How To Negotiate On Insurance Claims

Sunday, Jul 26,2009, 9:31:25 PM Click:

NEW YORK (MarketWatch) -- American consumers know they should shop around to find the best deals on insurance for their home, car and valuables. But many people don't realize that when it comes time to file a claim with the insurer, there's room for negotiation on the size of the payout.

For instance, say your insured car or diamond bracelet is stolen, and the insurance company says it's worth $5,000. You're cringing, because you know it's worth more. "You don't always have to accept the first thing they say if there's a rational reason," says Judy Semler, an agent with State Farm Insurance.

But you do have to arm yourself with information to have any hope of getting a higher dollar value.

Imagine this: You're in a car accident and it's the other person's fault. You take the car in for a repair estimate, which comes to $2,500. But the other insurance company offers only $600. That's what happened to Semler's client.

"My client didn't have collision on his own car so we couldn't cover it," she says. "But he continued to negotiate with the other insurance company and got more estimates and, after going to the supervisor, he eventually got it."

Good, solid facts are hard to dispute. Semler says the best way to make the facts work in your favor is to document the item's value with:

If it's a car you're trying to replace, consider reviewing all of the items that Kelly Blue Book considers when determining value, such as mileage, condition, and location.

If it's jewelry or antiques, the best thing you can do is to have it appraised in advance, when you first purchase it, unless it was purchased new with a receipt.

"Once you have all your ducks in a row, ask for the supervisor or their supervisor," Semler says. "Point out that your car is worth X in excellent condition, that it has Y miles, and what it's selling [for] in your area -- and use that to make your case about what it will cost you to replace it, especially if it was the other driver's fault."

A few other important tips:

Remember, the smartest thing you can do is to start documenting now. Do what Semler suggests in two simple steps: 1) get a binder or folder to store all warranties and manuals for appliances, equipment, etc. and 2) put new receipts collected through the year in its own folder or binder.

The habit pays off, Semler says. When she had her own burglary claim some 20 years ago, she recalls the claims adjuster saying, "This is the most documented claim I've seen."