What If Repair Cost More Than Insurance Estimate

What If Repair Cost More Than Insurance Estimate

Have you ever been in a car accident and found out your auto insurance payment doesn’t fully cover the cost of repairs? This stressful situation is all too common. Insurers are infamous for lowballing damage estimates, leaving policyholders stuck with excess bills. Don’t worry – you have options. We’ll walk you through steps to take when the repair quote is higher than your insurance check. With some strategic negotiating and legal leverage, you can ensure you’re treated fairly and made financially whole after an accident. Let’s dive in!

Getting Multiple Repair Estimates

The first thing to do is visit several reputable auto body shops for repair estimates. This gives you concrete evidence of the true extent of damage. Look for shops experienced in working with insurance claims. Ask if they frequently see insurer estimates that are too low compared to the repairs needed. Request they provide a full teardown estimate itemizing every necessary part and process. Taking your car apart reveals hidden issues an adjuster’s quick visual inspection would miss. Have the shop document everything with photos too.

With quotes from multiple shops in hand, you can compare assessments and identify the most comprehensive, accurate repair costs. If there’s a huge discrepancy between estimates, find out why. Some shops may suggest used or aftermarket parts to save money while others insist on new OEM (original equipment manufacturer) components. Labor time and hourly shop rates also impact estimates. Approach this process like you’re buying repairs and want the best diagnosis possible.

Negotiating with The Insurance Company

Next, it’s time to contact your claims adjuster armed with documentation that their initial payment won’t suffice. Don’t immediately cash the check they sent, as that may indicate full acceptance of their offer. Be polite yet firm explaining how experienced mechanics found more extensive damage requiring more work and parts than the adjuster believed necessary based on visual inspection alone.

Provide copies of the repair shop estimates you’ve gathered, along with photos clearly showing damage. Point out line items the insurer missed and where their allowances fall short. Offer to meet at one of the body shops for an in-person reassessment. You can also propose compromises like agreeing to use aftermarket or recycled parts to reduce costs. Through reasonable negotiation, many insurers will agree to supplement their initial claim payment.

If you get nowhere with the adjuster, request to speak with a supervisor or manager to get a second opinion. Present the same documentation and make your case again. Go up the ladder of command until someone reasonable addresses the situation fairly.

Understanding Actual Cash Value vs Replacement Cost

Insurance policies pay claims on either an actual cash value or replacement cost basis. Actual cash value takes into account depreciation, paying only current worth considering the vehicle’s age and condition. This ACV amount often isn’t enough to fully repair an older car.

Replacement cost coverage ignores depreciation, paying the amount needed to fix or replace damage with new parts and materials based on today’s prices. This guarantees you can make necessary repairs. The downside is that replacement cost insurance costs more in premiums.

If your insurer is only paying ACV, request they change your policy to a replacement cost valuation basis. Then submit the claim again. This waiver of depreciation should get you funds sufficient to complete repairs properly.

Arbitration and Legal Representation

If talks with your insurance company go nowhere, it’s time to break out the big guns. Every insurance policy has an arbitration clause you can use to dispute an unsatisfactory claim decision. Under this provision, a neutral third party reviews the case through an informal legal proceeding. You’ll present documents like repair estimates and damage photos, while the insurer must prove their lower valuation is justified. The arbitrator ultimately issues a binding decision on a fair settlement amount.

If headed for arbitration, hire an attorney experienced with car insurance disputes. They have intricate knowledge of insurer tactics and will vigorously pressure them to make a reasonable offer, lest the case move to courtroom litigation. An attorney may reference statutes or case law obligating higher payments in your state. The threat of court can motivate an insurer to pay what they owe to avoid a ruling far exceeding policy limits.

According to consumer advocacy nonprofits, policyholders prevail in over 60% of arbitration cases against insurers. Even if arbitration falls through, your attorney can file a lawsuit to obtain compensation. This legal leverage is the best way to force insurers to honor their obligations.

Accepting the Insurer’s Offer

If you ultimately exhaust options negotiating and arbitrating with little success, you may have to accept the original payment – even if it won’t fully fund fixes identified by mechanics. Carefully review your policy declarations page listing coverage levels. Check if you chose lower premium options with reduced payout limits or high deductibles restricting available claim funds.

You can pay the repair shop your deductible and any costs beyond the insurance check. Ask if they offer payment plans. To avoid out-of-pocket expenses altogether, sell the damaged vehicle “as-is” without making any repairs.

If proceeding with repairs using the claim money, request concessions like recycling usable damaged parts or utilizing aftermarket components to contain costs. Get guarantees the shop will warranty work against defects. While not ideal, making compromises can make the best of the situation.

Diminished Value Considerations

Even quality repairs can lower a vehicle’s resale value due to its accident history. Studies show cars lose 10-25% of their pre-crash value after significant repairs. Insurers rarely pay diminished value claims without legal demand. But you have options to pursue compensation for this financial loss.

Work with a professional auto appraiser to assess your car’s market value right before the accident, then its worth after repairs. The appraisal report will quantify the difference attributable to damage. Present this documentation to your insurer requesting payment for diminished value.

If they deny your request, include diminished value compensation in any arbitration or lawsuit to recover it. A few states including Georgia, Texas, Arkansas, and South Carolina legally require insurers to pay the policyholder for a repaired vehicle’s loss of value, so check your state’s regulations.


Dealing with repair costs exceeding insurance claim payments can be incredibly frustrating. But knowledge is power. Now you’re equipped with steps to take, from gathering documentation to requesting policy upgrades, negotiating firmly, and leveraging legal options. Don’t let insurers take advantage. Be persistent and assertive to ensure you’re made financially whole after an accident. With smart strategy, you can get the fairest settlement possible.