How to negotiate with a car insurance company after a total loss

Getting insurance coverage for a damaged car can be a hassle, but things get even more complicated when the car is declared a total loss. While a full coverage car insurance policy covers your vehicle’s actual cash value, you and your insurance company might disagree about what your car is worth. In this article, Bankrate’s insurance editorial team explains how to get the most money from insurance for a totaled car. 

How do you determine if your car is totaled?

Total loss settlements are becoming a more common result of car accidents. According to a recent report by LexisNexis, over a quarter of all collision claims in 2023 were total losses — a 29 percent increase from 2020. 

But this increase in total loss claims doesn’t necessarily represent more cars getting destroyed beyond recognition. A total loss is simply an insurer’s way of dealing with damage that would cost more in repairs than the covered vehicle’s actual cash value. With the cost of auto repairs increasing at more than six times the rate of inflation, it’s no wonder that repair estimates increasingly outweigh vehicle values. 

If your insurance company says your car is totaled, consider the estimates they used to draw that conclusion. Remember that unless you have specific endorsements like new car replacement, your insurance policy only covers your car’s actual cash value (ACV), which may not match the fair market value you see from sources like Kelley Blue Book.

What is the role of an insurance adjuster?

An insurance claims adjuster investigates your coverage and insurance claim after an accident. Specifically, they will look to see that you have the necessary coverage to pay for a total loss, and they may gather statements from those involved in the accident. If a police report was submitted, the insurance adjuster will also review it.

If the insurance adjuster believes the claim is covered, they will typically inspect the vehicle to determine the cost of repairs (or whether repairs are even possible). If your vehicle is totaled, it means it can’t be repaired, or the cost exceeds the value of your vehicle at the time of the accident.

How to negotiate a car’s value after an accident

If your vehicle is determined to be a total loss — meaning that it cannot be repaired or the cost of repairs exceeds its value — the insurance company will likely send an adjuster to examine it and determine its worth.

However, you may find yourself in a situation where you are offered less than what you perceive the value of your vehicle to be. In this case, you may wonder how to negotiate a total loss payout that’s lower than your anticipated estimate. Here’s what you need to know.

Determine what the vehicle is worth

Before negotiating a total loss settlement with your insurance company, arm yourself with knowledge by independently determining the value of your vehicle. Actual cash value is based on a vehicle’s replacement cost minus depreciation. Your vehicle’s value will depend on several factors, including:

• Make and model
• Year of manufacturing
• Mileage
• Physical condition
• Accident history
• Number of owners

You could get an estimate from a qualified mechanic, but if you just need a ballpark figure, there are online tools that you can use to determine your vehicle’s value for free. The National Automobile Dealers Association’s (NADA) website is typically a useful resource for cash value estimates, particularly compared to sites like Kelley Blue Book, which may overestimate your car’s value.

Keep in mind that your total loss payout will be based on the vehicle’s actual cash value (ACV) at the time of loss — not its market value or the cost to replace it with a similar vehicle. Insurance companies generally use value estimates from a third-party company to determine your car’s ACV; if you have concerns about the amount of your settlement, check the methodology that the company used to arrive at its estimate. 

Negotiate with your insurance adjuster

If you feel that the vehicle appraisal from your car insurance company is too low, you can opt to negotiate with your claims adjuster. There are a few things you can do before and after the appraisal process that may improve your chances of success:

• Get a written estimate: Find a trusted professional body shop and ask for a written estimate of your vehicle’s value. You can bring this to your appraiser to work on negotiating a settlement. 
• Ask for your Certified Collateral Corporation (CCC) report: Insurance adjusters use a CCC report to estimate your car’s value. Review the estimate and check for details, such as your car’s trim level, that could impact the final settlement amount. 
• Look for local listings: Check out local listings for cars with the same make and model as your vehicle to get a sense of the car’s local market value. While list prices aren’t necessarily representative of a car’s cash value, this evidence could help you negotiate if there’s a significant discrepancy with your insurance offer. 

