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Negotiating a Car Insurance Payout

Negotiating a Car Insurance Payout If you’re ever unfortunate enough to be in a car accident resulting in your vehicle being totaled, your insurance company will write you a check to replace your car with a similar model of equal value. But did you know that you don’t necessarily have to accept the car insurance payout your provider offers? You do have the right to negotiate.

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Insurance companies may not be the big, evil corporations they are made out to be, but they are businesses whose main goal is to make money. Therefore, it’s only natural that they will offer you the lowest payout possible while still keeping you as a happy customer. If it takes a higher payout to keep your business, they’re also willing to do that.

How a Car Insurance Payout is Calculated

Your insurance company uses a variety of methods to determine the value of your car insurance payout. They look at the current market value for your model in its condition just prior to the accident, and with its current mileage. They also take into consideration geographic location, how long you owned the car, and so on. Some insurance companies employ proprietary formulas to help determine what they believe is the proper value for your vehicle.

Whether or not your insurance company uses industry standards like the Kelley Blue Book, Edmunds, or NADA Guides is entirely up to them. Regardless, their goal is to give you sufficient reimbursement to replace your car without making an unnecessarily high payment. Remember, they will also be paying other things like the price of your rental car and administrative costs just to settle your claim.

Taking an Active Role in Determining Car Insurance Payout

You can help your insurance company arrive at a proper value of your car insurance payout by doing some research on your own. If your insurance company doesn’t use the previously mentioned resources like the Kelley Blue Book, feel free to use them yourself. Look up your make and model, your mileage, and the condition of your vehicle before the accident. Be honest in your assessment of condition; just as you don’t want to be ripped off by the insurance company, you shouldn’t rip them off either.

In your estimate, include any custom modifications you made to the vehicle. If you added a sunroof, custom stereo system, new wheels and rims, or anything else, those things add to the value. Hopefully you saved all of your receipts. If not, you may not be able to add those things to the value unless you can prove you paid to install them.

Other Things That May be Part of Your Car Insurance Payout

When a car suffers damage that is repairable your insurance policy will probably only cover repair costs and possibly the price of rental. But when a car is totaled, an insurance policy should cover all of the costs involved in replacing the vehicle, because you wouldn’t have incurred those costs had you not totaled it.

Examples of these costs are taxes and title fees, registration fees, and towing fees on your wrecked vehicle. Make sure that you include these expenses in your estimate, and if you can, provide supporting paperwork from your state DMV that includes any fees they will charge you.

The cost of your rental car should also be covered under most insurance policies. However, the car insurance company may dictate what type of car you can rent and for how long. Don’t a squabble over this. The idea is to get the maximum payout for your car without making your insurance carrier the enemy.

It’s far better to accept their terms where car rental is concerned, and simply live with it for the short time it takes you to replace your vehicle. As always, make sure you get documentation and receipts for your rental car, since oftentimes the insurance company will pay that bill separately.

How to Negotiate Car Insurance Payouts

In business negotiations there’s a principal called “good faith”. The idea behind good faith is that both parties go into negotiations with the expectation that the other is being honest and is willing to work on a compromise best for both sides. You need to trust your car insurance company and not automatically assume they are trying to take advantage of you. By the same token, don’t take advantage of them.

As long as you have all of your paperwork and receipts, you can negotiate in confidence knowing the true value of your vehicle. Don’t be rude or abusive, but don’t be timid and shy either. State your case, present your paperwork, and ask for a firm and specific amount. Your insurance adjuster will do the same, and you’ll most likely meet somewhere in the middle. A settlement reached this way keeps both sides happy and will help you maintain an ongoing relationship with your insurance company.

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