Dispute an Insurance Total Loss on a Car

If you have been in an auto accident, your insurance company will compare the cost of repairs to the value of your vehicle. If the cost of repair is close to or more than the value, your insurer will declare your vehicle a total loss (or "totaled") and compensate you for the value of your vehicle rather than the cost of repairs. The calculations used by auto insurers apply total loss status to a great number of vehicles each year. Whether you think the insurance company has undervalued your car, or you think it still has enough life left to save it, you can take steps to dispute a total loss and hopefully persuade the insurance adjuster to change his or her position.

Steps

Getting an Estimate From Your Insurance Company

  1. Call your insurance company. If you can drive your vehicle home, remove it from the scene of the accident first. If your vehicle is inoperable, call your insurance company from the scene. When you call your insurance company to report the accident, a representative will ask you for information, including the year, make, model, and a description of the damage.
    • The representative will probably begin calculating the likelihood that your case is a total loss, but will not necessarily tell you that he or she is doing these calculations.
    • The representative will arrange to have your vehicle towed from the scene of the accident, but if your car is likely to be a total loss according to the calculations, your car may be towed directly to a salvage yard to save the insurance company the cost of having to tow the car a from a garage to a salvage yard after the claim is settled.
    • Always ask where your car will be towed, and ask to have it delivered to a garage or mechanic instead of a salvage yard.
  2. Wait for a decision. Once your insurance company inspects the car or performs more calculations, they will contact you with their decision. If they deem your car to be totaled, they will offer you a sum of money based on what they believe the car was worth prior to the collision. The insurer will typically ask that you assign title to the car to the insurance company when they pay the claim.[1] They can then sell the car to a salvage yard to offset their expenses.
    • Most states set a "total loss threshold" by law. If the cost of repair is less than the threshold, then the insurance company cannot declare a total loss and must pay for repairs. The threshold ranges from 100% of the car's value down to 50% in different states. If there is no threshold set by law, then the insurer will total the car if the cost of repair plus the salvage value is greater than the value of the vehicle before the collision.[2]
  3. Request the report and review it. The insurance company's decision to total your car and offer you a certain sum is based on a written report. Ask the representative to mail or email you a copy of the report. Then review the report for any inaccuracies or missing information.
    • For example, make sure that the car's mileage is accurate, and that any upgrades or optional features are mentioned. These can have a big impact on the value of a vehicle.

Disputing the Total Loss

  1. Gather your records. If you believe that the insurance company undervalued your car in their report, gather and copy any records you have that show that your car was valuable and well-maintained. This includes receipts and other proof of:
    • Optional features
    • Upgrades, add-ons, and customizations
    • Repairs
    • Regular maintenance
    • Any documents you received from the car's previous owner
  2. Do some research. Spend some time finding evidence that your insurer undervalued your vehicle or overvalued the cost of repair. Kelley Blue Book is a good place to start. KBB is the go-to authority on car values, and lets you calculate the value of your vehicle with reference to its condition and your geographic location. You can also find for-sale listings online or in a newspaper for the make and model in a similar condition in your area. Finally, you may be able to get a quote for repairs from a mechanic. Have him or her put the quote in writing.
    • Vehicle owners are often surprised to find out that their car has depreciated substantially since they purchased it. Remember that the value of your car is based not its resale value, not on what you paid for it.
  3. Submit your records and research to the insurance company. Your insurance adjuster should have prepared the initial report by calculating the average values and cost of repairs for similar vehicles in your area.[3] Submit a detailed collection of evidence showing that the adjuster's valuations were inaccurate. The adjuster will review your supporting documentation.[4]
    • Do your own calculations by averaging the values of several different comparable vehicles in your area. The adjuster will certainly check your math, but your evidence will be more persuasive if you present the conclusion of your research up front.
  4. Request an appraisal. Your insurance company may or may not have had the vehicle appraised in person. Re-read your insurance policy, or ask if your policy guarantees you the right to an independent appraisal. The insurance company will either hire an appraiser inspect your vehicle, or they may simply offer you more money to settle the claim and avoid the trouble of hiring an appraiser.[5] The adjuster may also want to avoid the possibility that the new appraisal will be substantially higher than the initial valuation.
  5. Negotiate. Your insurance company has a lot of power in declaring a vehicle a total loss, because they have the money that you need to either repair your car or buy a new one. However, if you can afford to wait, you can exercise some power of your own by refusing to settle right away. Insurance adjusters are typically under a lot of pressure to settle cases quickly. Some sources report that adjusters usually have discretion to increase a settlement amount by up to $500 during negotiations.[3][6] To get more, you will need to present compelling evidence that their initial calculations were off and demonstrate that you are not in a hurry to settle.
  6. Consider filing a complaint with the Department of Insurance. Insurance companies are required by law to settle claims in good faith.[7] If you believe that your insurer has acted in bad faith by making an unreasonably low offer, you can file a complaint with your state's Department of Insurance. You can find a directory of links to each Department of Insurance's consumer complaint website here. You can usually submit your complaint online through an electronic form by providing your contact information and the details of your complaint. The Department will investigate your claim for potential regulatory issues and violations of law, and may mediate the issue for you.

Warnings

  • This article is intended as legal information and does not provide legal advice. If you need legal advice, contact a licensed attorney.

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Sources and Citations

  1. ↑ http://www.progressiveagent.com/claims/total-loss.aspx
  2. ↑ http://www.claimsjournal.com/news/national/2013/12/05/240841.htm
  3. ↑ 3.0 3.1 http://www.edmunds.com/auto-insurance/confessions-of-an-auto-claims-adjuster.html
  4. ↑ http://www.progressiveagent.com/claims/total-loss.aspx
  5. ↑ http://www.auto-insurance-claim-advice.com/Right-of-Appraisal.html
  6. ↑ http://www.auto-insurance-claim-advice.com/car-total-loss-2.html
  7. ↑ https://www.justia.com/trials-litigation/docs/caci/2300/2330.html
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