Steering Your Car Insurer To A Fair Deal

The day before Thanksgiving, my beloved 1990 Honda Accord was stolen. I would soon learn that losing a car to a thief was just the start of my woes. Things really got unpleasant after I called my insurance company.

Although the claims adjusters at my carrier, Geico, were unfailingly polite, the company tried to stiff me. It offered only $7,159 for a car that cost nearly $15,000 new--and had only 52,000 miles on it. But I learned I didn't have to take it. I did my homework, including researching used-car prices on the Internet. I found the people at Geico who really make decisions. I was persistent. And in the end, I won a better settlement. "However they come up with a value, test it," advises Robert Hunter, director of insurance at the Consumer Federation of America.

My problem was that Geico, along with many other insurers, doesn't use standard references, such as the National Automobile Dealers Assn.'s Blue Book, to determine fair market value. Instead, it hires consultants who check ads and talk to used-car dealers. "It gives a more accurate value," insists William Mayer, Geico's assistant vice-president for claims. "Sometimes it can be more than book, sometimes less."

But since these consultants were on Geico's payroll, I doubted their objectivity. Fortunately, I had time to dicker, since Geico, hoping the car would be found, wouldn't pay for 30 days. First, I went to the Web. Two sites provided powerful ammunition. Kelley Blue Book ( and Edmund's ( get prices by checking dealers and reviewing ads and other sources. Plug in your make, model, year, mileage, and options, and they instantly give you the dealer's retail price. Kelley priced a comparable '90 Accord at $10,775. Edmund's came up with $9,956.

Next, I asked Geico to send me its consultant's report. The 16-page printout was based on local ads and the prices of three cars on Washington-area dealer lots. These were supposed to be comparable to mine, but the only '90 Accord they found had 114,000 miles on it. The list price was $6,500, but Geico's "take" price--what it felt the car would actually sell for--was only $5,000. In fact, while the three cars had very different asking prices, the consultants figured the sales price of each by simply knocking $1,500 off list. Geico also admitted the cars were never test-driven or inspected to see if they had been in accidents. After adding an adjustment to reflect the mileage difference between my car and the 114,000-miler, Geico made its offer.

Once I saw Geico's proposal, I checked dealers and read classifieds. I found one '90 Accord, with about 60,000 miles, for $8,995. It seemed like a good starting point for negotiations. I faxed Geico my research, then worked my way up the bureaucratic chain.

BIG STICK. The first guy said he was only authorized to add $300. His boss ponied up a few hundred more. Since Geico wouldn't pay until we agreed on a settlement, it would have happily negotiated forever. But I needed a car. So I made a final offer: I would take what Geico gave me. But I warned that its offer would have to satisfy the Maryland insurance commission, since I was going to send it the whole file for review. Regulators are often industry lapdogs, but insurers still hate to deal with them. And what do you know? The offer went up again. In the end, I got $8,315--less than the car was probably worth, but $1,156 more than Geico's first offer. At least I felt I was robbed only once.

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