How to Negotiate the Value of a Totaled Car with Your Auto Insurance Company

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By A. Suzanne Wells
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2001 Toyota Camry

The purpose of having auto insurance is to pay for damages to your automobile. When your car is totaled in an accident and you file a claim, your auto insurance should pay you the same amount it would cost for you to walk onto a lot and purchase the exact same car. This is called the replacement value. Learn how to get the most for your totaled car and how to negotiate the value of your car with your auto insurance company.

Difficulty: Moderately Challenging

Instructions

Step 1

Understand what the term "totaled" means. It can mean different things for different cars. A car is totaled when the repairs to the damage cost 75% or more of the car's retail value. So, minor damage to a 1972 Buick may total the car. The same damage on a 2008 BMW will not be a total loss.
Step 2

Determine the retail value. Do your research and learn what the exact same car (same features and mileage) costs from a retail car dealer. Look on CarMax for comparable values. Visit Edmunds.com. Look on eBay. Check the newspaper. Make sure you understand what the replacement value is. Make copies or print out this information and keep it handy for when the insurance adjuster calls.
Step 3

Understand that even though your car is totaled, it still has value. Once you sign your car over to the auto insurance company, they will tow the car to an auto salvage dealer and they will sell the parts. For example, if your car has new tires, the airbags were not deployed, the windows are not cracked, and the leather seats are in good condition, (as in the photo above), the salvage company will sell off these parts (along with everything else) and the auto insurance company will get the proceeds. There is big money to be made in auto salvage so your insurance company won't walk away emptyhanded. The car does not just go to the junkyard in the sky.
Step 4

When the insurance adjuster calls to tell you how much you are getting for your totaled car, you don't have to accept his offer. If you feel the offer is too low, ask the question, "Where am I supposed to get a replacement car for that price? My research shows a replacement car will cost XYZ." Your best defernse is being informed and having your research handy. Don't be afraid to negotiate. Your auto insurance company may low-ball the offer just to see if you will take it. Stand firm and know the facts.
Step 5

If the auto insurance company does not work with you to give you a fair price, you may have to hire an attorney. Bear in mind that every day your car sits on the impound lot, it is costing the auto insurance company money. They usually like to settle these claims quickly.