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Conventional wisdom states that in order to own a vehicle, you have to pay for it.
Of course, there are ways around that, but most aren’t legal. (When it comes to money though, I like to think outside the box.)
I, however, discovered a way, to have my car pay ME to drive IT.
July 28, 2016, is a day I won’t ever forget. That was the day that my car started paying me to drive it.
It started out unremarkably–playing in the backyard with the kids, followed by a trip to Costco, and an afternoon nap for my two little munchkins.
Then, at 6:13 pm, my life changed forever. Well, that may be a bit dramatic, but it definitely is a moment that is etched in my mind.
It was at that moment that I began to hear the soft pitter-patter of raindrops hitting our roof. These tiny drops were quickly followed by a methodical drumming of rain and then a downpour. Minutes later, the sound became deafening as our home started to be beaten with hail the size of marbles.
My first instinct was to save my wife’s planters, but because of the cataclysmic nature of the hail that had engulfed our home, one step outside sent me scurrying back indoors.
Continuing on this botanical rescue mission would’ve meant taking my life in my hands, and I wasn’t prepared to lay down my life and limb for lettuce.
As my family and I watched in horrific wonder at the hail decimating our plants and garden, my thoughts quickly turned to our vehicles.
Were they inside the garage???
Fortunately, our family SUV was in the garage. But my little commuting car, a 2008 Nissan Versa, was outside facing the full fury and wrath of Mother Nature.
I opened the garage door and watched from inside for a moment as my car was beaten relentlessly, then quickly closed it again to keep the hail from getting inside and waited for the torrent to cease.
When the hail finally stopped 30 minutes later, I immediately went outside to survey the destruction.
And this is what I saw.
Hail had piled up 8 inches in some locations near our house.
Our Christmas lights, which I keep up all year (Yes, I’m lazy in that respect. Don’t judge.) had been reduced to an exploded mess hanging from our house.
Our garden lay in shambles.
And my car. Oh, my poor little car.
It looked like it had been beaten to death by an assailant armed only with a ball peen hammer. It resembled a black golf ball, dimpled and dented from head to toe.
When I first walked out to inspect the damage, I was crushed.
Even though it looked fine from far away, up close my little car, which I had been toying with selling only months earlier but had decided to keep, was a battered mess. The car, which in my mind could’ve sold for $5,000 or so, was going to need thousands in repairs or be a write-off.
I knew the way insurance companies worked, or at least I thought I did. They were going to tell me all sorts of reasons that my Versa was only worth a couple of thousand dollars. Then I’d be forced to either drive a beater or pay out of pocket to get something nicer.
Either way, I figured I was going to get the short end of the stick.
An Idea Dawns
A few days later I was hanging out with a buddy and sharing with him what had happened. I was bummed about having to go through insurance, again figuring that I was going to get a horrific payout from them.
He mentioned to me that he’d had a vehicle that was damaged and had gone through insurance and he had been able to negotiate with them to get a decent settlement.
For some reason, the idea of negotiating with the insurance company had never dawned on me. I had always just sort of figured that they gave you what they gave you and that was that.
The idea of negotiating with them was all new to me, but I liked it! I didn’t have to take what they gave me. I could get what I wanted!
The next day I set to work to get my KILLER payout.
The first step I took was to call my insurance company to make a claim.
After I did this, they told me that I would be contacted by a property damage analyst (PD analyst) to begin the process.
A few days later, I got a phone call.
I was informed that the first step in the process was to take the car into a certified auto body shop to get an estimate of the damages.
This can be a sticky point for some.
I know that some people claim that insurance companies use body shops that purposely lowball the estimates, but in my experience, this wasn’t the case.
If you’re unhappy with the estimate that you receive though, you can always go to a shop of your own choosing and get a second estimate to use in your negotiations.
When I went into the shop they put my car under a special light that showed all of the tiny dents. It didn’t take the technician long to look at my dimpled beauty to see the damage was extensive.
