How to Handle a Proposal for an Auto Accident Insurance Settlement

Before you settle an auto insurance claim, make sure to (1) know your rights, (2) get your own estimate, and (3) gather paperwork as evidence.

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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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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 16, 2021

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Things to Remember...

  • You may be stressed and confused after you have an accident
  • You should never settle for the lowest settlement offered after being involved in an accident
  • if involved in an accident, you should contact your insurance company as soon as possible

An accident is a confusing and stressful time, and the insurance settlement proposal is one point that many consumers don’t understand. Many lose out because they don’t know how to handle a proposal for a settlement.

Unfortunately, many car insurers will use the bewildering time right after an accident to push through a low settlement claim. They are running a business and trying to minimize their payout. It is not illegal or even uncommon.

However, most people are in crisis mode after an accident; they are focused on fixing everything as quickly as possible rather than fixing it as well as possible. That means that you could lose hundreds or even thousands of dollars from your settlement.

Don’t lose out on the best-priced car insurance; find quotes now when you click here to enter your zip code in the FREE box above!

Know Your Rights

All customers have certain rights when it comes to auto insurance coverage, and everyone needs to understand their rights, especially concerning claims and settlements. Every state regulates companies that sell insurance in that state, and each will have different rights for consumers.

To find the rights you have concerning insurance in your state, you need to review your state’s Insurance website. The National Association of Insurance Commissioners offers a map that redirects you to each state’s department of insurance website.

There you can find the rights you have as a driver concerning auto insurance in your state.

For example, in the state of Texas, as per the Texas Department of Insurance, any driver has the right to refuse any settlement offer from an insurer after an accident.

That refers to both a settlement if the vehicle is a complete loss after an accident or theft and a settlement to get the vehicle repaired. That means you can challenge both the valuation of a vehicle that is a complete loss and the settlement to have the damages repaired.

Many states have similar rights for consumers, but not all do.

It is a good idea to review your state’s department of insurance website before you are in an accident or you suffer a loss.

Then you will know exactly what to do with an insurance settlement.

You can certainly accept the insurance company’s settlement offer and be done with it, but you should do a little bit of homework before you accept the offer. Additionally, you will follow different paths depending on whether your vehicle is repairable or a complete loss.

Additionally, you will follow different paths depending on whether your vehicle is repairable or a complete loss.

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Find the Fair Market Value

If your vehicle is a complete loss, then the insurance company will offer you a settlement amount minus your deductible. If you were not at fault in the accident, the insurance company will be the other driver’s company and there will be no deductible.

If the accident was your fault, then you need to have collision coverage to be offered a settlement for your vehicle. Keep in mind that the settlement is based on the fair market value of your vehicle, not what you owe.

The adjuster for the insurance company will base the settlement amount on a valuation of the car.

A valuation takes into account the age, mileage, and condition of the vehicle to establish the fair market value of your vehicle.

Fair market value is what you could reasonably expect to get for the vehicle if you sold it yourself to another individual.

Fair market value can come to quite a shock to many people, especially since vehicles lose their worth a lot faster than loans are paid off. It is a good idea to always have a ballpark figure of how much your vehicle is worth.

After the adjuster quotes you a settlement amount, take a day or two to establish the fair market value of your vehicle. Kelley Blue Book will give you a fair market value for your vehicle based on age, mileage, and condition for the make and model.

While it will not give you the exact valuation that the adjuster will likely present to you, it will allow you to see if the adjuster is giving you a fair valuation or not.

If you feel the insurance adjuster is attempting to offer you a settlement based on a valuation that is too low, then you have every right to refuse it. With the fair market value information of your vehicle in hand, you can explain exactly why the adjuster’s settlement is not enough.

Gather Paperwork

There is one thing that you can do to increase the valuation of your vehicle beyond counteracting a low settlement offer. Gather all of your paperwork concerning any work you recently had done or any additions to the vehicle that are permanent.

If you just had your brakes replaced or a new alternator installed, then the insurance company has to add that value to the settlement amount.

Keep old receipts for parts or check with your mechanic for records. Keep in mind that this does not cover removable items, such as a GPS. Check with your homeowner or renter’s insurance policy for coverage for removable items.

Get Your Own Estimate

If your vehicle just needs to be repaired after an accident, then your options will be a bit different. Again, if you were not at fault, then the other driver’s insurance must cover your damages up to the limits that the driver had.

If you were at fault, you must have had collision coverage on your policy to get a settlement. If you didn’t have collision coverage, then all repairs will be coming out of your pocket.

The industry specialists at the Insurance Information Institute assure that you are expected to get an estimate from a mechanic. Similarly, your insurer cannot insist that you utilize a particular mechanic, but they may require estimates from more than one mechanic to ensure that the estimates you get are accurate.

While your insurance company cannot choose your body shop for you, they might have an issue with the parts that are used to fix your vehicle, further advises the Insurance Information Institute.

Car insurance is meant to make you whole, or return you and your vehicle to the point where you were before the accident.

Insurers argue that the use of new parts to fix a damaged vehicle falls under the definition of betterment. Essentially, the use of new parts makes the vehicle better than it was before, not the same.

Car insurance companies may pay you a settlement based on the cost of used parts or lower the settlement amount to account for betterment if new parts are used.

However, this is not a rule that is followed in all states. Part of a driver’s rights in Texas is that insurers cannot specify the age, brand, condition, or many other factors concerning the parts that can be used to fix your vehicle. Again, your state’s department of insurance should have this information.

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An accident can be a trying time, so it is good to know you have someone on your side. Your state’s department of insurance website really has a wealth of information focused on helping you, the consumer, to understand everything possible about auto insurance.

Furthermore, help is also available over the phone if you don’t wish to utilize the website.

There is also further assistance to be had from your state’s insurance department if you need it.

If you feel like you and your car insurance adjuster are getting nowhere trying to agree on an amount for your settlement, you can always utilize your state’s insurance department.

You can also file a complaint about an insurer, concerning a settlement claim or any actions from your insurance provider that you believe is unlawful.

Other Options

Another option beyond your state’s department of insurance is to hire a lawyer. It is up to you to decide if you require legal representation. Most lawyers’ offices will offer you a free consultation to review the merits of a possible case.

You also have the right to switch auto insurance providers at any time you choose, for any reason.

If you feel that you were not treated fairly during the claims process with your own insurance company, then exercise your right and choose another car insurance provider.

Taking your business elsewhere is the strongest message you can send to your insurer. This is as long as you are not dealing with illegal practices that should be punished by fines and sanctions by the state.

Make sure you ask friends and families for references and check customer satisfaction ratings while searching for your next insurance provider so that you know you are getting a company that will treat you fairly.

You can start your search for a new car insurance provider right here when you enter your zip code into the FREE search box below!

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