How do you contest the amount of a car insurance payout?

If you’re unsatisfied with a payout from your car insurance company for a damaged or totaled car, you may want to contest the amount. If you wish to contest the amount of your car insurance payout after your car insurance claim, you need to prepare beforehand.

If you don’t take the proper steps, there is a higher chance your insurer will reject your counteroffer. To help we’ve covered all the steps you need to take to be successful in earning a higher car insurance payout, from evaluating your car’s value to filing complaints.

How to Contest a Car Insurance Payout 

Insurance companies may try to pay the lowest amount possible, as large insurance payouts aren’t good for business. If this is the case, and you wish to contest the amount or otherwise dispute the car insurance claim, you must have a solid argument and evidence.

You don’t have to accept a car insurance company’s offer. Still, if negotiations and a counteroffer don’t work, you may have to sue if the amount is seriously undervalued. We recommend using a lawsuit as a last resort, and only if the amount you’ll earn will pay for your legal fees. 

Below, we’ve outlined the main steps you can take to contest a car insurance payout so you can see the process.

Research and Prepare Evidence 

If the amount for a totaled car seems low, make sure you’re considering your car’s depreciation. Depreciation starts the minute you drive your car off the lot, so your vehicle won’t be worth as much as it was a year or two ago. 

You should also check the amount of car insurance coverage you carry, as sometimes payouts are low because you don’t have a high coverage level.

After considering depreciation and coverage, you’ll want to gather evidence from your insurer and any research you conduct. First, ask your insurance company how it calculated the payout, as there could be calculation errors undervaluing your car or repair costs.

Once you’ve taken a look at the calculations, research and gather evidence to prove the payout is low. 

Below are some of the factors you should research:

• Maintenance and inspection records. Maintenance and inspection records can show your car has lower mileage or is in better condition than estimated.
• Compare vehicle costs or repair costs. Look at similar cars with the same year and condition as yours to strengthen your argument. You can also look at repair costs at different shops. 
• Your use of the vehicle. It can be helpful to show how much losing your vehicle disrupts your daily life, like if you have to ride the bus or take an Uber to work. 

Collect as much documentation as possible and prepare your argument. The more evidence you have, the more likely your insurer will accept your counteroffer.

Make a Counteroffer 

Once you’re confident you have a solid argument, make a counteroffer to the insurance company. Your argument should clearly state why the insurance company’s initial payout is low, the amount you believe is fair, and your reasoning.

You can also hire an appraiser rather than make your own counteroffer. An appraiser can estimate your car’s value, damage costs, and help with your counteroffer. 

When negotiating a counteroffer, have two numbers prepared: the high amount you want and the lowest you’ll accept. Always start with the highest appraisal first. Get the agreement in writing if your insurance company accepts the counteroffer.

File a Complaint if Your Counteroffer Gets Rejected 

If your counteroffer gets rejected, you can file a complaint. The best place to file a complaint is with the insurance commissioner in your state.

Provide as much evidence with your complaint as possible to speed up the process. With multiple complaints filed daily, it is important to be patient as you wait to hear back from the insurance commissioner’s office.

File a Lawsuit as a Last Resort 

Filing a lawsuit is the least desirable outcome because you’ll have to pay to hire a lawyer and take the case to court. In most cases, it is not worth the cost and time to get an extra thousand or two on your car insurance payout.

You should only consider filing a lawsuit if you have a clear case and the amount you want will pay legal fees. Otherwise, you should avoid filing a lawsuit and settle the matter out of court. Insurance companies are usually motivated to keep cases out of court as well.

Understanding How Car Insurance Payouts Work 

It can be helpful to understand how car insurance payouts operate when attempting to challenge a payout. 

Insurance companies base payouts on the following:

• Your coverage level
• Your car insurance deductible
• Repair costs
• Value of your vehicle

An insurance company may have an appraiser look at your car or have you take it to a pre-approved shop to get a quote for repairs.

If your car is totaled, insurance companies will look at similar car values to determine how to pay you. The insurer will base its offer on these estimates, your coverage, and deductible.

If you have a $500 deductible and the repair estimate is $2,000, the insurance company will only offer $1,500 at most. Likewise, if you have the minimum coverage on your car, the insurance company may not offer a high payout, if any.

When is a car considered totaled by the insurance company? 

An insurance company will consider a car totaled if the estimated cost of repairs is more than the car’s value. For example, if your vehicle is worth $20,000, but repairs will cost $25,000, your insurance company will declare your car totaled and pay out $20,000 for the car’s value. 

If you want to contest the insurer’s decision to declare your vehicle a total loss, follow the earlier steps to contest a car insurance payout. In most cases, it’s best to list the car as a loss and invest in a new car.

Cars can be expensive to fix and may not run well after extensive repairs, resulting in more repair bills down the line.

Case Studies: Contesting Car Insurance Payouts

Case Study 1: John’s Total Loss Claim

John was involved in a severe accident that resulted in his car being declared a total loss by his insurance company. However, he believed that the insurance payout offered was significantly lower than the actual value of his car. To dispute the amount, John researched market value, collected repair estimates, and obtained comparable vehicle listings.

Case Study 2: Sarah’s Underinsured Claim

Sarah was involved in an accident where the other driver was at fault. Unfortunately, the at-fault driver had insufficient insurance coverage, and Sarah’s insurance company offered her a low payout to cover the damages. Unhappy with the offer, Sarah gathered evidence showing the extent of her injuries, the cost of medical treatment, and the impact on her daily life.

Case Study 3: Mark’s Stolen Vehicle Claim

Mark’s car was stolen, and although he had comprehensive car insurance coverage, he felt that the insurance company undervalued his vehicle in their payout offer. To contest the amount, Mark requested a detailed explanation from the insurance company regarding how they calculated the value of his stolen car. Upon reviewing their calculations, Mark found errors and inconsistencies.

The Final Word on Contesting Car Insurance Payouts 

You can counteroffer if you believe the insurance company is offering a low payout and you have solid evidence your car is worth more or repairs will cost more than estimated. You aren’t obligated to accept an insurance company’s offer. 

If your counteroffer fails, you can file a complaint with your state’s insurance commissioner. You can choose to sue as a last resort, but you should only pursue this if the payout covers legal fees.

Drivers unhappy with their insurance company can shop for new insurance using quote comparison tools to find the best rates in their area. 

Read more:

• Can I sue my own car insurance company?
• How do you dispute a car insurance claim?