According to the California Department of Insurance (DOI) if your vehicle is declared a total loss, then the insurance company must replace it with a comparable vehicle or pay the actual cash value of your vehicle. The actual cash value of a vehicle is the fair market price of the vehicle if it was offered for sale in your local area. The amount of the settlement must include sales tax and license fees.

THE DOI goes on to say that if you are not advised at the time of settlement where a comparable vehicle can be purchased, and you are unable to locate one on your own within 35 days after receiving the claim payment, then you need to notify the insurer. The insurer must then re-open the claims file and make further efforts to adjust your loss.

An insurance company may survey dealers, value guide books, and private parties for a similar vehicle to approximate the ACV. A computerized market analysis system might also be used.

If you do not agree with the insurance adjuster's figure for ACV, you may want to do your own survey of dealers and private party sellers in your area. Companies are required to offer a fair settlement. If you can show that your figure more closely approximates the ACV, then the company should be willing to negotiate.

If your son was going through his own company then normally his policy would contain an appraisal provision. Since this is a third party claim through the other person's property damage liability coverage if your son cannot negotiate a settlement then he may need to obtain legal counsel.

To negotiate well your son will need to provide proof that the worth of his vehicle (ACV) is more than the current offer. Since he is upside down on his loan the settlement will not pay off his car. If he has GAP insurance then this would pay the difference between the ACV he receives and the balance due.

Generally a rental car will be offered if a car is being repaired or while a settlement is being negotiated. This rental car allowance or reimbursement is due to the loss of use of the vehicle. If your son was not offered a rental car he should request it.

For more consumer rights help on this subject your son can contact the CA DOI.