When your car is declared a total loss after an accident, the insurance company will determine how much they will pay you based on the actual cash value (ACV) of the vehicle. But how can you be sure that the amount offered is fair? Here are some steps you can take to research and verify that you’re receiving a fair settlement for your totaled vehicle.
1. How Insurers Determine Value
Insurance companies use valuation tools and databases to determine your car’s ACV. This is based on:
- The make, model, year, and mileage of your car
- The condition of the vehicle before the accident
- Local market comparisons (similar cars recently sold in your area)
- Any additional features or upgrades on your vehicle
The insurer will typically provide a report explaining their valuation. Reviewing this report is your first step in assessing whether the offer is fair.
2. Research Your Vehicle’s Market Value
To verify the insurer’s valuation, conduct your own research using these sources:
- Online car valuation tools – Websites like Kelley Blue Book (KBB), Edmunds, and NADA Guides allow you to input your car’s details and get an estimated value.
- Local dealership prices – Check listings from dealerships and private sellers in your area for similar vehicles.
- Recent sales data – Look at actual sale prices on platforms like AutoTrader, Cars.com, or Craigslist rather than just asking prices.
Compare this data to the insurance company’s offer to see if it aligns with real-world values. Many car insurance companies use an average sales value of your vehicle in your area. You can search what vehicles like yours are selling for. Find 10 vehicles for sale or that have sold and determine the average of these prices. This will give a good value of what your car is worth. Also consider the condition of your vehicle. Car insurance companies will make deductions for high mileage, damage to the exterior and interior of the vehicle, worn, excessively worn tires, and many other factors. You may also receive additional value for a vehicle that is in excellent condition.
3. Review the Settlement Offer for Errors
Carefully review the insurance company’s valuation report for any inaccuracies. Common errors include:
- Incorrect mileage
- Missing upgrades or features
- Understating the condition of the vehicle before the accident
- Using outdated or non-comparable sales data
If you find discrepancies, gather evidence such as maintenance records, photos, or online valuation reports to support your claim. Share these discrepancies with the car insurance adjuster
4. Consider Depreciation and Adjustments
Insurance companies may adjust the value based on pre-existing damage, wear and tear, or market trends. Ensure that any deductions are reasonable and based on actual conditions rather than arbitrary depreciation.
5. Negotiate If Necessary
If your research shows that your car’s value is higher than the offer, you can negotiate by:
- Providing evidence from your independent valuation research
- Pointing out any errors in their report
- Requesting a reconsideration or a second valuation
Sometimes, insurers may increase their offer if you present a well-supported case.
6. Check Your Policy for Additional Coverages
Your policy may include extra coverages that impact your settlement, such as:
- Gap Insurance – Covers the difference if you owe more on your loan than the car’s ACV.
- New Car Replacement – Provides a replacement vehicle if your car was new and met specific criteria.
- Rental Car Reimbursement – Covers temporary transportation costs while your claim is processed.
Review your policy details or speak with your agent to ensure you’re receiving all entitled benefits.
7. Know Your Rights
If you’re unsatisfied with the offer and negotiations stall, you have options:
- Request an independent appraisal (some policies allow for an “appraisal clause” where both parties hire independent appraisers).
- File a complaint with your state’s insurance department if you believe the offer is unfair.
- Consider legal advice if you feel the settlement process is not being handled properly.
Final Thoughts
Your total loss settlement should reflect the fair market value of your vehicle. Taking the time to research comparable values, check for errors, and negotiate if necessary can help ensure you receive a fair payout. If you have questions about your claim or coverage, our team at Ameriguard Insurance is here to help.
Need guidance on your auto insurance policy? Contact us today!