By having more evidence to show that your insurance company undervalued your vehicle, you’ll build a stronger case for negotiating your vehicle’s settlement value.

Hire an attorney

If negotiating with the claims adjuster proves unsuccessful, but you still feel you have a strong case, you could hire an attorney. Although likely a last resort, litigation could help you get the settlement you feel you deserve. It could also help to relieve some of the stress surrounding total loss negotiations. An attorney will be more familiar with the process.

It is important to point out that there will typically be a cost associated with hiring an attorney, though. And there is no guarantee that you will win a new settlement even if you hire one. As such, it may be a good idea to ensure that the attorney’s fees won’t outweigh the potential increase in your settlement amount if your insurance company agrees to a higher payout.

Obtain a written settlement agreement

Once you reach a settlement with the insurer, you may want to confirm the terms in writing to verify that everyone agrees. This protects both parties by setting appropriate expectations and helping to ensure they will be met.

Consider using your policy’s appraisal clause

Your car insurance policy should include a clause that allows for a special negotiation process in the case of a claim dispute. If you and your insurance company agree that your total loss should be covered under your policy, but you disagree about the dollar amount that should be covered, you may be able to invoke this clause. 

The appraisal clause offers an alternative dispute method to resolve the conflict. Here’s how it works:

• Both parties select their own appraiser: You and your insurance company will each choose an appraiser to evaluate the vehicle’s actual cash value. 
• The appraisers choose an umpire: This third party will look at the two value estimates given by the appraisers and make the final call. 
• Your claim payout is based on the umpire’s decision: You won’t have an option to revisit the negotiation; the umpire’s word is final. 

This approach to negotiating your total settlement isn’t always cheap. In this type of dispute resolution, each party pays for its own appraiser and splits the cost of paying the umpire. 

Frequently asked questions

• Can I keep my car if it is a total loss?

  In a typical total loss settlement, you are paid for the value of the vehicle, which means the car becomes the legal property of the insurance company. But in some cases, it could take very little damage to officially total your vehicle. If this happens, you can likely choose to retain the car, but your total loss settlement may be decreased. You may also be required to remove comprehensive and collision coverage from your vehicle until the repairs are done. Even then, if your vehicle is damaged again, your claim payout may be reduced since you have already been paid for the full value of your vehicle.

• Should I get my own claims adjuster for total loss settlement negotiation?

  A public adjuster is an independent claims adjuster who works for you rather than the insurance company. Hiring a public adjuster is a common option in a disputed home insurance claims process, but public adjusters rarely work on auto insurance claims. You’ll likely have better luck opting for an appraisal or arbitration process rather than hiring your own adjuster.

• How do insurance companies determine the value of a totaled car?

  If your vehicle is deemed “totaled,” your insurance company will look at your car’s actual cash value (ACV). This is the amount the vehicle was worth before the loss, based on replacement cost minus depreciation. The ACV will always be less than what you paid for the car and often less than the car’s fair market value based on sources like Kelley Blue Book. Insurance companies typically use a third-party company to determine a car’s ACV.

• How is your totaled vehicle covered on your policy?

  Collision and comprehensive coverage are the primary types of car insurance that cover totaled vehicles. Collision coverage pays for damage due to crashes, while comprehensive coverage pays for non-collision damage, such as flood damage or vandalism. In some cases, such as if you don’t have comprehensive or collision coverage on your policy, other types of insurance, like liability coverage or uninsured motorist coverage, could cover all or part of your totaled vehicle costs. However, these types of insurance are subject to coverage limits, while comprehensive and collision cover the total ACV.

• How do I pay less for car insurance?

  It might help to shop around and compare rates for coverage. Start by researching the companies writing the cheapest policies and request quotes from several of them. Use the same coverage types and amounts to do an even comparison. Don’t forget to check for available discounts before purchasing a policy.