If your car is totaled, the first thing to remember is that the insurance company is not your friend.
There's a tendency among those of us who have had a car deemed a "total loss" to consider the insurance company's payout as a gift of sorts.
That attitude, say auto insurance and repairs experts, is a mistake. You should view the payout as negotiable, just as you would if you were selling the car without damage. The insurance company won't be offended if you negotiate, says Scott Benavidez of Mr. B's Paint & Body Shop in Albuquerque, N.M.
"I tell my clients to negotiate. Start high and plan to meet in the middle," he says. "Remember, even if (the insurance company) saves $10 a vehicle and do a million claims a year, that's $10 million. Think if they save $100 a vehicle. … That is where they save money."
But the first step is to evaluate your own insurance policy. That means reading the fine print. Gone are the days when insurance companies were in lockstep about how they would determine a car a "total loss" -- that rule of thumb was damage equal to 70 percent of the car's value -- and what they would pay.
Today, total-loss thresholds vary by state. And insurers often have internal, more generous guidelines, says CarInsurance.com consumer analyst Penny Gusner.
"There is no need to routinely check with your car insurance company to see how it determines if a car is totaled out or not. The threshold for a car being declared a total loss doesn't change that often," says Gusner. "However, when consumers first obtain a policy they should find out when their insurer considers a vehicle to be a total loss. Ask what the threshold is and how the car insurance provider calculates actual cash value, since that plays a part in the total-loss situation."
Once you're satisfied that you understand your policy, you'll be in better shape to negotiate a fair settlement for your car. Still, facing a totaled car settlement is unnerving at best. Keep these reminders handy to make sure you understand what you need to do to obtain a fair value for your car.
5 ways to get the most for your vehicle
What the insurer does: The first order of business is for the insurer to scout out five vehicles that are "comparable" to yours and compare their values. The insurance representative disregards the highest valued car, the lowest valued car, and pays you based on the average of the middle three.
The problem: Sometimes insurance companies don't choose vehicles that are comparable to yours. "Make sure the cars are the same, the mileage is the same," says Kevin Parsons of ARA Collision Carstar in Everett, Wash., and a former adjuster with Allstate Insurance. He cites a time when cars powered with turbo diesels were rare. A Volkswagen Jetta with such an engine was seriously undervalued by the insurance company, because the adjuster did not find "comparable" models. In another instance, an adjuster used a lower-end model Toyota Camry as a "comparable" of a high-end Camry.
It pays for you to ask and understand what cars the insurer is using as comparable. "Accessories on vehicles are very, very important, and mileage can make a big difference, too," he says. "Make sure the vehicles they compare don't have 100,000 or more miles on them" if yours has half that, for example.
The solution: Besides asking what specific cars the insurer has deemed comparable to yours, do your own research. There are tools available from the National Automobile Dealers Association (most frequently used by insurance adjusters), Auto Trader, Kelley Blue Book and others. Then, use those resources to find cars comparable to yours, just as the insurance company did.
What the insurer does: Consider your car without the extras.
The problem: A car with leather seats and stability control is worth more than one without.
The solution: Run the VIN number of your car. Generally a dealer that sold the car originally will be willing to do so. The report will tell you all of the extras you bought from the dealer such as heated seats and mirrors. Also, don't forget to gather the receipts for your radar detector, sound system, speakers and other aftermarket products installed on your car. Although maintenance doesn't usually play a role in the process, it doesn't hurt to show receipts for recent repairs and maintenance, too, says Robert Benavidez, Scott's brother, of Auto Damage Consultants, Albuquerque, N.M.
"That way you know if they did their homework because you have all of the information about your car. You can tell them what they missed," says Parsons noting that insurance companies aren't offended by clients that have asserted their rights. "It's fine to do that; they won't complain."
What the insurer does: Arranges for you to drive a compact rental car when you drive a large SUV.
The problem: You may be eligible for a larger car or even for a payout under loss-of-use provisions if you don't need the rental car. Much depends on the specifics of the accident, such as if you were hit by an uninsured driver, your policy,- and state laws.
The solution: At the very least, read your automobile policy and ask the question. "Most people don't know you can cash out the money for the rental car," says Robert Benavidez. "That can really help pay for the deductible."
What the insurer does: Offers you what it considers fair market value, but that amount doesn't cover your loan.
The problem: You were told your car was worth a lot more money.
The solution: Don't overreach. Sometimes you may have overpaid for a vehicle or put the minimum down, which would leave you with a large balance after the settlement if you did not secure gap insurance. "Just because you didn't make a good deal when you bought the vehicle doesn't mean you will be compensated if your car is totaled," says Parsons.
What the insurer does: Submits an offer that does not account for all costs of buying an equivalent car.
The problem: You will have to pay sales tax and registration fees to replace your new car.
The solution: Compensation for sales tax and fees is required under the law in 34 states, and it is the most common practice in total-loss settlements in all of them. But you'll probably have to ask.