After getting into a car accident, you may need to seek compensation from an insurance company. Be prepared to negotiate the payout by doing your research, preparing your arguments and potentially seeking help.
Insurance companies lose money when they're forced to pay out for an accident. So a claims adjuster may try to offer you the smallest amount possible for your damage.
Before you accept the insurer's offer, know that you can negotiate for what you think you deserve.
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Determine the value of your car
After a car accident, the value of your car will be determined by a claims adjuster with your insurance company, if it's a first-party benefits claim, or from another driver's insurance company if it's a third-party benefits claim.
First-party benefits cover medical expenses for you – the policyholder – and the people in your car at the time of the accident. This is also called personal injury protection or a no-fault benefit.
Third-party benefits cover the damage you cause in an accident. This is also called bodily injury coverage or liability coverage.
The adjuster is incentivized to pay you the minimum amount in both cases, so knowing the true value of your car is important for negotiations. We recommend you collect estimates from several sources.
You don't need to accept the adjuster's estimate of your car's value if it doesn't match the estimates you found in your research.
Negotiating with the car insurance company
If the adjuster's initial offer is far below the estimates you gathered, you should negotiate with the insurance company. You don't have to file a lawsuit to start. These discussions can take place in person or via email, but you'll want to get the final decision in writing.
If the insurer's first offer is inadequate, you can decline it and ask for a better offer without suing.
Negotiation tip: Ask the adjuster to explain their justification for their offer. After considering their argument, you can form a counter-argument.
When you negotiate with the insurance company, you should have a desired settlement in mind along with the minimum settlement you'll accept. Your high and low numbers should reflect the estimates you researched. During negotiations, keep a level head and objectively weigh the strengths and weaknesses of their offer.
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Betterment and the value of your car
"Betterment" is a clause in some car insurance policies that says the insurer won't pay for repairs or replacement parts that improve the car's condition and increase its value. An old car, for instance, may need new parts when it's repaired. But the new parts could make the car more valuable than it was before the accident. Most insurance companies will either charge you for the additional value you're gaining or reduce their payment in proportion to the increased value.
Betterment can be tricky to argue against because you're essentially asking the insurance company to pay more than what your car was worth at the time of the accident. But there are some ways to counter a betterment charge.
- Demonstrate how the parts won't increase the value of your car. Getting a statement from your mechanic or another car expert could help in this case.
- Argue that your car still has a diminished value after the accident. This means a potential buyer would pay less for the car simply because it had been involved in an accident.
The state you live in affects how fault is determined
Where you live may affect the compensation you receive after an accident because each state regulates fault differently. This may impact your payout from a third-party claim, like bodily injury or property damage liability.
In Washington, D.C., Maryland and North Carolina, for instance, the law calls for pure contributory fault determination. In these states, a driver needs to be 0% at-fault to receive any compensation, which is a very high standard.
Other states, like Georgia, are a bit more lenient and only require you to be less than 50% at-fault for an accident in order to receive compensation. Meanwhile, car insurance in California pays out proportionally, meaning you receive compensation based on the percentage of your fault in the accident. So if you're 25% at fault, for instance, then your payout is lowered accordingly.
In negotiations, the insurance company may want to prove you're more at fault as a way to reduce its payout. Be prepared to give them as much information as possible. Police reports, photos and witness testimony can be solid pieces of evidence to help prove your innocence in an accident.
More tips for getting a higher value for your car
- Consider emphasizing the emotional points of your argument. For instance, you might show images of the car damage or explain how the accident has prevented you from getting to work.
- If you don't have the time or ability to negotiate with the claims adjuster, hiring an attorney may be best. This option may not be cost-effective for a small claim, but if the payout you're seeking is greater than the lawyer's fees, then it may be worth it.
- If the case seems tricky in terms of proving who was at fault, an attorney may also be highly beneficial.
After agreeing to a settlement
After negotiations are over, you’ll need to confirm the offer in writing.
It doesn't have to be extensive, just detailed enough to outline the amount of the settlement and what will be repaired.