Car is totaled and you have to negotiate with an insurance adjuster
If you don’t like the insurance company’s initial offer, don’t worry—that’s just their opening offer. Here’s how to negotiate with an insurance adjuster to get a better deal
Getting into a car accident is stressful enough. But once you file a car insurance accident claim and the insurance company determines that your car is totaled, that’s when an ugly accident turns into a real nightmare. A friend recently had to go through this ordeal. Her car was rear-ended while she was stopped at a light. The other’s driver’s insurance company sent out an adjuster and immediately totaled her 1999 Camry. Several days later, a claims adjuster contacted her with an offer—well, the claims person called it an offer. It was really an insult.
Find out what your car is worth
My friend had already done her homework by checking with local dealers (finding comparable cars at a local dealer is the key here) to find the going rate for a ’99 Camry with comparable mileage. The going price was around $7,000. The insurance company offered her $5,100. When she pressed the claims adjuster to disclose how they arrived at that offer, the adjuster said, “We checked the NADA book.”
Insurance adjusters can’t use NADA or Kelly Blue Book to value your car
NADA and Kelley Blue Book are references used by car dealers to help them determine what a car is worth. But, they are NOT the definitive guide to what YOUR car is worth. 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 and Kelley Blue Book don’t sell cars. So when it comes time to settle a claim, their values are worthless.
The insurance company must make you whole
Now let’s get to the meat of an insurance settlement. 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. 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.
Insurance adjusters fudge their “comparables”
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.
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. My friend lives in Minneapolis. But the insurance company “comparables” were actually from the Chicago area, where selling prices are at least $1,000 lower for the exact same vehicle.
Her 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)
Get the names and phone numbers of the car lots with the comparable vehicles
When faced with the ridiculously low verbal offer, she pressed them for the names and phone numbers of the dealers the adjuster cited as comparables. None of them were listed in the local phone book or on the Internet. So she contacted each of the dealers to get their exact location. Each was at least 8 hours away.
Get help from the Attorney General’s Office in your state
Angry and upset, she contacted the Minnesota Insurance Commissioner’s office to speak with a consumer advocate. The advocate provided a copy of the “unfair settlement practices” portion of the Minnesota Statutes. There, in the statue, was the requirement for an insurance company to present their local comparables in WRITING. The statute also stated that she was entitled to the full amount of sales tax, title transfer fees, and pro-rated license plate tabs (after all, she would have to pay for all of those on the replacement vehicle—remember, you have to be made “whole”) .
Armed with this knowledge of the law, she sent the insurance adjuster a written request citing the Minnesota Unfair Settlement Practices statute and demanding a written offer with evidence of comparables from the local market. The following day the adjuster called.
The adjuster’s demeanor had changed completely. Where the adjuster had been arrogant and feisty, she was now as sweet as pie and blamed the initial low offer on the adjuster that pulled the comparables. The new offer? You guessed it. It was within $200 of the current selling price of the 1999 Camrys she had seen for sale from local dealers. Oh yes, the offer also included an additional amount for sales tax, title transfer, and pro-rated tabs.
You too can avoid being taken to the cleaners on a settlement offer. Do your homework. Check the local dealers and private sellers to get the going rate for your vehicle. If the insurance company says they got their values from NADA or Kelley, tell them that NADA and Kelley don’t sell cars and those values are totally worthless. The only numbers you care about are what a comparable vehicle is actually selling for in your local market. Insist that they show you local comparables in writing.
Finally, if you feel you’re getting the run-around, call your state’s insurance commissioner or insurance division and ask to speak with a consumer advocate.
© 2012 Rick MuscoplatPosted on by Rick Muscoplat