In all of my years in handling car accident cases, personal injury cases, and other insurance claims, the thing that gets most people upset is damage to their car. Most of the time, the car is fixed. But what happens when the car is declared a total loss? Actually, let's start with what is a total loss?
Each insurance company is a bit different. But there is a general rule: a car is a total loss when the cost of repairs is 75% of the value of the car or more. Some insurance companies will tell you that the repair costs have to be 80% of the value of the car. This is a rough guideline, but if your car is worth $10,000 and the repairs are $8,000, then the car is a total loss.
Before I go further, one more point: the fair market value of your car is NEVER the KBB (Kelley Blue Book) value, the NADA value, or any other "book value." KBB.com is a great website to figure out what a car may be worth, but it is not definitive and, in California, an insurance company cannot use book value to determine the value of a car.
So, how do you make sure you are getting fair market value for your car? Here are 10 easy steps. At the end, I will give you the easiest step!
1. KNOW THE OPTIONS ON THE CAR
This is one of the biggest mistakes I see. You have to know what options you have because this affects the value of the vehicle significantly. Let's say you buy a car that normally comes with a radio and no CD player. You get it upgraded to include a CD changer and an MP3 player. That will have an impact on the value of your car. So make sure you know all of your options!
2. BE HONEST ABOUT THE CONDITION OF THE CAR
Everyone thinks his/her car is in excellent condition. I don't think I have ever met anyone who has told me that his/her car is not in great condition. Vehicle condition and mileage affect the value of your vehicle and being honest about it helps in negotiations.
3. CHECK FOR RECENT WORK DONE ON THE CAR
If you have recently added tires, brakes, new rims, or aftermarket parts, this will affect the value of your vehicle. Keep records for work you had done on the car. Regular maintenance, like an oil change, does not impact the value of your car, but having new brakes put on or adding aftermarket parts, can increase the value of your car.
4. OBTAIN YOUR OWN COMPARABLE VEHICLE LIST
Use websites like www.cars.com and your local newspaper for ads for comparable cars. Never trust that the insurance company is finding the cars that are most like your cars, even if it is your own, first party, insurance.
5. CALL DEALERS FOR PRICES
If you cannot find 5 to 10 ads for your car, call a few dealers, including used car dealers, and ask them for a quote. You may also want to get it in writing. CarMax is a good resource since they have so many different cars for sale.
6. GET THE INSURANCE COMPANY'S REPORT AND READ IT!!!!
The insurance company must give you the report that it is relying on to determine the value of your car. Do not agree to anything unless they provide the report and you have a chance to read it. But, having it and reviewing it are two different things. You need to get the report and read it closely.
7. COMPARE YOUR NUMBERS TO THEIR NUMBERS
Once you have found 3 to 5 cars for sale that are similar to yours, compare the average price with what the insurance company is offering you. The prices should be close. If none of your cars are on their list, or their cars are all out of state or are significantly different than your car, you need to figure out why their report is so different.
8. CHECK FOR INACCURACIES IN THE REPORT
There are many inaccuracies in these reports. Sometimes the model is different, or the engine is different. Look for inaccuracies and tell the insurance company about them.
9. NEGOTIATE WITH THE INSURANCE COMPANY
The insurance company's offer is not final. Especially if this is your insurance company, their offer is just that - an offer. You do not have to accept it and you can negotiate with the insurance company. Provide them with proof to support your argument.
10. ASK FOR APPRAISAL OR FILE SUIT
If this is your insurance company, you cannot sue them, but rather you have to ask for appraisal. Read your policy and follow the procedures. It can be expensive, however, and if it is only for a few hundred dollars, it may not make sense. If it is the other person's insurance company, consult with an attorney and then consider a suit, maybe even in small claims court.
Okay, so if you follow those 10 steps, most time you will get fair market value for your total loss after a car accident. But, if you are unsure at any stage, or unsure about what the value of your car is, or you just have questions, call me. I have prepared reports for other attorneys, for people who want to go to small claims court and for other people who just need to negotiate with an insurance company. It can be done and you should figure out the cost before you simply agree with the insurance company, especially if you are unsure about the value of your car or how to get more.