Your car was written off. The insurer accepted the claim, which felt like a small win. Then the payout offer landed — and it’s $5,000 to $15,000 below what your car was actually worth. They quote some “market value” methodology that ignores the recent service, the new tyres, the low kilometres, the unique trim, or the current state of the used-car market.
Underpaid total-loss settlements are one of the most common — and most fixable — insurance disputes in Australia. The insurer is gambling that you’ll just sign the deed of release and move on. Don’t.
The legal framework
Motor insurance valuations sit under the Insurance Contracts Act 1984 (Cth) and the General Insurance Code of Practice. The Code requires the insurer to explain how they reached the valuation, identify the comparable vehicles used, and respond to dispute submissions within 30 days. The duty of utmost good faith (section 13 of the ICA) extends to settlement valuations — they can’t just pick the lowest available comparable.
Common low-ball tactics and how to push back
- “Agreed value” vs “market value” confusion. If you took out an “agreed value” policy, the insurer is contractually bound to that figure — they cannot apply market-value depreciation.
- Comparable vehicles cherry-picked. Insurer chooses the worst three on Carsales. Pull your own comparables (same make, model, year, kilometres, condition) — they’ll often be $3,000–$10,000 higher.
- Ignored modifications and recent spend. New tyres, recent service, new battery — these don’t show up in their algorithm. They should add to the payout.
- Salvage value double-counted. Insurer keeps the wreck AND deducts salvage from your payout — that’s a double dip.
- “Take it or leave it” pressure. Code of Practice requires them to give you reasonable time to consider. Don’t sign the deed of release under pressure.
What the document does
A Letter of Demand sets out the policy details, the claim reference, the offered settlement, your evidence-backed valuation, the gap, and a 14-day deadline to revise. It formally requests their valuation methodology and comparables under the Code. It also explicitly puts them on notice that you will not sign any deed of release and reserves your AFCA rights.
What Claim Done delivers
Wizard takes ten minutes. Upload the offer letter, your comparables, any service receipts. AI drafts the Letter of Demand citing the right Code clauses and ICA sections. Flat $79, PDF the same day.
What to expect after sending
Most insurers come back with a revised offer within 14 days — often $2,000–$8,000 higher. If they don’t, lodge an AFCA complaint: free, binding, and AFCA can order an independent valuation at the insurer’s expense. Many total-loss disputes settle for the consumer’s number once AFCA is involved.