How to Get the Most Money for Your Car If It’s Declared a Total Loss
We’ve all heard the terms “totaled” or “total loss.”
If someone said to you, “Henry was in a car accident and his car
was totaled!” you would probably think the worst. You would probably
think to yourself Henry’s condition is serious because he was in a
car accident and his car was “totaled.” But what does “totaled”
Under Florida Law, a motor vehicle is considered a “total loss”
when the vehicle is damaged, and the cost, at the time of loss, of repairing
or rebuilding the vehicle is 80% or more of the cost to the owner of replacing
the damaged motor vehicle with one of like kind and quality. Let me give
you a simple example: Let’s say you have a car that has a fair market
value of $10,000, and someone crashes into you. If the cost to repair
your car is $8,000 or greater, the insurance company will declare your
car a “total loss.”
When this occurs, it is easy to feel that you are at the mercy of the insurance
company. After all, it is the insurance company adjuster who will ultimately
write the check for the loss of your car (unless of course the other driver
has no property damage coverage). In this case, you may have a bigger
problem on your hands.
If the other driver does have adequate property damage liability coverage,
and if you carry collision insurance on your policy, then you actually
have two options:
- You can choose to have the total loss claim handled by your insurance company, or
- Go through the other party’s insurance company.
If you choose to have your own insurance company handle the claim, you
may be responsible for a deductible. You will need to refer to your insurance
policy to see if you have a deductible on your collision coverage. Most
If you choose to utilize the other party’s insurance company to pay
the total loss of your vehicle, there is no deductible to worry about.
I often tell my clients to have each insurance company submit a “total
loss” offer and choose the greater of the two. However, some people
do not want to use their own insurance to cover the loss caused by the
other driver and will therefore deal only with the other party’s
insurance company to resolve the damage claim.
Regardless of which insurance company you choose to handle your total loss
claim, you will initially need to wait for the insurance adjuster to provide
a settlement offer. While you’re waiting, you should be doing your
own research so that when you receive the insurance company’s offer,
you are able to assess whether the offer represents the fair market value
of your vehicle. There are many online sources to help you educate yourself.
So do your homework.
Once you receive the insurance company’s initial settlement offer,
you should already have a good idea of the fair market value of your vehicle.
Compare your figure with the figure offered by the insurance company.
In my experience, the insurance company typically offers less than what
my research (or that of my client) has revealed the fair market value
to be. If the two figures are relatively close, it may be a matter of
simply negotiating with the insurance adjuster to reach an agreement.
However, if your figure is significantly greater than the insurance company’s,
more work needs to be done to determine why. If the insurance company
is using a database reflecting recent sales in your area of similar vehicles,
and you have essentially researched the same, why are your figures not similar?
One reason may be that either you or the insurance company is not comparing
apples to apples. In other words, if your vehicle is a 2008 Honda with
manual transmission and manual windows, you should not be considering
sales prices of Hondas with automatic transmissions and electric windows.
You should limit your research to vehicles that match yours as closely
as possible. Options such as automatic transmission can add hundreds of
dollars to the value of a vehicle.
In addition to making sure the make, model, year, accessories, options,
etc. are similar to your vehicle, you should also limit your comparison
analysis to vehicles which have approximately the same amount of mileage
and reflect the same condition as your vehicle, i.e. excellent, fair,
poor, etc. It is also important that the insurance company likewise does
the same. Request a copy of the results of their database search containing
the list of all of their comparables to verify this.
The process is similar to when a real estate agent determines how much
to list a house for sale. The agent will look at the comparables, or “comps”
to determine the appropriate listing price for the home. Likewise, comparables
are utilized in determining the fair market value of a vehicle for the
purpose of assessing a total loss settlement.
Once you receive the insurance company’s database research results,
look through the list of vehicles and make sure they are “true”
comparables. If you come across a vehicle that is not a true comparable,
insist that the insurance adjuster remove that particular vehicle from
consideration in arriving at the average.
If your vehicle has 20,000 miles on it, for instance, you certainly do
not want a vehicle with 100,000 miles being used to determine the average
fair market value. Obviously, the 100,000-mile vehicle will have a lower
sales price, and as a result, will bring down the overall average for
fair market value, resulting in a lower settlement offer to you.
In addition, scrutinize the insurance company’s database research
report to make sure they have listed the make, model, type, condition,
mileage, etc., of your vehicle correctly. If your vehicle has interior
wood trim, make sure the insurance company’s report reflects this.
Finally, if you have the opportunity, you may want to clean the inside
of your car before the adjuster comes to see it. It’s no different
than if you were going to trade your car in or sell it on your own; you
want it to look its best.
By following these simple tips, you can increase your chances of settling
your total loss claim fairly.