My daughter was involved in a crash that damaged her 2002 GMC Envoy’s left door, left quarter panel, and front bumper. Although I believed the damage could be repaired (which it is), the insurance company decided to replace the vehicle with a new one. As you can see, the car is not totaled. Repairs were estimated at $6000. The truck was worth $9,500. So why would an insurance company decide to repair the damage instead of totalizing it? If you are working with a claims team on a vehicle they consider total loss, I will answer your question and offer some tips.
If it were cheaper to repair the car, why would they have it totaled? Insurance companies always choose the route that will cost the company the least amount of money. When a vehicle’s total value exceeds 65%, it is often cheaper to have it totaled than to repair it. This is due to the car’s salvage value. After an insurance company has paid you for your car’s loss, they will turn it around and sell it at its salvage value to recoup some of their payment. The cost of repairing the car is often less than the salvage value. If my daughter’s Envoy had a salvage value of $3,500, her insurance company would have to pay $6,000. When you add other factors, such as storage costs before and after repairs, rental car cost during repair, and the possibility of further damage once a vehicle is damaged, it becomes clear how insurance companies can save money if they total a car rather than repairing it.
Here are some tips for handling a car that has been totaled: If you do find yourself in the unfortunate situation of a totaled car, there are some things to remember that will help you get the most accurate payout from your insurance company. You won’t like the first quote you get for your car. It’s up to you to make sure the insurance company gives you the right amount. Here’s how:
- Together, we are in this together Keep in mind that the claims adjuster with whom you are dealing is a human being who wants to be treated fairly. Most people forget that claims adjusters are on your side and want to be fair with them. It is not you against the insurance company. The claims adjuster won’t try to cheat. A lot of kindness and good manners can go a long ways! Your claims rep will likely be dealing with several hundred claims along with yours. There is a lot to do, and they may have many people shouting at them. They appreciate clients who are patient and understanding. It is a difficult job.
- Do your homework: Insurance companies now consider more than just the vehicle’s book value. The book value is actually one of the less important factors when determining the car’s worth. To find out what it is worth today, claims adjusters will search online for cars similar to yours. Keep a list of all cars that are sold within 75 miles of your vehicle. Look on eBay, Craigslist Autotrader, Kelly Blue Book, Autotrader, and Autotrader. You should keep track of where each car came from, its price, mileage, and the model. If it’s different, any differences could make your car more or less valuable. Although it may seem like a lot of work this should not take more than an hour. That hour will likely net you some extra cash! I found 11 GMC Envoys within a 75-mile radius when I was looking for replacements for my daughter’s 2002 GMC Envoy.
- You should ensure that the adjuster uses the correct information. Claims reps have a lot on their plates. They might forget to add features to your vehicle, or even pick the wrong model. While they may not be doing this intentionally, they are still working quickly and may not have as much knowledge about your car. You should inform them of any extras they might have missed, such as sunroofs, 6-disc changers, power seats, and so on. My Envoy model was not the right one and my initial estimate for my payment was $2000 less than the final.
- Do not forget to add the extras! You should inform your claims rep if you’ve had to replace the tires, get an oil change, tune up, or other work done on the car. You should also consider any additional items you have added to your car, such as aftermarket rims or stereo system. Some insurance companies will require you to add these extras to your policy to ensure that they are covered. For more information on your policy, consult your agent.
- Negotiating is okay The first offer they bring you may not make sense to you, but there’s no reason you have to accept it right away. The claims adjuster will give you an in-depth explanation about how they came up the figure for the vehicle’s value. If the offer doesn’t seem fair or right, tell them that you would like to spend a few hours researching things. Let them know you appreciate their efforts but feel things are a bit low. Although you don’t have to accept the offer they make, it is important to remember that mediation may be required if you do not reach an agreement.
- You can keep the car. If the damage to your car is not catastrophic and you still wish to keep it, the insurance company will permit it. Colorado has seen a lot of hailstorms lately, which can leave cars in terrible condition but still allow them to drive. If hail dings are not a problem, let your insurance company know. They will adjust the offer by subtracting salvage value (the amount they would receive for selling the car at a salvage yard) from the price you are offered and paying you the rest. You can drive the car as long as you like and still have collision and comprehensive coverage.
It can be frustrating to handle an insurance claim. But it doesn’t have to make you miserable. There are positives. You’re likely to be spared any serious injuries in an accident. Your insurance company will help you get back to where your life was before it happened. While there may be some out-of-pocket expenses like your deductible it is still a lot better than not having insurance. Keep an optimistic attitude and you will soon be back on your way.
Robert Edgin, the owner of Edgin Insurance and Financial Solutions in Colorado, is a company that specializes in protecting clients’ assets, preserving client lifestyles, and preparing clients to their future.
