If you have a vehicle total loss, then you will soon learn that insurance companies are not as "consumer friendly" as they claim in T.V. commercials. Everyday we hear horrible stories about people getting offers for their vehicle total loss low as $50. The question usually asked is, is this legal? What is the process of settlement? We have written prior articles on the subject creating a lot of interest, so we decide to do your best to summarize the process and show you how you can protect your rights. A vehicle total loss exists when the value to fix the car is 70, 80, or even 90% of the total value of the car (it depends in your state law). For example, If the value of your car is $10,000 and if the estimate of repairs reach $7,000 ($8,000, or $9,000 depending in your location), then the car is a total loss.
Insurance companies know the value of the car before they are inspecting it. They do not disclose this value to you until the very end, but they have a good understanding of vehicle values. Usually, a third party company hired by the insurance company (usually CCC Information Services Group, Inc will do a preliminary evaluation of your car. They will look at vehicles on your local market to see the value of your car is "going for".
Once they determine the value of the car, they compare it with the repair estimate and they add the rental cost (if they would have to fix it, and you have rental coverage, the insurance company will take that into account), and determine if there is a vehicle total loss.
At this point, the "real" evaluation of your car begins. The insurance adjuster will inspect your car for prior damage, rust, cleanness, etc. They will also look at equipment, options, and special features. They will determine if your car is in excellent, normal, average, or below average conditions (or similar terminology). They will re submit that information to CCC (or other third party company) and usually within 24 hours, this company will give a report back with several comps in your local market for a vehicle just like yours.
The insurance adjuster still has the discretionary power to add or subtract certain things, for example, if they believe the car is in exceptional condition, they might add $200 to their offer. If the car has prior damage, then they will reduce what they believe it is adequate.
Here is where the "negotiation" begins. The vehicle total loss is a negation; however we put it in quotes because it will not appear to be one. The total loss adjuster will give you an offer and tell you that it is a final offer, then cut the rental car (actually, they will cut the rental car the day they tell you have a vehicle total loss, some jurisdictions allow for three days after that), and tell you that if you do not settle, then they will deduct the value of the salvage of the car (the value your car is worth acraps), and send you whatever is left.
Is that legal? Yeah it is. As long as the offer was within the "range" that CCC (or the third party company) gave, and the rental regulations are within the "state law requirement", insurance companies have the upper hand. Can you protect yourself? Yes, there are ways to defeat the above situation. You need to ask for the CCC report. This is critical. The insurance companies MUST (not optional) give it to you. They must give you the numbers they are looking at.
You can dispute this report if you believe they are not taking into account things they should be taking into account (your low mileage, for example). It is important to you do not forget about the original estimate of repair. If the insurance company is trying to make the value of your car so low, then ask them if they would fix it. If you can "pin" down what percentage do they use declare a vehicle total loss, then you can use a reverse math approach to argue that they need to fix the car (they will not to do that). The only way to truly win your vehicle total loss is by having all information in front of you. Do not settle until see everything. You will be surprised how many "mistakes" or how many things they "overlook" when negotiating with you.