Auto Insurance Claims: REARENDED...car is a total loss, lienholder, lien holder

Question
I was rear ended a week ago. The damage was pretty severe and found out yesterday that my car is a total loss. I unfortunately still owe on the vehichle. I am currently in a rental and I am worried about the next step to take and how to work out the issues with my lien holder. I have not yet been given an offer. I have also been told that I will probably be lo-balled on the first offer. Is this true? What can I do now to make the best decision in this matter.

Answer
Hi Chris,

Before you receive an offer you should investigate the retail value of your vehicle so you know what it is worth. Yes, insurance companies will usually try to low-ball you. You should check the following:

1) www.nada.com
2) www.kbb.com
3) www.edmunds.com
4) www.autotrader.com

The last one will allow you to search for currently for sale vehicles like yours in your area. You should average all value info you find to develope an average value for your vehicle.

As far as your loan, it would be a good idea to call your lienholder and inform them of the totaled car. You should also ask them what the payoff figure is. The insurance company will pay you for the value of your car, not the balance of your loan. If the settlement amount is less than your loan balance the insurance compan will send any check directly to your lienholder and you will still owe the balance (if any) to the lienholder. So you want to negotiate for as large a settlement as possible. Also remember that in addition to the value of the car the insurance comapny will also need to add sales tax to the amount. When you are negotiating the value of the car do not include the sales tax until you agree on the value of the car, then add the sales tax. If the insurance company makes you a low ball offer, tell them to send you their documentation so you can review it for accuracy. Then submit your research to them demanding payment of the true retail value of your vehicle. There will still be some negotiating that will occur but you should be able to increase their initial offer.

I hope this helps
Richard Hixenbaugh