What You Need to Know

• Research your vehicle's value through resources like Kelley Blue Book and the National Automobile Dealers Association to get a fair settlement
• Don't accept the insurance company's first settlement offer until you've had a chance to review all the details
• Always ask your adjuster to send you a copy of the valuation report, payoff lien amount, and net settlement amount before accepting any offers

Understanding how to negotiate the best settlement for a totaled car is important to obtain the best deal from your insurance coverage.

When filing a car insurance claim, don't accept the company's first offer without reviewing the details. Many drivers assume the auto insurance company is offering a fair payout for their car in its current condition. Many times, insured drivers don't know what to expect.

For example, you may remember to tell the insurance adjusters the vehicle had a DVD player, but did you tell him/her that it was a split-screen DVD player? You may not realize it, but these types of added items may increase the fair market value and settlement amount.

There are also processes to challenge findings if you think the Kelley Blue Book value is higher. Of course, it's important to get the facts. Putting in overly generous descriptions of your car on Kelley Blue Book won't get you a better payout.

Here are five tips on how to negotiate the best loss settlements for a car considered totaled.

1. Know what you are selling to your car insurance company.

If your insurance company totals your vehicle, then according to certain policies, your insurer may need to buy your totaled car from you at a reasonable price. This is based on the fair market value of your car immediately preceding the accident. By totaled, auto insurers generally mean the cost of repairs is over a certain threshold making it more expensive for them to pay for repairs.

Some car insurance companies will total a vehicle if the damage to the vehicle is at or above 51% of its pre-accident value. Other insurance companies will total it at 80%. It is within their discretion.

Depending on how much it costs to repair your car, or if you think the damage is severe enough, you can also ask to have it totaled. A vehicle is considered a wrecked vehicle when it's so disabled that it can't operate without substantial repair or reconstruction. If you keep it or your insurer tries to resell it, a car in this condition would be sold with a salvage title.

It might also have damage a repair shop wouldn't see without extensive work. Unfortunately, this could lead to future auto failure or even accidents. Your insurance provider is looking to avoid future claims, and you should think about your safety with total loss vehicles.

It is in your best interest to provide the insurance adjuster with the sticker details that accompanied your car when you purchased it. Didn't save the sticker? Contact the dealer where you purchased the vehicle and ask for a list of your vehicle's features. The dealer should keep records of the vehicles they have sold. This way, you can be sure you're getting the fair market value.

If you're unable to locate this information, then search online for your vehicle's year, make and model to determine exactly what features your vehicle had. Be sure to provide this information to the adjuster so that the adjuster may make the highest possible initial offer at the outset.

2. Prepare your counteroffer.

After providing the adjuster with your vehicle's features, prepare your counteroffer. Avoid waiting until you have the adjuster's offer to start your research. While they may come up with a fair value, doing your research after could lead to delays in your payout and therefore in your ability to get replacement coverage (and more so for a new car replacement).

A good counteroffer could be the difference between being free and clear or still being on the hook for a car you can't drive if you don't have gap insurance.

With the sticker or list of the vehicle’s features, one option is to visit the National Automobile Dealers Association (NADA). Enter the information of your vehicle to determine the value of your car. Remember, the important amount is the retail value, not the trade-in value. You are not trading in your car; you are selling your car to the insurance company.

Print the estimated retail amount and features used to determine the amount, as you will need to show this to the adjuster when you make the counteroffer. Many sites offer a guide to how you should evaluate the condition of your vehicle as to the current vehicle owner. Use this information wisely when preparing an estimate for your claims adjuster.

Also, find any receipts for any major work performed on your vehicle in the last seven or eight months, such as new tires. If you don't have the receipts, contact the mechanic and ask them to provide you with the receipt. If you've customized your car, keep in mind not all policies cover aftermarket upgrades.

3. Determine the comparables (comps) in the area.

Visit a few used car websites and print those that are for sale with similar features and mileage as yours. Some sites to visit include Auto Trader and Car Gurus.

4. Obtain a written settlement offer from the auto insurance company.

Once the adjuster contacts you with an offer, ask them to email it to you with the valuation report or CCC report (Certified Collateral Corporation report). Many insurance companies rely on this report to provide a market evaluation showing the car's value and ultimately use it to determine the settlement amount.

Confirm that all of your vehicle's features are considered on this report and that the report correctly lists the mileage. Upon receiving the written offer, ask the adjuster to show three additional items:

• Sales Tax:  The insurer is responsible to payout the state sales tax.
• Payoff Lien Amount:   The amount to be paid directly to the auto financing company for any outstanding vehicle loans
• Net Settlement Amount :  The amount that you will receive from the company.

5. Make your counteroffer for your totaled car.

Compare your written offer with NADA (or a similar website) and used car printouts you previously researched. Do they match up? Based on these figures, determine a reasonable counter offer.

Email the insurance carrier your counteroffer and attach all documentation that you based your counteroffer on, including the NadaGuides.com value, used cars reports, and recent repair costs. Without supporting documentation, your offer is less credible.

Proper research, documentation, and setting reasonable expectations should result in a fair settlement. If you believe you are not receiving a reasonable offer after negotiation attempts, contact your agent for guidance. In certain states, the office of consumer affairs may provide additional advice.

If the insurer totals your car, they will pay out the car's actual cash value, minus your deductible. Your car will then sent to a salvage yard for an auction by the highest bidder and usually whacked up for parts. Insurance companies keep the money they got for the salvage vehicle.

How to Negotiate the Best Settlement for Your Totaled Car

These five tips to negotiate the best settlement for your totaled vehicle will protect you from unfair offers:

1. Know what you are selling to your car insurance company.
2. Prepare your counter offer.
3. Determine the comparables (comps) in the area.
4. Obtain a written settlement offer from the auto insurance company.
5. Make your counteroffer for your totaled car.

Always be proactive and research your vehicle's value compared to similar makes and models in your area to get the best settlement offer possible.

Frequently Asked Questions About Negotiating the Best Car Insurance Settlement

Do you still get an insurance payout if you keep the car?

No, and options for keeping a totaled car are limited. Bear in mind that you might not be able to buy collision or comprehensive coverage on a rebuilt-title car. And once the car has a salvage title, you'll also need to pay for extensive repairs to register it for road use.

Will my car insurance rates increase after the company totals my vehicle?

After a car accident, it's common for your car insurance rates to increase. It may be a good time to shop around for a new car insurance company. Our car insurance shopping guide shows that customers save an average of $390 annually when switching auto insurers.

The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice. This site should not be used as a substitute for obtaining legal advice from an insurance company or an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the insurance company or any individual attorney.