Popping the dents individually, he said, would take way too long and cost an insane amount. Replacing the entire roof would also be incredibly expensive. He didn’t want to say for sure, but a write-off was likely given the value of the car.
He said he’d send in the estimate to the insurance company and I should hear back from them in a week or so.
Sure enough, a week later, I received an email with their offer.
I was stunned.
That was their INITIAL offer???
That was more than I thought the car was worth to begin with.
Granted, I hadn’t done much research to come up with my $5,000 valuation in the first place, but $5,600 exceeded my expectations.
Needless to say, I was VERY happy to have that as the starting point for our negotiations.
Greedy or Shrewd?
Now I could’ve just been content with the offer and taken it and ran. But I thought that I could do better.
I’ve negotiated before and I knew that if $5,600 was their initial offer, they had worked in some potential wiggle room for going higher.
Some may call me greedy.
So be it.
I wanted to get what the car was actually worth. And how could that be determined?
How is the value of anything determined? Quite simply, it’s the price that the buyer and the seller agree to. In this case, since no one was buying or selling, it’s the price the insurer and the insured agree to.
I don’t think it’s greedy to negotiate hard. It’s shrewd.
Obviously, there’s a point at which it goes too far and becomes unreasonable. But as you’ll see, I didn’t cross that line.
If I had, they would’ve told me I was crazy.
And they never did.
How was the original value calculated?
When I asked how they had arrived at $5600 they gave me some long-winded answer about how they had a “program” from JD Power that they used to calculate the value.
After talking with them for awhile, I was able to figure out that what they did was find comparable vehicles listed online in my region.
They then plugged these vehicles and their prices into a program which made adjustments based on the features the vehicles did or didn’t have when compared to mine. The program then made adjustments for mileage, and it spat out what the car was worth.
They then calculated a rough average to determine the payout.
Or in other words, nothing that couldn’t be accomplished by a human being with the desire to maximize their insurance settlement, average intelligence, and a bit of time on their hands.
Immediately I told them I wasn’t happy with their number.
They offered to send me the summary of the comparables they’d used and how they’d calculated the value.
She said I could present a case for why I thought I deserved more and they’d look at it. I was welcome to look at other vehicles online and try to prove why a larger settlement was fair.
How to Negotiate to Get the Most for Your Car Insurance Settlement
With the initial offer in hand and the negotiating gauntlet firmly thrown down, it was time to determine my strategy.
After doing some research and thinking through how to best go about getting the most I could for my car, I settled on the following 5 pronged approach:
1) Pick apart the comparables from the insurance company. I’d go through in detail and analyze the comparable valuations. I’d look for any mistakes or inconsistencies in comparing their comparables to mine when it came to features and options.
2) Find my own comparable vehicles (year, mileage, features, etc.) on used car sites like Autotrader and Kijiji (Canada) or Craigslist and car.com (U.S.)
3) List all the different features that my vehicle had that the comparable cars didn’t. For example, I had a remote car starter. If that feature wasn’t listed on the comparables, I’d take that into account.
4) Use an online calculator to determine the ACTUAL value of my vehicle. I used the site VMR, which my brother, who’s a big car guy, had told me about. It was AMAZING and helped me establish a solid alternative value for my car.
5) Use shock and awe to overwhelm my insurance analyst with information. I was going to be this analyst’s worst nightmare. In short, I’d be the client from hell. Oh, I’d be more than respectful in our dealings. But I would negotiate HARD, harder than they’d ever seen anyone negotiate and push for more.
I’d be the client who’d spent hours sifting through information with a fine-toothed comb, who had a rebuttal to every argument they made for why they wouldn’t give me more.
I’d go in with beautiful tables, pictures, links to websites, and spreadsheets.
They’d think they’d stumbled into a murder trial where the defendant was representing himself and making the case to save his life.
Keeping the Car?
