Settle on a Total Loss

by Karen
(Flagstaff AZ)

My 1998 Subaru was hit by another driver one month after I paid it off. Their insurance company has accepted full liability. They have not yet gotten back to me with any numbers as far as repair estimates but it appears that it'll be a total loss. I have been checking the paper and local dealerships for comparables and have found the same make and model but 2 years newer than mine.

In the area I live Subaru's hold their value and are very desirable. Can I negotiate on the premise that to get me back to where I was before the accident, with an excellent car and no payments, I want the same make and model with similar miles but because of lack of availability in my area (the next closest place is 150 mi) they'll have to settle on a slightly newer car?


Answer:

It’s all a negotiation. Do not let them tell you that you have to take a “comp” 150 miles away from you. You can point out the fact that your car is in this area and it is only fair to give you what you had where you had it.

The argument of having an excellent vehicle is a good one. They will have to “add” value to your settlement because of it. They will inspect the car first, make sure it is in excellent condition and then they will add value to the settlement. Make sure that is account for.

Your argument about no payments is a very strong one, and a good one, but unfortunately the insurance companies do not allow for them! Somehow they believe that if you have a car, then they only pay your for the same car, not any of the surrounding “economic circumstances.” We believe this is highly unfair because you are losing your “opportunity cost”. You are done paying for a car, therefore you can elect to pay less insurance. Also, when you are in a total loss situation your are hard press to find a vehicle fast (they do not allow for rental that long). Your bargaining position to get another car is jeopardized. Either way, insurance companies will not (or they do not have to) take the fact the car is paid for.

Negotiating the value based on a comp that is a newer is good grounds for you. But they will not pay that amount. They will depreciate that car by two years. In other words, they will take the value and deduct what they believe the two years of use will take away from its value. Again, another contention point for you.

Good Luck,
Hector.