How to get a better accident settlement

5 Tips for How Get a Better Accident Settlement

If you don’t like the insurance company’s initial offer, don’t worry—that’s just their opening offer. Here are 5 tips on how to negotiate with an insurance adjuster to get a better accident settlement.

Getting into a car accident is stressful enough. But once you file an accident claim and the insurance company determines that your car is totaled, that’s when an ugly accident can turn into a real nightmare.

Tip #1 Find out what your car is worth if you want to get a better accident settlement

Your car is worth what it will cost you to replace the same vehicle with comparable mileage and in comparable shape. So your job is to start shopping the dealers to find your car. And we’re not talking the window price minus arm twisting negotiation. The window price IS the value. In other words, NADA.com and Kelley Blue Book kbb.com don’t sell cars. So when it comes time to settle a claim, their values are worthless.

Tip #2 If the accident was the other person’s fault, the insurance company must make you whole

Insurance law states that when you are in an accident that’s not your fault, you are entitled to be “made whole.” The legal term “made whole” means you are entitled to receive enough money to go out and buy the exact same car in like condition or a comparable car if your car isn’t available. So the final settlement must include enough to buy the replacement vehicle, pay the sales tax and also pay the license and transfer fees. You should not be out-of-pocket on a not-at-fault accident.  Knowing the sales tax, license fees and transfer fees up front can help you get a better accident settlement!

But keep in mind, you are not entitled to “betterment.” In other words, the insurance company doesn’t have to offer you enough to buy a car with lower mileage, or one that’s in better condition than the one that’s totaled.

This is where your research pays off, because to come up with a value, the insurance company has to come up with “comparables;” vehicles that are currently for sale in your area, that are comparable to yours.

Tip #3 Two can play this game — Know your policy terms to get a better accident settlement

To drive down the settlement price, insurance company adjusters play games. They have computer programs that tell them exactly what condition a normal vehicle of your make, model, and mileage should be. Then they deduct money for carpet and upholstery stains, cracked windshields, or poor mechanical condition. That’s bad news for you if your car was filthy and stained on the day it was totaled.

However, you do have some bargaining power here. If the adjuster deducts more than $135-$150 for cosmetic reasons, it may be worth your while to call in a car detailer and have the vehicle cleaned and buffed to get it up to “normal” condition. Obviously, you would only do this if you could reclaim more than the cost of the detail job. But if you do actually clean up the car, the adjuster MUST re-figure their settlement price to account for the clean condition. You shouldn’t receive less just because your car was dirty that day.

Broken windows are another area where you may be able to gain some ground. If your policy includes glass coverage and the adjuster has deducted money because yours was cracked, it may pay for you to insist that your glass coverage compensate you for the difference.

Tip #4 Look at the comparables and see if they’re local

Now here’s where consumer smarts really pay off. The insurance laws in many states require the insurance company to present their offer to you in WRITING, along with substantiating evidence of “market value.”

In addition, many states require the offer to be based on comparable vehicles IN YOUR MARKET area, or within a reasonable (1 hour) drive from your home. Some deceptive adjusters find comparables from competitive car makers far away from you. For example, in a recent settlement, a friend’s insurance adjuster came up with low priced comparables from Chicago, even though my friend lives in Minneapolis. The comparable prices in Chicago were about $1,000 less than the same cars were selling for in Minneapolis.

My friend’s insurance company told her they were mailing her the offer. But that was part of their scam—it never arrived in the mail. When she pressed them for the offer, they gave it to her over the phone. The insurance company knew that they could not legally provide written comparables from Chicago. So they stalled her by telling her it was in the mail. Then they waited for her to call, so they could present the offer on the phone. (No written offer means no violation of the law)

When faced with a ridiculously low verbal offer, ask the adjuster for the names and phone numbers of the dealers the adjuster cited as comparables.

If the accident was your fault, you may or may not be entitled to replacement cost

Some insurance companies sell “full replacement cost” coverage. For those policies, the adjuster should come up with a value that’s high enough to buy the same or comparable vehicle again.

If you didn’t buy that coverage, you’ll get actual cash value which is usually a lot less. To learn more about Actual Cash Value, see this article.

Get help from the Attorney General’s Office in your state

If you don’t know the laws in your state, don’t hesitate to contact your State’s Insurance Commissioner or Attorney General’s Office and ask for the rules.

© 2012 Rick Muscoplat