Car insurance total loss payout too low? How to dispute the write-off valuation

If your insurer has written off your car and the payout looks too low, you can challenge the figure. Ask the insurer in writing to show how it reached the valuation, put your own evidence of what the car was worth in front of it, and ask it to review the offer. If it will not move, you can make a formal complaint to the insurer, then take it to the free external complaints scheme.

Claim Done drafts a total-loss valuation dispute letter from your answers for a flat A$49. It sets out your car, your comparable listings and sales, and asks the insurer for its valuation basis and a higher payout. You download it straight away and send it yourself.

First, check whether you have market value or agreed value cover

Everything depends on this. According to Moneysmart, with comprehensive cover you choose how your car is valued, and that value is the amount you get if the car is written off or stolen. There are two kinds:

• Agreed value is a fixed amount decided by you and your insurer. As the car gets older, the insurer may reduce the agreed value every year, so the figure on your latest schedule is the one to check.
• Market value is the amount your car would have sold for at the time of the accident. Moneysmart says the insurer decides it based on industry information, and that it is not the amount you think you could sell it or trade it in for.

The Moneysmart glossary adds that market value policies value the car on its make, model and condition. Your policy schedule says which type you have.

The type changes your argument. With agreed value, the question is simple: has the insurer paid the agreed sum on your schedule? With market value, the question is whether the insurer’s figure really reflects what your car would have sold for. That second question turns on evidence.

When a valuation dispute makes sense

A dispute is worth raising when:

• the insurer has accepted the claim and declared the car a total loss, but you think the amount is wrong
• you can find cars like yours, with the same make, model, year, variant and similar kilometres, listed or sold for more than the offer
• your car had things the insurer may have missed, such as low kilometres, a full service history, factory options or recent spending on tyres or a major service
• on an agreed value policy, the offer is less than the agreed sum on your schedule

Ask how the insurer worked out its figure

You cannot fix a valuation you cannot see. Ask the insurer for its valuation report and the full basis for the offer: the method it used, the vehicles or data it compared yours with, and any deductions it made. Legal Aid NSW’s own sample letter about a settlement offer asks the insurer for the reports, documents and calculations it relied on to calculate the offer.

Insurers must follow the General Insurance Code of Practice. Legal Aid NSW says, in its guide to insurance claims after a disaster, that insurers must provide expert reports, such as assessor or loss adjuster reports, within 10 business days of you asking for them. When you get the insurer’s comparisons, check each one against your car: kilometres, trim level, year and condition.

The law also sets a standard for how the insurer deals with you. Under section 13 of the Insurance Contracts Act 1984, every insurance contract is based on the utmost good faith, and each party must act towards the other with the utmost good faith. Section 14A gives the regulator powers where an insurer fails that duty in handling or settling a claim.

What your dispute letter should say

1. Your name, contact details, the date, and the claim and policy numbers.
2. The car: make, model, year, variant or trim, and kilometres.
3. The offer the insurer made, and whether your policy is market value or agreed value.
4. The figure you say the car was worth.
5. Your comparable cars, one per line, each with its price and where you found it.
6. The car’s condition, features, extras and recent spending that support a higher figure.
7. A request for the insurer’s valuation report and the basis for its figure.
8. A request to review and increase the payout, or to pay the agreed sum, and confirm it in writing.
9. The next steps you will take if it is not resolved: the insurer’s internal dispute resolution, then the external complaints scheme.

How the letter is structured

The Claim Done letter follows this outline, built only from what you tell it:

• Heading and reference: your details, the insurer’s name and address, the claim and policy numbers.
• Background: the car, its kilometres and condition, the write-off, the offer, and your policy type.
• The valuation dispute: what you say the car was worth, your comparables set out as a list, then the condition, features and recent spending that lift the value.
• Request: numbered requests to provide the valuation report and basis, and to review and increase the payout. On an agreed value policy, it asks the insurer to pay the agreed sum on your schedule. If you are not sure which type you have, it asks the insurer to confirm and apply the right basis.
• Next steps: the insurer’s internal dispute resolution, then the external complaints scheme, stated as facts rather than threats.

How to send it and what to keep

Send the letter by email to the claims or disputes contact on your offer letter, so you have a dated record. Moneysmart’s complaint guide says a formal written complaint should include the word “complaint” in the heading or subject line, a clear explanation of the problem and the outcome you want, and copies of relevant documents. If you want your letter treated as a formal complaint now, put “Complaint” in your email subject line. Keep the originals and a copy of everything you send.

Save each comparable as a screenshot or PDF on the day you find it, with the date, price, kilometres and the web address. Listings disappear once cars sell. Keep the offer letter, policy schedule and service records.

What happens next, and if the insurer will not move

Moneysmart says that if you are not happy with how your insurer handled your claim, you complain to its Internal Dispute Resolution team, and if you are still not happy, you contact the Australian Financial Complaints Authority (AFCA). Moneysmart also says the external scheme hears complaints for free, and can help if you are not happy with the offer the business has made.

Legal Aid NSW explains that an internal review is done by someone at the insurer who was not involved in the original decision. At AFCA, the insurer is asked to respond, and AFCA may try conciliation or give a preliminary view. If it makes a determination, it looks at what the law says and what is fair. If you accept the determination, you and the insurer must follow it. If you do not, the insurer does not have to, and you may be able to take other action, including going to court.

Mistakes to avoid

• Using poor comparables. A higher trim, newer year or much lower kilometres will be dismissed. Match your car as closely as you can.
• Quoting what you would have sold it for. Market value is not your hoped-for sale or trade-in price. Rely on real listings and sales.
• Arguing comparables on an agreed value policy. Check the agreed sum on your latest schedule first.
• Not asking for the valuation basis. Without it, you are guessing at what to rebut.
• Disputing only by phone. Put it in writing.
• Waiting too long. Comparable listings vanish, and the AFCA time limit runs from the insurer’s final decision.

If you are ready to put your evidence to the insurer, the total-loss valuation dispute letter is drafted from your answers for a flat A$49, ready to download and send the same day.