What to Do If Your Insurance Check is Less Than the Cost of Repairs

Getting into a car accident is stressful enough. But finding out your insurance company’s check doesn’t fully cover the cost of repairs can be infuriating. This common scenario leaves many wondering – what if my insurance check is less than the cost to fix my car? Thankfully, you have options to resolve this discrepancy.

Why Insurance Checks May Be Low

There are a few key reasons your insurance payout may not align with the repair quote:

• Pre-existing damage – Your insurer is only liable for accident-related damage, not wear and tear or previous dents/scratches.

• Differing repair methods – The shop may insist certain parts be replaced while your insurer wants cheaper repairs done.

• Aftermarket vs OEM parts – Insurers often specify use of non-original manufacturer parts to save costs.

• Labor time disputes – The shop’s estimate for work hours may exceed what your insurer believes is reasonable.

• Hourly labor rate discrepancies – The shop’s hourly rate may be higher than what your insurer will cover.

Essentially, insurance companies want to pay as little as possible to fix your car, while repair shops aim for comprehensive repairs. This natural tension can leave you caught in the middle with a gap between the check and invoice.

Negotiating a Fair Insurance Settlement

Don’t immediately accept a lowball insurance check. You have negotiating power to potentially get a fairer settlement. Consider these strategies:

• Let the shop and insurer negotiate – Your repair facility can justify their quote directly to the insurance company. Many gaps get resolved this way.

• Request a re-inspection – Ask the insurer to reassess the vehicle if they missed any damage. Provide repair quotes from multiple shops to support your case.

• Dispute the settlement – Formally contest the claim amount through your insurer’s appeals process. Supply evidence backing up your repair costs.

• Threaten small claims court – Your insurer may raise the offer to avoid court. But be prepared to actually file if needed.

• Hire a lawyer – An attorney can often get a lowball settlement increased substantially through assertive negotiation.

• Pay out-of-pocket – If negotiations fail, you can pay the difference between the check and invoice yourself.

With some finesse and persistence, you can often get the insurer to cover the complete cost of fixing your car.

Using Manufacturer or Dealer Repair Programs

If you purchased a new vehicle, check whether the manufacturer or dealer offers an insurance repair program. These programs guarantee factory authorized repairs if you get in an accident.

The manufacturer/dealer handles negotiating the claim and repair process directly with the insurer. Some benefits include:

• Guaranteed use of OEM factory parts
• Maintains vehicle resale value
• Preserves warranty coverage
• Often provides a repair warranty
• May offer free loaner vehicles

The main downside is you may get steered to a repair shop approved by the insurer, rather than your own preferred facility. But for peace of mind, these programs are worth exploring if your new car needs major repairs.

When to Lawyer Up

If an insurer stubbornly refuses to pay for the full cost of repairs, hiring a personal injury lawyer may be your best recourse. A qualified attorney has experience fighting lowball settlements from insurance companies.

Legal representation often results in much fairer claim payouts. An attorney may take actions like:

• Sending official demand letters to the insurer
• Filing court motions against them
• Initiating arbitration or mediation
• Threatening bad faith lawsuits

Pursuing a legal case can get time consuming and complex. But the right lawyer levels the playing field against large insurance carriers trying to shortchange policyholders on repairs.

Steps to Avoid Underpaid Claims

You can take proactive measures to help ensure you receive adequate funds to fix your car after an accident:

• Document damage – Take extensive photos and get repair estimates in writing immediately after the accident.

• Call your insurer promptly – Reporting it quickly starts the claims process before conditions change.

• Keep records – Maintain paperwork for all repair estimates, negotiations, and supplements as they occur.

• Be meticulous – Note every single dent, scratch, part needing replacement, etc. to justify the repair quote.

• Research shops – Choose a reputable repair facility known for quality work at fair prices. Avoid inflated estimates.

• Consider OEM parts – Using original manufacturer parts can provide peace of mind, even if they cost more.

Thoroughly documenting damage right away and developing evidence supporting your claim value will make it harder for insurers to dispute the amount needed to fix your vehicle.

When to Accept Less Than Full Coverage

In some cases, accepting the insurer’s lower settlement check may be your best option:

• If the car is very old, repairs exceeding its value may not make financial sense.

• For minor dents or scratches, pocketing the check and living with the cosmetic damage is reasonable.

• If you cannot afford higher premiums that may arise from a disputed claim.

• If the insurer’s approved shop can complete quality repairs for the amount offered.

• If you simply want to avoid the time and stress of negotiating or legal action.

Don’t feel pressured either way. Evaluate your specific circumstances and options to make an informed decision on whether to accept or dispute the offer.

Using Mediation or Arbitration

If you exhaust other options, mediation or arbitration may help resolve a gap between the insurer’s settlement and repair costs.

With mediation, you meet with an impartial mediator and the insurance representative to find mutual agreement. The mediator facilitates discussion but does not impose a binding decision.

Arbitration involves presenting your case and evidence to an independent arbitrator, who then issues a binding settlement amount after the hearing.

Both options aim to settle disputes out of court in a streamlined process. Mediation is often quicker and less formal. Arbitration resembles a mini trial with rules of evidence. Weigh the pros and cons relative to your situation if pondering these alternatives.

Is Legal Action Worth It?

Suing an insurance company over a lowball check almost always requires help from an attorney. Before pursuing legal action, weigh factors like:

• The time it will take – Lawsuits can drag on for years.

• Upfront litigation costs – Lawyers, filing fees, expert witnesses, etc.

• The burden of proof – You must conclusively prove the insurer is breaching its duties.

• Potential outcomes – Be realistic about what damages you could win.

• Risks involved – No victory is guaranteed at trial.

• Impact on premiums – Your rates may increase down the road.

• Peace of mind – Is the principle of the matter worth fighting for?

An experienced personal injury attorney can analyze the viability of potential legal claims against insurers in light of these considerations. They can then advise you about the pros, cons, and likelihood of prevailing if you proceed down the legal path, so you can make an informed choice.

When to File a Bad Faith Claim

If an insurer clearly handles your claim in an unfair or deceptive manner, you may have grounds for a “bad faith” lawsuit. For example:

• Denying a claim without proper investigation
• Intentionally lowballing damage estimates
• Delaying the claims process unnecessarily
• Misrepresenting policy terms to avoid payment
• Attempting to settle for much less than actual damages

Proving bad faith can result in the insurer paying for all losses caused by their misconduct. This can include compensation for financial harm, emotional distress, and punitive damages.

An experienced bad faith attorney can assess the merits of a potential claim after reviewing your insurer’s handling of the situation. Bad faith cases often settle out of court if strong evidence of misconduct exists.

Don’t Get Discouraged

The most important thing is not getting discouraged if an insurer disputes your repair costs. Be persistent in negotiating for fair compensation, using the various approaches covered here. Consider legal help if you continue getting stonewalled. And know that with patience and diligence, you can often successfully resolve an underpayment settlement. Don’t let insurers intimidate you or give up too easily!