Dealing with Car Insurance Totaled Loss Disputes: CarMax, Market Value, and Salvage
Introduction
If you are reading this article, it is likely that you are facing a challenge with your car insurance provider, specifically regarding a totaled loss. In many cases, the insurance company estimates the value of your car to be significantly less than the amount owed on your loan. This article aims to provide you with practical advice, including how to challenge the valuation and negotiate a fair settlement.
The Situation: Geico and a Disputed Total Loss
Many individuals have encountered situations where their car insurance company, like Geico, has declared their vehicle a total loss, but the value estimate is significantly lower than the market value and the loan outstanding. In such situations, it is critical to take decisive action to ensure you get a fair settlement. Here are some steps to consider:
1. Verify the Market Value of Your Car
The first step is to determine the true market value of your car. Your insurance company may have overvalued or undervalued the car in their estimate. To do this, visit local dealerships, both new and used, and research the same make, model, and year of your car.
Visit CarMax, a reputable dealership with inspections and warranty services. CarMax is a bit more expensive but ensures that the car you purchase has been thoroughly checked. Research comparable cars on and Edmunds. Look for cars with the exact make, model, and sub-model, and similar mileage.2. Understand the Insurance Company's Totaled Loss Criteria
In many cases, if the damage plus salvage value exceeds the market value of the car, it is considered totaled. If the insurance company has indeed made the determination that your car is totaled, the details are technical and based on agreed-upon standards. However, you need to ensure that your car does not fit this criterion.
The damage estimate by the insurance company (9k) plus the salvage value (2k) totals 11k, which is close to the market value of 11k. If the damage and salvage do not exceed the car's market value, then the car is not totaled. However, if you believe there has been an error or a miscalculation, you will need to present compelling evidence to support your claim.
3. Gather Evidence and Negotiate
Arming yourself with the most up-to-date information will significantly strengthen your position. Save the URLs of the two highest market values and be ready to provide proof to your adjuster. Ensure that the market values include all sales tax and registration fees for a replacement vehicle.
If you find that the car is worth more than the estimate, you can negotiate a higher settlement. It is not advisable to add a higher sub-model, as this will not increase the total value effectively. Instead, focus on ensuring the accurate value of your car is reflected in the settlement.
Understanding Negative Equity
It is important to understand that your loan balance on the car does not determine its market value. People often roll over negative equity into new car loans, making their new vehicles appear more expensive than they are worth. For instance, if you still owe $10,000 on a car and the dealer is only willing to give you $8,000 for a trade-in, the $2,000 negative equity can be added to the new car loan. This makes the new car seem more expensive, but the car itself is still only worth $40,000, creating an unpleasant scenario of being upside-down on the loan.
Conclusion
In conclusion, if you are facing a situation where your car insurance company estimates the value of your totaled vehicle to be significantly less than its market value, take steps to verify the true worth of your car, negotiate a fair settlement, and understand the concept of negative equity. With thorough research and evidence, you can increase your chances of securing a fair resolution.