Negotiate the Best Settlement for a Totaled Car.