In my research, I’d seen that you can negotiate to keep your vehicle if it’s a write-off. The price of the vehicle is worked into your final settlement amount, so you get less than you would if you didn’t still want the car.
I suspect some people either try to fix it on their own or end up just selling it for parts.
But in my case, the hail had only damaged the car’s body. Structurally it was still sound and aside from its battered appearance, it still drove great.
After thinking about the situation and the pain of buying a new car, I decided that I really wanted to keep it.
In my case, the ideal outcome would be getting a payout that I could pocket and continuing to drive the car.
No Salvage Tag, Please!
Usually, when a vehicle is written off, the registration has a salvage tag applied to the VIN so future owners know it’s been a write-off. Because many vehicle write-offs are caused by serious accidents, most of these vehicles marked as salvage are no longer structurally sound.
But in my case, there hadn’t been an accident.
As I poured over a variety of resources on negotiating with insurance companies, I found that if a vehicle is written off for cosmetic damage only (like my little pock-marked beauty) it’s possible to negotiate to have the insurance company not put a salvage tag on the car.
This would allow me to be able to sell the vehicle after I had driven it for a few more years. Yes, it would be for a way lower price than an undented Versa, but I could sell it as structurally sound.
If there was some other frugally-minded individual like myself who was only concerned with how the car ran, and not how it looked, then they’d get a killer deal and I’d get a bit more cash on top of the settlement.
With my plan of attack all laid out, I set to work doing my research.
The Research: Analyzing the Insurance Company’s Comparables
The insurance company had sent me a detailed summary of the 4 comparable vehicles they had found and the breakdown of how the values were calculated.
I’ve included an example of a couple of them below.
For each of these cars, they had made adjustments for mileage and various extra equipment and features they had that mine didn’t.
For example, if the comparable had the Technology or Sport package and mine didn’t, they would deduct a certain amount from the value of the comparable car to make it more accurately reflect the value of mine.
I also did a lot of research on the different trim levels for 2008 Nissan Versa’s (S, SL) and what features were standard. (My car was an SL)
For example, they assumed my vehicle didn’t have the ABS package and decreased the value of their comparables by about $170 or so. After calling my local Nissan dealership and having them use my VIN to check, I learned that my car did have the ABS package.
They also continually subtracted something called the “Value Package” option, a package only available on the lower trim level S.
But I had an SL, and all the features of the Value Package came standard on it.
I called around to dealerships and got quotes on for each of these upgrades. After I ran the numbers, I determined they were taking about 28% of the original cost of the upgrades and deducting them from the value of the comparables.
I won’t get too much further down the rabbit hole of the nitty-gritty details.
Just be sure you check EVERY SINGLE feature, option, and line of their comparable summary because there are LOTS of mistakes or inconsistencies.
They’d also neglected to ADD the value of many of the options I had that these cars didn’t; things like a remote starter and winter tires.
In order to be consistent, I got quotes or found old receipts for how much these extras cost and ADDED 28% to the value of their comparables on the loss vehicle adjustments.
After I’d picked apart their comparables piece by piece, the average value had moved from $5860 to $6422.
The Research: Comparable Vehicles
Finding vehicles similar to mine was not difficult.
After going on a few different used car sites like Kijiji and Autotrader, I was able to come up with a nice list of comparables:
I then went over the features of each of the cars in painstaking detail.
I compared the trim levels, options, mileage, and other aspects of the car to mine. And finally, I used the VMR website to adjust the price of each listed car based on which features it had or was missing and the mileage.
(As an aside, the VMR website was AMAZING in letting me add options and adjust for mileage to see how the cost of the different vehicles listed compared to the value of mine; here are the Canadian and American sites).
For example, the white 2008 Nissan Versa SL I mentioned above was for sale by owner and listed at $7990.
It, however, only had 117,000 km and mine had 139,000 km. Using the VMR website, I calculated that if this exact car had 139,000 km instead of 117,000, it would reduce the price by $650 (not good for me, but I wanted to be honest and fair in the negotiations, but tough too!)
