How to Handle the Insurance Offer After an Accident
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. Insurers typically have 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 what the ‘betterment argument is and be prepared to negotiate.
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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.
Insurance companies may also deny your claim. This is 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. Since a mechanic will need to use new or fairly new parts to repair an old car, this 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 set a specific total loss threshold, where the damage only needs to exceed a certain percentage — say 65%, 70% or 80% — of a car's value to be deemed a total loss. About half of all states, however, use what’s called a “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 first 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 if you don't have time to negotiate with the claims adjuster, you can hire a lawyer. A lawyer can help resolve who was at fault and can often get you a higher payout, so 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.
About the Author
Managing Editor
Ben Breiner is the Managing Editor of ValuePenguin/LendingTree's insurance vertical. He oversees a team of writers who focus on guiding readers through the rigors of home and auto coverage. He still loves that moment when the words fall together and he can translate an intimidating topic so a reader can make the best choice.
Ben got involved in insurance in 2021 when he joined ValuePenguin. He moved up from writer to editor and watched the team grow to expand the ways it helps consumers. Before that, he spent a decade as a sportswriter for newspapers in the Southeast and Midwest.
Ben had to put off buying his first car because of high insurance rates, so he's keenly aware how the wrong policy can get in the way of your goals. He should've shopped around and looked to the experts.
Insurance tip
Always keep an eye out for insurance you can load up on at a low price. A lot more liability coverage won't break the bank and protects your hard-earned assets.
Expertise
- Car insurance
- Home insurance
- Renters insurance
Education
- BA, Economics and Journalism, University of Wisconsin-Madison
Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
