When your car repair costs exceed the value of your car, you have what is known as a total loss claim. (For full details on how an insurance company resolves this, see the nearby sidebar, “How to Tell If Your Car Is Really Totaled.”)

If your car is a total loss, the actual cash value (ie, pre-accident market value) of your specific car at the time of loss must be established. Remember, this is different from book value. Book value is the average selling price of a car like yours, with similar features and mileage, in good condition, and with no dents. Various used car guides list these prices.

You should know three things about book value:

• It’s the median selling price for a car like yours, in your area, which means there were plenty of cars that sold for more, some even much more. Your new car could be one of those. Of course, the opposite could also be true.
• It’s a guide, it says so on the cover, not a bible.
• It does not always take into account supply and demand factors in your particular area. A sports car in Alaska may not be worth as much as a sports car in Los Angeles.

The value of your car before the accident is what you would have to pay to replace it with a car almost exactly like yours. Therefore, your insurance company should check with used car dealers to see what price your car would sell for before the accident. Push the insurance company to get at least three quotes from local dealers. (But beware: Dealers may price the company below book value.)

To get the best possible settlement offer, consult with at least three dealers for yourself. Cut out used car ads from the newspaper for cars similar to yours. When calling dealers, speak only to the used car manager, whose opinion will carry more weight than that of a salesperson. Then write down the manager’s name, the dealer’s name, the manager’s phone number, and your estimate of what your car would sell for. If your car is really perfect and has good photos, visit the dealer in person. The photos will help you get a greater
estimated value.

Then average those three estimates and the newspaper prices to get your own estimate of your car’s value before the accident. So sit on it. When the adjuster makes you an offer, if it’s equal to or greater than your average estimate, smile on your good fortune. If the offer is lower than yours, extract the information from him and insist that you take his number, or at least average his number with yours. If you resist that, ask your insurance agent for help.

When you buy a car, you must also pay sales tax, title fees, etc. Make sure the insurance company pays you for all those extra costs. And don’t forget the prorated portion of your plate fee, based on the number of months until your plates expire.

In a total loss situation where the accident was caused by the other driver and your car will not be repaired, file a claim simultaneously with the other driver’s insurance and your own collision coverage. By filing both claims, you’ll get two offers for the value of your car and you’ll be able to take the higher one.