Obtaining insurance coverage for a damaged car is a hassle, but things become even more complicated when the car is declared a complete loss. Full coverage auto insurance covers the actual cash value of your car, but you and your insurance company may not agree on how much your car is worth. In this article, Bankrate’s insurance editorial team explains how to get the most money from total car insurance.
How do you determine if your car is totaling?
Your car insurance company will determine if your car is a total loss based on an valuation from the insurance adjuster. Total loss settlements are becoming a more common outcome of car accidents. According to the latest report from LexisNexis, more than a quarter of all conflict claims in 2023 were total losses, up 29% from 2020.
However, this rise in total loss claims does not necessarily represent vehicles that are destroyed beyond recognition. Total loss is the way an insurance company deals with losses that cost more to repair than the actual cash value of the vehicle. And given the severe rise in the costs of auto parts and labor in recent years, it’s no surprise that some insurers are declaring more total losses. According to a report by the U.S. Bureau of Labor Statistics, the cost of car repairs increased by 7.6% between April 2024 and April 2025.
If your car is totaled, please note that your insurance only covers the actual cash value (ACV) of your car unless there is a specific approval, such as a new car replacement.
What is the role of the insurance adjuster?
The insurance claim adjuster will investigate coverage and insurance claims after the accident. Specifically, they appear to see you have the coverage you need for the total loss and they may collect statements from those involved in the accident. If a police report is filed, the insurance adjuster will also review it.
If the insurance adjuster thinks the claim is covered, it usually inspects the vehicle to determine the cost of repairs (or whether it is possible to repair). If the vehicle is totaled, it means it cannot be repaired. Or, the cost exceeds the value of the vehicle in the event of an accident.
How to negotiate the value of a car after an accident
If the vehicle is determined to be a complete loss – it means that it cannot be repaired or the cost of repair exceeds its value – the insurance company may send adjustments to look into it and determine its value.
However, there may be situations where you are less than you recognize the value of your vehicle. In this case, you may wonder how to negotiate a payment for a total loss that is lower than the expected estimate. This is what you need to know.
Determine the value of the vehicle
Before negotiating a total loss settlement with the insurance company, gain knowledge by independently determining the value of the vehicle. Actual cash value is based on vehicle replacement costs and depreciation costs. The value of a vehicle depends on several factors, including:
- Creation and modeling
- Year of manufacture
- Mileage
- physical condition
- Accident history
- Number of owners
You can get a quote from a qualified mechanic, but if you want a ballpark figure, there are online tools you can use to determine the value of your vehicle for free. The National Automobile Dealers Association (NADA) website is usually a resource that helps you estimate cash value. Especially compared to sites like Kelley Blue Book, which may overestimate the value of a car.
Please note that the total loss payment is based on the actual cash value of the vehicle at the time of the loss. It’s not the market value or the cost of replacing it with a similar vehicle. Insurers usually use third-party companies’ value estimates to determine the ACV of their car. If you have concerns about the amount of the settlement, check the methodology the company had reached that estimate.
Negotiate with the insurance adjuster
If you feel that your vehicle is rated too low by your car insurance company, you can choose to negotiate with the claims adjuster.
Step 1: Prepare the lost document. Insurance companies are unlikely to change their ratings based on what you say. Collect documents related to the value of the vehicle, recent improvements made, medical expenses related to the accident, videos or car photos.
Step 2: Calculate fair payments. Before you begin negotiations, be sure to figure out the amount you’re willing to accept. You may not want to disclose this to your insurance company immediately, but it is important to know a fair settlement offer before negotiations begin.
Step 3: Ask the adjuster to justify the rating. Armed with evidence and the idea of fair settlement, write a formal letter asking insurance adjusters to justify their ratings. Provide them with evidence to show why their initial offer is unacceptable. Receipts and photos may be particularly useful in your case.
Step 4: Engagement expression. If you are still unhappy with the insurance company’s offer, consider getting a public adjuster. This is the experts who hire you to perform an independent assessment of your vehicle. They may also be able to defend you directly with the insurance company.
By having more evidence to show that your insurance company is underestimating your vehicle, you will build a stronger case to negotiate the payment value of your vehicle.
Hire a lawyer
If you have proven that negotiations with the claim adjuster have failed, but still feel that there are strong cases, you can hire an attorney. While it may be a last resort, a lawsuit will help you get a settlement that you feel is right for you. It also helps to alleviate some of the stress surrounding the total loss negotiations. Lawyers will be familiar with this process.
However, it is important to point out that there are usually costs associated with hiring an attorney. And even if you hire it, there is no guarantee that you will win a new settlement. Therefore, if the insurance company agrees to a higher payment, it is recommended that the attorney’s fees not exceed the potential increase in the settlement amount.
Get a written settlement agreement
Once you have reached a settlement with your insurance company, we recommend that you review the terms in writing to ensure that everyone agrees. This protects both parties by setting appropriate expectations and ensuring that they are met.
Friendlander advises policyholders.
- Ensure an independent evaluation by a professional appraiser (note that you will need to pay for this).
- Please provide a book value document for the vehicle in the event of an accident. Best resources include Edmunds, Kelly Blue Book and NADA Guide.
- Research prices for comparable vehicles sold in the market (similar resources as above).
- We provide counter offers and all background documents to the insurance adjuster.
Consider using the evaluation clause in the policy
Your car insurance should include clauses that allow for a special negotiation process in the case of a claim dispute. You and your insurance company agree that your total loss should be covered under your insurance, but if you do not agree on the amount to be covered, you may be able to call this clause.
The assessment clause provides alternative dispute methods to resolve disputes. How does this work:
- The parties choose their own appraiser. You and your insurance company each choose an appraiser to assess the actual cash value of your vehicle.
- The evaluator selects a judge: This third party will look at the estimates of two values given by the appraiser and make the final call.
- Your bill payment is based on the judge’s decision: There is no option to revisit the negotiations. The judge’s words are final.
This approach to negotiating your settlement is not necessarily cheap. In this type of dispute resolution, each party pays its own appraiser and divides the cost of paying the judge.
