How do I contest the amount of a car insurance payout?

You can contest the amount of your car insurance payout if you believe the insurance company offered you too low of a payout and you have solid evidence to support your claim.

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UPDATED: Jun 14, 2022

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Written By: Laura BerryReviewed By: Joel OhmanUPDATED: Jun 14, 2022Fact Checked

Here's what you need to know...

  • Drivers should collect evidence that the insurance company’s payout is low 
  • Know the lowest payout amount you’ll accept from an insurer
  • Suing should be a last resort, as the payout may not cover legal fees

If you’re unsatisfied with a payout from your car insurance company for a damaged or totaled car, you may want to contest the amount. If you wish to contest the amount of your car insurance payout after your car insurance claim, you need to prepare beforehand.

If you don’t take the proper steps, there is a higher chance your insurer will reject your counteroffer. To help we’ve covered all the steps you need to take to be successful in earning a higher car insurance payout, from evaluating your car’s value to filing complaints.

How to Contest a Car Insurance Payout 

Insurance companies may try to pay the lowest amount possible, as large insurance payouts aren’t good for business. If this is the case, and you wish to contest the amount or otherwise dispute the car insurance claim, you must have a solid argument and evidence.

You don’t have to accept a car insurance company’s offer. Still, if negotiations and a counteroffer don’t work, you may have to sue if the amount is seriously undervalued. We recommend using a lawsuit as a last resort, and only if the amount you’ll earn will pay for your legal fees. 

Below, we’ve outlined the main steps you can take to contest a car insurance payout so you can see the process.

Research and Prepare Evidence 

If the amount for a totaled car seems low, make sure you’re considering your car’s depreciation. Depreciation starts the minute you drive your car off the lot, so your vehicle won’t be worth as much as it was a year or two ago. 

You should also check the amount of car insurance coverage you carry, as sometimes payouts are low because you don’t have a high coverage level.

After considering depreciation and coverage, you’ll want to gather evidence from your insurer and any research you conduct. First, ask your insurance company how it calculated the payout, as there could be calculation errors undervaluing your car or repair costs.

Once you’ve taken a look at the calculations, research and gather evidence to prove the payout is low. 

Below are some of the factors you should research:

  • Maintenance and inspection records. Maintenance and inspection records can show your car has lower mileage or is in better condition than estimated.
  • Compare vehicle costs or repair costs. Look at similar cars with the same year and condition as yours to strengthen your argument. You can also look at repair costs at different shops. 
  • Your use of the vehicle. It can be helpful to show how much losing your vehicle disrupts your daily life, like if you have to ride the bus or take an Uber to work. 

Collect as much documentation as possible and prepare your argument. The more evidence you have, the more likely your insurer will accept your counteroffer.

Make a Counteroffer 

Once you’re confident you have a solid argument, make a counteroffer to the insurance company. Your argument should clearly state why the insurance company’s initial payout is low, the amount you believe is fair, and your reasoning.

You can also hire an appraiser rather than make your own counteroffer. An appraiser can estimate your car’s value, damage costs, and help with your counteroffer. 

When negotiating a counteroffer, have two numbers prepared: the high amount you want and the lowest you’ll accept. Always start with the highest appraisal first. Get the agreement in writing if your insurance company accepts the counteroffer.

File a Complaint if Your Counteroffer Gets Rejected 

If your counteroffer gets rejected, you can file a complaint. The best place to file a complaint is with the insurance commissioner in your state.

Provide as much evidence with your complaint as possible to speed up the process. With multiple complaints filed daily, it is important to be patient as you wait to hear back from the insurance commissioner’s office.

File a Lawsuit as a Last Resort 

Filing a lawsuit is the least desirable outcome because you’ll have to pay to hire a lawyer and take the case to court. In most cases, it is not worth the cost and time to get an extra thousand or two on your car insurance payout.

You should only consider filing a lawsuit if you have a clear case and the amount you want will pay legal fees. Otherwise, you should avoid filing a lawsuit and settle the matter out of court. Insurance companies are usually motivated to keep cases out of court as well.

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Understanding How Car Insurance Payouts Work 

It can be helpful to understand how car insurance payouts operate when attempting to challenge a payout. 

Insurance companies base payouts on the following:

An insurance company may have an appraiser look at your car or have you take it to a pre-approved shop to get a quote for repairs.

If your car is totaled, insurance companies will look at similar car values to determine how to pay you. The insurer will base its offer on these estimates, your coverage, and deductible.

If you have a $500 deductible and the repair estimate is $2,000, the insurance company will only offer $1,500 at most. Likewise, if you have the minimum coverage on your car, the insurance company may not offer a high payout, if any.

When is a car considered totaled by the insurance company? 

An insurance company will consider a car totaled if the estimated cost of repairs is more than the car’s value. For example, if your vehicle is worth $20,000, but repairs will cost $25,000, your insurance company will declare your car totaled and pay out $20,000 for the car’s value. 

If you want to contest the insurer’s decision to declare your vehicle a total loss, follow the earlier steps to contest a car insurance payout. In most cases, it’s best to list the car as a loss and invest in a new car.

Cars can be expensive to fix and may not run well after extensive repairs, resulting in more repair bills down the line.

The Final Word on Contesting Car Insurance Payouts 

You can counteroffer if you believe the insurance company is offering a low payout and you have solid evidence your car is worth more or repairs will cost more than estimated. You aren’t obligated to accept an insurance company’s offer. 

If your counteroffer fails, you can file a complaint with your state’s insurance commissioner. You can choose to sue as a last resort, but you should only pursue this if the payout covers legal fees.

Drivers unhappy with their insurance company can shop for new insurance using quote comparison tools to find the best rates in their area. 

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

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