After your car is totaled, you might expect your insurance company to pay you what you paid for your car so you can replace it. Unfortunately, you might find their estimate of your car’s fair market value to be very low. If that happens, you can try to negotiate for a higher payment.
Bear in mind that insurance companies are businesses and their ultimate goal is to make a profit. They won’t raise the estimated value of your car just because you think it’s worth more. The insurance company will want to see compelling evidence. You may have more luck if you work with a car accident lawyer.
Our attorneys at the Law Firm of Anidjar & Levine can negotiate with the insurance company to get you a fair payout for your totaled car. Call us today for a free consultation by dialing 1-888-494-0430.
For a free legal consultation, call (800) 747-3733
What Is a Total Loss?
Even if your car can be repaired, that doesn’t mean that your auto insurance will cover it. They may decide your car isn’t worth fixing and call it a total loss. So when do you know your car has been totaled?
Typically, an automobile is considered a total loss when the cost of repairs exceeds its value. Some states have laws defining a totaled vehicle by percentage. In Florida, a car is deemed a total loss when the cost of repairs exceeds 80% or more of its fair market value.
After a collision where both cars are damaged, insurance will calculate reimbursement differently. If you drive a Honda Civic worth $6,000 and it needs $5,000 worth of repairs, your car is totaled. If the other driver has a Tesla Model X worth $80,000, a repair estimate of $50,000 means that car might still be worth fixing.
Whose Insurance Pays for Damages?
If your car was damaged in a car crash, either your auto insurance or the other driver’s insurance should pay for the damage to your vehicle. Which driver’s insurance company pays for damage depends on your state laws and liability.
In the state of Florida, the insurer of the at-fault driver pays for the damage to all vehicles in the collision. However, if anyone was injured in the accident, each driver must file a claim with his or her own insurance. This is because all drivers are required to carry Personal Injury Protection (PIP) insurance.
How Much Does Insurance Pay for a Total Loss?
How much insurance actually pays for a totaled vehicle will depend largely on the policy terms. They may pay the fair market value or replacement value. These terms might sound like they mean the same thing but they don’t.
Fair Market Value
If the insurance company pays fair market value, they will use an evaluation method like Kelly Blue Book. This helps them calculate your car’s fair market value at the time of the accident based on your car’s make, model, age, mileage, and condition.
If the insurer pays the replacement value, they estimate the cost of buying a replacement car of similar value to your car.
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Do I Have To Accept the Insurance Company’s Offer on a Totaled Vehicle?
There’s a good chance that the insurance company’s offer of payment will look low to you. Whether they pay fair market value or replacement value, their estimate could be biased. There’s every chance that your car is worth more than they offer you.
Luckily, you can negotiate for a higher amount. While it won’t be easy to convince the insurance company to pay more, it’s possible. You will need to show them evidence to prove that your car is worth more than they originally estimated. Any upgrades you made to your car could increase its value. Show the insurer photos or receipts of upgrades such as:
- Improved sound system
- Add-on spoiler
- Remote starter
- New paint job
- New tires
The insurance company may not think all your upgrades and customization ultimately add value to the car but that could vary by company. You should gather as much information as possible to prove that your car is worth what you think it is. Include current listings and recent sales of similar vehicles.
What if I Don’t Own My Car?
There are a few things that could complicate your situation if your car has been totaled in a wreck. If you don’t actually own the car, you may not receive any compensation. You could even owe money for it. It depends on your particular case.
Leasing a vehicle is a great way to drive a new car without worrying as much about depreciation. If you lease a car, you don’t own it. Leasing is a long-term rental agreement. The expectation is that you will either return the vehicle at the end of your lease or buy it. You have an obligation to make payments to the leasing company and even if the car is totaled, you won’t be off the hook.
Any reimbursement you get for the value of the car will be used to pay off the lease and remaining value of the car. If it is not enough to do so, you will owe the remaining balance to your leasing company.
Not everyone can afford to purchase the car they want in cash. Most vehicle purchases involve financing. If you bought your car with an auto loan, you might not own it outright for 3-6 years. Between your auto loan’s interest rate and your car’s depreciation, you could end up upside down on your loan, meaning you owe the lender more than your car is worth. This typically happens when someone buys a brand new car without a down payment.
It could be disastrous if your car is totaled and you owe more than its estimated value. The insurance company will not pay you more than the car is worth. You will still owe the lender any outstanding balance and anything above the insurance payment will be out of pocket.
Lenders and auto insurance companies often push gap insurance to protect you from owning more on your car than it’s worth in case of a total loss. If you skipped the gap insurance and later realize you’re upside down on your loan, you can correct that by refinancing or making extra payments. However, there’s not much you can do about your loan after your car is totaled.
Let Your Attorney Negotiate With Insurance
The lawyers at the Offices of Anidjar & Levine can negotiate with the insurance company to get you a larger total loss settlement. For a free consultation, call us today at 1-888-494-0430. We’re standing by 24/7 to take your call.