Is insurance ripping me off?

"I think the insurance company is ripping me off. My car got written off in an accident. Now the insurance company says that it is worth a lot less then I paid for it. I have financed the vehicle and won't have enough money to pay it off. What do I do?"

Once again, there is no one answer for this insurance question. First off, do you think that you paid the right price for the vehicle when you bought it? We all know that car and truck prices have dropped significantly and the vehicle you bought in 2008 was significantly more expensive then the one you buy today.

If this is the situation then you find yourself in a tight spot. One answer is to talk frankly with the dealership and add the prior vehicle balance to your new financing. Yes, you will end up paying more on the overall financing but it does answer the immediate need to replace the vehicle without undue financial hardship.

The second situation is that you can negotiate a bit with the insurance company on the final price. You will need to give the adjuster or appraiser a reason to increase the offer made. Some steps you can take include:

  • Check on the Internet for similar vehicles with approximately the same mileage. Copy the pages to a folder so that you can send this to the adjuster. Check the newspapers and car trader magazines to see what price the car or truck is selling for there. Make copies of these items. You can go to dealerships and get an offer in writing on vehicles.
  • Look for photographs of your vehicle showing the condition. A picture truly is worth a 1,000 words.
  • Find any receipts you have showing add-on or maintenance you did to the vehicle. The usual formula is that for every $4 you spend you will get $1 in value. In other words, 25% of the value is considered for improvements or betterment you may have done. Regular maintenance receipts do testify to your keeping your vehicle in good working order.
  • If you had an appraisal done or a vehicle inspection for an older car then be sure to provide a copy.

Talk to your agent or broker about helping you present your case to the insurer. Your adviser cannot act on behalf of the insurance company in a claim but they can help you to achieve claims fairness. Your broker or agent can check with the insurer as to why the amount is lower then expected. It could be as simple as a communication error.

This is a time for both your broker/agent and the insurance company to show you the worth of what you paid for with your insurance premiums. You paid for insurance because you might have a claim. You have had a claim. Now is the time for them to step up and help you. Loyalty goes both ways in this picture. Be firm but do remember that you are negotiating here so don't bully. It won't help.