When the insurance adjuster extends an offer on the total loss, you are legally allowed to force them to disclose the sources of their value determination. This disclosure should include the description of your vehicle, a list of all equipment and options, a mileage statement, a list of comparable vehicles, book values, a description of your vehicle’s condition, and an explanation of all calculations, deductions, and additions used to arrive at your total loss offer (11 NCAC 04.0418(4)). When reviewing the insurance adjuster’s homework, make sure that due consideration was given to your vehicle’s condition. If the car was in very poor mechanical or cosmetic condition, you will see deductions. These are appropriate considering the used car value would be lower if the vehicle is not in average condition. If your vehicle was in better-than-average condition prior to the collision, the adjuster is legally required to give due consideration to this fact in determining total loss value (11NCAC 04.0418(1)).
The paperwork you will receive from the adjuster typically will include some reference to NADA and/or Kelley Blue Book values along with research reflecting the current used-car market for vehicles of the same year, make, and model. Many insurance carriers use database valuation services, such as the Certified Collateral Cooperation (CCC). These companies monitor actual sale prices in the used-car market on a nationwide scale. They are easily able to restrict their value calculations to local market areas. These services are typically very reliable, and they offer value appraisals to insurance carriers and private individuals.
Example—Increasing Total Loss Payment
Following a collision, John is advised that his vehicle will be handled as a total loss. After receiving his offer, he realizes that his own research suggests a much higher value. John requests the insurance carrier’s evaluation and receives a written report including a list of comparable vehicles that were reportedly sold recently in the community market. The report also included some vehicles that were available for sale. John invested additional time to contact the dealers listed on the report and learned that the prices reflected in the insurance carrier’s report were incorrect. He confirmed that certain vehicles on the report were not actually available. He also confirmed that the listed sale price was below the actual sale price. After reporting these errors, John provided his own homework showing vehicles that were actually available. John took the extra and proper step to contact the sellers to negotiate down to actual bottom-line sale price. With this additional homework in hand, John was able to motivate higher offers and resolve his total loss claim.
If your vehicle is rare, vintage, or exotic, you should be much more actively involved in the total loss evaluation process. Rare vehicles like vintage muscle cars or collectibles will not fall into NADA or Kelley Blue Book guides. Further, comparable vehicles may not be available in your community. In these cases, you should perform careful research on your own to locate auction prices, actual sales of true comparables, and quotes from experienced dealers. Also, it is appropriate to use a nationwide search for comparable vehicles, as these more valuable vehicles are commonly shipped to buyers, and state-to-state sales of high-price vehicles are quite common.
Challenging the Total Loss Offer
Since the insurance carrier is required to secure evidence supporting the value and then extend the full appraised value in their total loss offer, they typically will not negotiate or increase their total loss offer. The only way to challenge their offer and seek an increase is to impeach the insurance carrier’s research. In cases where the vehicle model is very common, insurance adjusters often will not negotiate even if you find errors in their research. However, obvious errors will give grounds for a successful challenge.