How to Negotiate Total Loss Settlements

You’ve been in an accident and your vehicle is a total loss, now what? The insurance company is going to make you a settlement offer.

This may sound simple, but knowing how to negotiate a total loss settlement properly may be more complicated than you think.

What if you disagree with insurance company’s valuation of the vehicle? Does it matter whose insurance you’re dealing with? In the following, we’ll answer these questions and provide some useful tips for successful total loss negotiations.

Specifically we’ll discuss …

How do you Prove a Vehicle is a Total Loss?
Whose Insurance Pays for the Damage?
What If You Disagree with the Insurer’s Valuation of Your Damages?
5 Critical Tips For Negotiating Total Loss Settlements

Let’s get started….

How do you Prove a Vehicle is a Total Loss?

A vehicle is totaled when the cost to repair it exceeds its value. Some states have an even lower threshold for a total loss. In Nevada, a vehicle only needs to be damaged at 65% of its value to be considered “totaled”, whereas in Florida it must hit 80%.

Total loss for Each State.

In the table below you can see the threshold requirements for most states [1]

State Threshold State Threshold State Threshold
Alabama 75% Kentucky 75% North Dakota 75%
Alaska Insurer Det. Louisiana 75% Ohio Insurer Det.
Arizona Insurer Det. Maine Insurer Det. Oklahoma 60%
Arkansas 70% Maryland 70% Oregon 80%
California Insurer Det. Massachusetts Insurer Det. Pennsylvania Insurer Det.
Colorado 100% Michigan 75% Rhode Island Insurer Det.
Connecticut Insurer Det. Minnesota 80% S. Carolina 75%
Delaware Insurer Det. Missouri 80% South Dakota Insurer Det.
Florida 80% Montana Insurer Det. Tennessee 75%
Georgia Insurer Det. Mississippi 70% Texas 100%
Hawaii Insurer Det. Nebraska 75% Utah Insurer Det.
Idaho Insurer Det. Nevada 65% Vermont Insurer Det.
Illinois Insurer Det. New Hampshire 75% Virginia 75%
Indiana 70% New Jersey Insurer Det. Washington Insurer Det.
Kansas 75% New York 75% Wisconsin 70%
North Carolina 75% Wyoming 75%

Proving a total loss is simple. You’ll want to supply the insurance company with the blue book value of your car along with one or two repair estimates. Depending on the carrier they may have an independent adjuster or appraiser review the vehicle.

For the sake of moving things along, you’ll want to do this as soon after an accident as you can manage.

Whose Insurance Pays for the Damage?

When you’re trying to learn how to negotiate a total loss settlement the first thing you need to understand is whose insurance company is going to pay. Will it be yours or the person who hit you?

This depends on whether you live in a fault or no-fault state. No fault insurance dictates that an insurance company will pay covered damages regardless of fault. Fault insurance places the liability for an accident on the negligent party (or their insurance company) [2].

Be aware that if you’re dealing with another person’s insurance company to settle your total loss settlement, your claim may be more hostile. They’re more likely to lowball you or employ tactics to reduce your claim value.

Your insurance company may do the same, but you pay their premiums and they (theoretically) have a vested interest in keeping you happy.

What If You Disagree with the Insurer’s Valuation of Your Car Damages?

The insurance company offers you a settlement and it doesn’t meet your expectations, what can you do?

You have a few options in this case:

  • Accept the offer
  • Push back and try to negotiate with the adjuster
  • Hire an attorney and file a lawsuit

Obviously if you pushback on your own or via an attorney you’ll want to have some evidence for disputing the insurance company’s numbers. When we say evidence we mean hard evidence such as:

  • Photos documenting the vehicles (good) pre-loss condition
  • A list of comparable vehicles and their values
  • Documentation of any aftermarket work you had done on the car
  • Disagreements from other qualified auto appraisers

This is certainly not all you can do, but are a few baseline ways you can challenge the offer of an insurance company.

If you get into a verbal negotiation with the insurance company know that they are probably more experienced than you at this. Try to keep your emotions out of it, and stick to the hard facts.

Five Critical Tips For Negotiating Total Loss Settlements

1. When an insurance company settles a total loss claim they compensate you for the “actual cash value” (ACV) of your vehicle. Actual cash value refers to the cost to replace your vehicle minus its depreciated value.

ACV must also include the taxes and fees incurred in the purchase of your vehicle. Some less honest insurance companies might omit this information.

2. An insurance company cannot withhold payment because some percentage of a claim is disputed. For example, you may be haggling over $500 — in the meantime, it is their duty to pay the undisputed portion of the claim in a timely manner.

Moreover, they cannot legally induce you to sign a release of liability unless the policy limit is reached or the disputed amount has been handled. So, watch the language of documents you sign carefully.

3. Be careful trusting your insurance company. If you are a policyholder with StateFarm or Allstate you might have a friendly agent and visions of trustworthy ad messages in your head.

Know that there is often little connection between these things and claims departments. Big carriers resolve tens of thousands of total loss claims per year. If they can pay on average 5-10% less on their claims this represents a lot of money, and therefore claims departments are often incentivized (explicitly or inexplicitly) to fight you for every dollar.

4. An attorney probably won’t help your claim. There is a limit to how much you can be reimbursed for a property damage claim involving a vehicle.

Because of this personal injury attorneys often have little interest in property damage. In fact, they rarely take a fee on this portion of a claim and sometimes consider it a courtesy if they’re working on a bodily injury claim as well.

This lack of money means that an attorney is unlikely to pay much attention or perhaps even take on your total loss claim.

5. Beware of “bad faith” tactics. Some insurance carriers give quick settlement offers for lower than reasonable amounts hoping people will just take the money and go away.

This is marginally unethical and in some cases against insurance regulations. Insurance companies may also delay payments or use biased appraisers in efforts to reduce payouts. Keep an eye out for all these underhanded practices.


Don’t let some of the information above make you apprehensive about settling a total loss claim. Sometimes the process is straightforward and smooth. But it’s good to be aware of the pitfalls and understand your position ahead of time. Just remember:

  • A total loss is (generally) when a vehicle is damaged more than 70-80% of its blue book value. Proving it is as simple as collecting a few repair estimates and documenting the blue book value of the vehicle.
  • Figure out whose insurance company should pay. This requires understanding if you live in a fault or no-fault state, figuring out negligence, and then pursuing the appropriate party, etc.
  • Never feel that you must accept an insurance company’s offer. You can always dispute it but be prepared to provide hard reasons for your disagreement if you want to get anywhere.
  • Five tips to keep in mind are: Actual cash value includes taxes and fees, insurance companies are required to settle undisputed portions of a claim, don’t trust your insurance carrier too much, attorneys often don’t help much with total loss settlements, and keep your eyes open for bad faith tactics.



1 – Car Buyer USA
2 – Insurance Information Institute

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