How to Negotiate Your Car's Value with an Auto Insurer after an Accident

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After getting into a damaging car accident, there will come a time when you will need to seek compensation from an insurance company. The process of receiving a fair payout can be tricky however.

After all, insurance companies are losing money when they are forced to pay out for an accident. A claims adjuster for a company is going to want to pay you the smallest amount reasonably possible for your damages.

Before you accept their offer however, know that you can negotiate for an offer you think you deserve.

Determining the Value of Your Car

Knowing the true value of your car will be vital when negotiating with an insurance company. After you get into an accident, the car will be sent to a claims adjuster who will determine how much it will take to repair it.

Depending on what type of claim it is, first-party benefits or third-party benefits, you will either be dealing with your own company in the case of the former or another driver’s company in the case of the latter.

With the adjuster having an incentive to not pay the full amount in either case, knowing the true value of your car will tell you if you are getting a good deal or not. We recommend that you collect estimates from several sources.

Luckily, there are several sources which you can turn:

  • The most obvious is your own trusted mechanic. In fact, you can bring it to as many mechanics or garages as you want until you get a figure you feel adequately reflects the damage your car has received.
  • You can also get the value of your car from websites such as Kelly Blue Book or Edmunds.

Whatever figure the adjuster comes back with, you do not need to accept it if it does not match the estimates you have received.

Negotiating with the Car Insurance Company

If the initial offer is below the estimates you have received, you will need to enter negotiations with the insurance company. Does that mean a lawsuit? Not necessarily, it is in both sides’ interest to avoid the cost of continued litigation.

This means that you can negotiate with the insurance company before any formal court proceedings are made. They do not want to bring the matter to court anymore than the driver.

If the insurer's first offer is inadequate, it is completely in the power of the driver to decline it and ask for a better offer without suing.

Negotation tip

Get the adjuster to justify their offer. After considering their argument, you can form a counter-argument. There are a few things an adjuster can bring up however that you should be prepared for.

When you enter negotiations with the insurance company and/or claims adjuster you should have a desired settlement in mind, as well as a minimum settlement you will accept. Your high and low numbers should reflect the estimates you got from the Internet and your mechanic. As negotiations press on, you will want to keep a level head that can objectively weigh the strengths and weaknesses of their justification for their offer.

"Betterment" and the Value of Your Car

One thing an adjuster can argue against you is the "betterment". If your car is fairly old, new parts may be required to repair it, making the car actually more valuable than before the accident. Most insurance companies will either charge you for the excess value or reduce their payment in proportion to the value increase.

Betterment will be hard to argue because essentially you are asking for the insurance company to pay more than what your car is even worth. To counter their betterment charge, you will need to prove that 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.

The State You Live in Affects How Fault (and Value) is Determined

Another issue that can diminish your claim is the state where you crashed your car. Payouts from third-party claims like bodily injury or property damage liablity depend on who was at-fault in an accident, which in turn is dependent on the state you crashed in.

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, 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 to receive compensation. Car insurance in California pays out proportionally, meaning you receive compensation based on the percentage of fault you played in the accident, even if it was 11% or 89%.

In negotiations, the insurance company is going to want to prove you were more at-fault than you are claiming to reduce their payout. To counter them, it is important to go into negotiations with as much information as possible. Police reports, photos, witness testimony are 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. Images of the car damage, or examples of how it has been affecting you from getting to work, are good pieces of evidence.
  • With all of your counter-arguments organized, review whether you should push for a settlement above your minimum amount.
  • If you feel that you do not have the time, or ability to adequately negotiate with the claims adjuster, then hiring an attorney may be best. This may not be cost-effective for a small claim, but if the pay out you are seeking is greater than the fees associated with a lawyer, then it may be worth it to pursue.
  • 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 with both parties content, you need to confirm the offer in writing.

It does not have to be long, just detailed enough to outline the amount being settled and what it is being used to repair.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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.