How to Handle the Insurance Offer After an Accident

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In the aftermath of a car accident, you and your insurance company will need to agree on a fair payout for the damage to your vehicle. The insurer typically has the upper hand in this process, because they deal with claims every day — while you might be handling your first negotiation.

To get the best settlement, research how much it will cost to repair your car, understand betterment and be prepared to negotiate.

Research the cost of repairs

After the car accident, you'll file a report with your insurer. A claims adjuster from the insurance company will estimate the cost of repairing your car and make an offer to settle the claim.

To see if it's a good offer, it helps to get multiple estimates. Start with your own trusted mechanic or body shop, or find one with good online reviews. After comparing at least three estimates, you'll be able to see if the insurance offer is enough to cover the cost of repairs.

Insurance companies may also deny your claim, usually due to policy limits, legal issues or a problem in the process of your submission.

Negotiate in good faith

If the insurer's initial offer isn't enough, you can negotiate. Keep a level head, and ask the adjuster to explain their offer, so you can understand the factors that shaped it. Then prepare a fair counterproposal, based on your own repair estimates.

Beware of the "betterment argument"

One thing an adjuster can argue is called betterment. A mechanic will need to use fairly new parts to repair an old car, which can actually make the car more valuable than before the accident — or so the insurance company may argue.

Most car insurance companies will either charge you for the excess value your car will gain from repairs or reduce their payment in proportion to the value increase. To counter their betterment charge, you'll need to prove the parts will not, in fact, increase the value of your car. Testimony from your mechanic or an expert witness would help in this case.

Working with a write-off

If your vehicle has suffered extensive damage, it might be written off as a total loss. That can happen when the insurance company says the cost of repairs exceeds the actual cash value of the car. What constitutes a total loss varies between states.

Some states use the total loss threshold, where damage only needs to exceed a certain percentage of a car's value to be deemed a total loss. About half of all states, however, use the total loss formula. With this formula, if the cost of repairs plus the salvage value of the car exceeds the car's market value, it is considered a total loss.

If you want to negotiate with the claims adjuster on this decision or educate yourself on total losses, you should find out which way your state determines a total loss. It's helpful to show proof that the car is worth more than what the insurer estimated. For example, if the appraisal failed to fully account for any modifications you’ve made, document those and show evidence that they may have raised the value of the vehicle.

If you still feel the payout offer isn't fair or you don't have time to negotiate with the claims adjuster, you can hire a lawyer. If the lawyer can help resolve who was at fault and get you a higher payout, they may be worth it. But if the claim is small, consider taking on the work yourself.

After agreeing to a settlement

Once negotiations are wrapped up, you'll need to confirm the offer in writing. The document will include the amount of the settlement and how the funds should be used.

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