Total Loss Vehicle Settlement - What Happens When Your Car Is Totaled

In our last post I explained how your insurance company would likely determine if your vehicle was a total loss from a covered accident. Understanding how your company makes this determination is important, however, understanding how they will value your car is even more important.
Once your car is determined to be a complete loss, the process that follows can be confusing. I wanted to provide some insight, from an insurer's perspective, that can help you get through the total loss process should you ever find yourself in that situation.
It is important to remember that, if your car is deemed a total loss, your carrier has a duty and obligation to pay you the ACV (Actual Cash Value) or fair market value for your vehicle. Understanding that, we want to be sure you are armed with solid & reliable information in the unfortunate event you find yourself in this situation.
The Value or ACV process:
The ACV or Actual Cash Value of your vehicle is a term that is meant to demonstrate & prove what the fair market value of your vehicle is on the date of the accident. Your carrier will have your car inspected, noting all options & features as well as estimating the condition of the vehicle prior to the accident. Below is a short list of some of the main variables involved when determining the value of your car:

• Year, make & model
• Features or upgrades on the car from the manufacturer
• Is there aftermarket equipment on the car & if there is, does it add or detract from the market value
• Condition rating: estimate of the condition of the vehicle prior to the accident
• Mileage (this, as we all know, can have a substantial impact on value)

Your insurance carrier will then use a 3rd party, such as CCC, to secure a fair market value for your car. Here is a short list of things that a 3rd party will look at when estimating the value:

• All of the vehicle details noted above
• Your zip code, which tells them exactly where you live
• Comps: most insurance companies will require at least 2 solid comparative vehicles

Note that where you live is important as vehicles can have different values based on where you live as the market (where you are) is what dictates what cars like yours would sell for at the time of the accident. Also note that the comps are how a price or value is determined as it is meant to convey what a vehicle like yours, same make/model/year, condition and features, would be worth in it's pre-accident condition.
One question or issue that does come up at times is "there aren't any vehicles exactly like mine where I live, now what?" In this scenario, most of the time the insurance company will then look for a vehicle that is a year newer than yours with similar features & in similar condition. It is usually not permitted to use an older vehicle as a comp in this case.
What if I don't agree with the value?
This is most often one of the biggest challenges when trying to settle a total loss claim: I don't agree with the valuation that my adjuster provided to me. It is ok, though, this happens frequently and if armed with good, accurate information, you can navigate your way through this. Here is how:

• Request a copy of the valuation
• Review the details and ensure it represents your vehicle: options, mileage, condition, etc.
• If you feel the value is truly not accurate, do some research and find a few comps of your own, ensure they are accurate. Provide your supporting information to your carrier for consideration
• If they don't move, advise you are formally disputing the valuation.
• Request that your insurance company issues payment for the "undisputed amount"
• Secure your own independent valuation, your insurance company will get one of their own
• The two of you will then come together and compare the valuations and reach a resolution

I know, you now have a few more questions, thought you might. Let's address those:

1. What do you mean by "undisputed amount?" You don't want your claim halted and, if you have rental coverage and are in a rental car, most insurance companies will only extend rental for a few days after they have made an offer to you to settle your total loss. The undisputed amount example: Valuation comes in at $20,000 but feel your car has a market value of $24,000 but are not disputing it is worth at least the $20,000. So, you accept the $20,000 but continue with the process. This will not prevent you from collecting more money should it be supported but it does get you something right now.
2. If you dispute the value and go down that path, you will have to, at your own cost, have an independent market valuation completed on your car. There are some great companies out there to help you, such as http://www.iada.org/.

I highly recommend that you work directly with your insurance company directly to resolve a dispute like this. Remember, this is a negotiation based on some subjective supporting evidence and some objective information as well, such as the make, model, year and features. The insurance carriers want to settle your claim and will, most of the time, be reasonable and work with you to settle your claim.
In addition, I strongly suggest you review your policy before going down the dispute path so you understand exactly what your policy states as it relates to this type of claim. All policies and companies have differences, some subtle and some not. Your policy will be the guiding rule over your claim so it is important to understand what it says and what your rights are.
You can also refer to your state's Department of Insurance site to see if your state has specific rules and laws as it relates to the handling of a first party total loss claim.
So, in summary, hopefully now you have a better understanding of how a value is obtained, you also have an idea on what you can do if you happen to disagree with the value. Just remember to be sure you are able to support your dispute in value with solid information if you want your company to consider your position. And, recall, this IS a negotiation so be calm and deliberate with your argument and information. I can almost guarantee it will lead to a fair resolution of your total loss claim.

Marc Berry brings over 8 years of direct experience in the auto insurance field, having worked for 2 of the largest and most respected insurance companies in the nation.

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