This is a collaborative post.
Winter is here and the roads are getting slick. Just look at havoc the most recent blizzard has left as it blanketed the country. While the best way to navigate often treacherous roads is to drive slow and keep an eye out for black ice, the reality is that accidents happen all the time.
Given that snow and ice can conspire against you, it’s no surprise that the insurance company might take one look at your car and decide that it needs to be totaled. However, this is not the end, instead, it is the beginning of the end as the interests of you and your insurance company are often not in alignment.
With that in mind, you need to be prepared with the tips and tricks that will help you to get the biggest payout for your car. Don’t wait until it is too late, knowledge is power – so read on to find out what you should do if you find yourself in this situation.
Why ‘Total Loss’ is not a Gift
As the saying goes, there is no such thing as a free lunch and this holds true to when you are trying to receive a payout from your insurance company. After all, these companies are in business NOT to pay claims as this is the fastest way to make money in the insurance game.
Unfortunately for most of us, we don’t have a choice and the risks of driving without insurance or self-insuring generally outweigh the rewards. As such, you want to save money without risking bankruptcy and this means making sure you get a fair settlement from your insurance company.
Why is ‘Total Loss’ not a gift? In many cases, it is a shortcut for insurance companies as they don’t want to bear the costs of repairing a damaged vehicle and then the risks that said vehicle might cause another accident. This means that insurance companies often use this classification as a ploy to close a claim with little or no pushback from the customer.
Tricky, tricky you might say but the reality is that this works in many cases as most policyholders are so happy to get anything from their insurance companies that they never bother to question the amount. While this makes sense, it also means that you might be leaving money on the table – money that could be used to get you into a new car.
How to get around this? It starts by knowing what the replacement value of your car would be and then asking for that. Remember the insurance companies are looking to save money on every claim, so you need to be prepared.
From there you want to thoroughly review your insurance policy – check the fine print as that is what your insurance company will use to justify giving you something less than the full amount. I realize that no one ever reads their insurance policy but when it comes to how much insurance pays for totaled car, you want to do your homework.
If you are not sure about the terms and conditions of your policy then reach out to an attorney who specializes in insurance claims. This is important, as you need to know how to counter any excuse the insurance company will give you.
Each State is Different
Another thing to know is that the rules governing insurance companies from state-to-state. As such, it behooves you to reach out to the office of consumer protection in your state to know what the ‘Total Loss’ thresholds and how they are applied. Again, this will help you to prepare for your negotiations with the insurance company.
How to Counter Your Insurance Company
One thing you should know is that once your car has been deemed a ‘Total Loss’ your insurance company will check out five comparable vehicles to see how much they are worth. Then they take out the most and least valuable cars and pay you the average of what is left.
While this is a commonly accepted technique, the devil is in the details and one thing you need to know is the criteria the insurance company used to determine what is a comparable vehicle.
Another thing you want to do is know which cars the insurance company has chosen. The reason for this is simple, maybe they have the wrong model or year, or maybe the mileage is significantly higher than your car.
Don’t for the extras. If your car is decked out with heated, leather seats and a panoramic moonroof, then you need to make sure the comparable cars have these options. If not, then the insurance company needs to adjust their calculations to take these extras into account.
Finally, we get down to the deductible. While you can’t beat this, the trick is to maximize your rental car allowance for the period you are between vehicle. Doing so will help you to claw back some of your deductible and this means more money in your pocket.