Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Reviewed by Melanie Musson
Published Insurance Expert Melanie Musson

UPDATED: Mar 15, 2022

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Just What's Essential

  • If you have a full-coverage policy, your car insurance company will pay you for the value of your car so long as the reason it is totaled is considered a covered event
  • Determining your car’s actual cash value (ACV) will help you negotiate your final settlement with your insurance company
  • A full-coverage policy on your vehicle will ensure you receive a settlement check if your car is declared a total loss

Being in a car accident can be frightening and stressful. And the aftermath of the accident may not be any less frustrating. If your car is declared a total loss by your car insurance company, you will have some decisions to make. But if you have a full-coverage policy, your car insurance company should pay you for the value of your car — provided the incident is considered a covered loss.

When your car is declared totaled, your insurance company will cut you a check for whatever your car is worth. But what if your car is worth more than your insurance company is offering to pay? Learning to negotiate a total loss car insurance settlement can help you in this situation.

What is a total loss car insurance settlement?

If your car is considered totaled after a car accident, your insurance company may end up paying you whatever your vehicle is worth. The process of deciding how much to pay you and cutting you a check is considered a car insurance settlement.

During the total loss settlement process, car insurance companies employ car insurance adjusters to determine the actual cash value (ACV) of your vehicle. Once your car insurance company knows how much your vehicle is worth, that exact amount will be presented to you as the amount you will receive in a settlement check.

In some cases, the number your car insurance company comes up with will be close to what you’re expecting — or even more. But you may encounter a situation in which your insurance company decides to pay you less than what you believe your car is worth. In this case, you will want to negotiate with your insurance company.

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How do you negotiate a car insurance settlement?

In order to learn how to negotiate with car insurance adjusters about your car’s total loss, you will need to know how much your vehicle is worth.

Many people use a total loss car value calculator or an insurance total loss payout calculator to determine how much their vehicle is worth and predict what their insurance company will offer in terms of a settlement. You can use different online calculators to help you determine your car’s ACV, but your insurance company may consider these calculators subjective.

Another way to determine your car’s actual value is to search online for the same make and model of your vehicle — and a similar condition, if possible — and see how much your car is selling for. If you find dealerships or individuals who have your car listed for a price that is higher than your insurance settlement, this could help you negotiate with your insurance company.

Will a car insurance company pay more for a total loss settlement?

Once you determine your car’s ACV, you need to make some decisions. If that value is almost exactly what your insurance company is offering you, or if it’s a bit higher, it’s a good idea to take the settlement your insurance company is offering.

But if your GEICO total loss payout — or your payout with any car insurance company — is hundreds or thousands of dollars less than what your car is worth, you will want to send an official demand letter to your insurance company. In the letter, you will need to highlight the nature of your car accident, any personal injuries associated with the accident, and the settlement amount for your car’s ACV.

Most experts agree that you should request anywhere from 25% to 100% more from your insurance company than what you’re actually willing to accept, but this is ultimately up to you. You will need to submit your demand letter in writing or via email, but it’s also a good idea to speak with a representative from your car insurance company to let them know your decision.

When will I know if my insurance company accepts my demand letter?

Waiting to hear back from your insurance company after you submit a demand letter can be frustrating, and it’s reasonable for you to reach out to your insurance company if you have not heard anything in a few weeks.

Ultimately, your insurance company is responsible for settling your claim and paying you for your car’s actual value. The goal of any company is to accomplish this as soon as possible. There’s a chance you may have to have multiple conversations with an insurance adjuster or with a representative from your insurance company before you get a final word on how much your insurance company is willing to pay.

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What type of insurance is best for a total loss settlement?

If you are not at fault for your car’s total loss, the person who was considered at fault in the accident will be responsible for your settlement. In this case, the money you receive for the value of your car would be offered by that person’s insurance company, and you would not need more than a liability-only policy.

But to make sure you are covered in the event of a total loss, you will need to have a full-coverage policy on your car. Full coverage includes both comprehensive and collision insurance, which will cover your car if you’re in an accident, your car is stolen, or your car is damaged by inclement weather.

The table below shows average rates for car insurance based on coverage type in each state.

Average Annual Cost Difference Between Full Coverage and Liability Coverage Car Rates Insurance by State
StatesAverage Annual Full Coverage RatesAverage Annual Liability Only RatesTotal Annual Rate Difference
South Dakota$766.91$300.22$466.69
North Dakota$773.30$298.18$475.12
North Carolina$789.09$359.42$429.67
New Hampshire$818.75$400.56$418.19
New Mexico$937.59$488.03$449.56
South Carolina$973.10$527.09$446.01
West Virginia$1,025.78$491.83$533.95
Rhode Island$1,303.50$759.80$543.70
District of Columbia$1,330.73$628.82$701.91
New York$1,360.66$804.51$556.15
New Jersey$1,382.79$869.57$513.22
U.S. Average$1,009.38$538.73$470.65

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If you are able to pay for full coverage on your vehicle, it may be in your best interest to do so. This way, you will know that you’ll receive a settlement check from your insurance company to help you figure out what you want to do next.