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When insurance companies make a settlement offer for a total loss vehicle, ask to see how the offer is made. The usual method is to inspect the vehicle for cosmetic condition and odometer mileage, and look for recent sales and cars for sale at dealers. Condition and mileage will cause the comparable cars' prices to be adjusted to approximate the value of the total loss vehicle. Sales tax and license expense (perhaps pro-rated to the unused portion of your current year license payment) should be added.
Where you could get screwed under this method of valuation is if:
a. You have a rare car and they use more common cars as comparables, with adjustments for the different model that are not reflective of the local market conditions for the rare car.
b. You have a car with much better mechanical condition than others with similar mileage, since cosmetic condition and odometer mileage are the main methods of insurance valuation (of course, if your car was in need of major mechanical work or a blower motor replacement, but was still driveable when it got crashed, you could actually come out ahead).
c. The insurance adjuster underrates the cosmetic condition of the car. You may want to clean the exterior and interior of the car as if you were going to sell it before showing it to the insurance adjuster. I.e. make the undamaged parts look as nice as possible in a cosmetic sense.
You typically can get the option to accept a reduced settlement while keeping the car. The amount of the reduction will be based on the salvage auction value of the car.
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