I then compared the options it had to my car. They were pretty similar except it had alloy wheels and mine were steel, which dropped the price another $60.
My Versa, however, had the optional continuous variable transmission (CVT) which added $364.
The Total Adjusted Costs
$7990 original price
117,000 km (- $650)
it has alloy rims – mine are just steel (- $60)
Total Value = $7644
I went through for each of the 7 vehicles I found a did this, adjusting for options, mileage, and after-market add-ons like tires and the car starter.
When I went to value my remote starter, winter tires, and CVT, I got quotes on all of them. I then ADDED 28% of the quote to the price of the comparable I’d found.
Having done this, my options added the following amounts to the value of the comparables:
Remote Starter= $224
Winter Tires= $269
After all the math was said and done, these were the final totals:
The average value for a 2008 Nissan Versa with my options and extras was $8112.
The Second Round of Negotiations
Having done hours of research, I’d arrived at 2 numbers from which to start negotiating:
The insurance company comparables average value was around $5600. But after dissecting it piece by piece, and adjusting for mistakes they made, the new value was $6422.
My comparables had an average of $8112.
I emailed the documents detailing my research to the PD analyst and called her the next day.
Having done such a thorough job of researching every single piece of information about the vehicles and how their values were affected, I had MUCH more credibility when negotiating. I wasn’t just some guy who said no to their first offer and wanted more money.
Now with hours of research under my belt, I was extremely knowledgeable.
I could tell that she hadn’t seen this level of time and effort put into a negotiation before.
Overwhelm with information? Check.
I also stated that not only did I want more than the original $5600 they’d offered, but I also wanted to keep the vehicle and to avoid having a salvage tag put on the title. She told me that they would have to charge a salvage fee for this, which was 20.5%.
She said she’d need a little while to go over the comparables. She’d contact me by the end of the day.
The Revised Offer
When the offer came in, it was solid.
$7000, but less 20% for the cost of the car.
It really surprised me how easily they had moved from $5600 to $7000. Since they had yet to put up any real resistance, I felt like I could shoot even closer to my $8112 comparable value.
I told her that it was better but still wasn’t good enough. I wanted to walk away with $6500 plus the car.
She stated that I’d need to talk to her supervisor, a Claims Advisor, who had the power to make these kinds of decisions.
He was not was I was expecting.
In fact, he was quite nice. After going back and forth for a bit we settled on a final payout of $6318. This included the cost to buy the car back (20.5%).
They would direct deposit the money into my account, and I’d keep the car.
He also agreed to not put the salvage tag on the title and sent me an email to that effect, ensuring that I had it in writing.
A few days later the money was safely in my account and I felt like a million bucks having negotiated with a huge insurance company and come out on top.
Bringing It All Together
At the end of the whole process, I walked away with $6300 in my pocket, and my beat-up beauty with no salvage tag on the title. Because a damage claim had been made on it, I couldn’t get it insured for collision, only liability, but that was fine with me!
How was I able to negotiate effectively and come out on top after everything was said and done? There were three key elements to my success:
1) I dissected the insurance company’s comparables for flaws. I then used these during our negotiations to change their initial settlement offer.
2) I researched in fine detail other comparables of my own. I then made adjustments for the different features my car had that these ones didn’t.
3) I used shock and awe to overwhelm my insurance analyst with information in our negotiations. I was the most prepared, organized, well-researched client they’d ever encountered. In other words, their worst nightmare.
These three keys were what enabled me to dominate negotiating a settlement with my insurance company.
And, ultimately, they’re why my car pays ME to drive IT today!
What tips have you used to negotiate a great deal? Add to the conversation in the comments below or on Twitter @method_money or my Facebook page Method To Your Money. You can also find me on Pinterest. Want more great ideas for mastering your money? Sign up to receive my weekly emails detailing how to keep more of your hard earned cash!