Auto Insurance Claims – An Overview Guide

If you are unfortunate enough to ever be involved in an auto accident, it’s likely you will have to file a claim, especially if your vehicle sustains damage or you and your passengers are hurt.

While no one wants to think about claims, they are a fact of life. Unless you have the convenience of mass transit or live within walking distance of your job, you likely need to drive to and from your job, run errands, and transport children to school and other extracurricular activities.

If your vehicle is damaged in an accident and not drivable until you get it repaired, you will need to initiate a claim with your insurance or more likely, the other driver’s insurance company. This might seem daunting but it’s really quite simple if you follow some basic instructions and remain calm and patient.

That said, if the accident is serious and there are injuries, you may need to seek legal counsel, especially if you are found at fault.

For more information on how best to solve auto insurance claims, you should read up on how to file a claim as well as what to do if you’re having trouble settling a claim at kind of rights you may have when filing a claim. Make sure you also know whether your insurance will raise your premiums if you file a claim.

If you file a claim, be aware of the various types of insurance fraud and how to avoid becoming a victim.

Once you start a claim you can determine the value and cost to repair your vehicle and whether you have to use certain auto parts in repairing it.

Finally, it’s good to know whether you will have rental car coverage while your vehicle is being repaired.

How to File an Auto Insurance Claim

Filing a claim is as easy as following a few simple steps.

  • Call your insurance company as soon as possible no matter who you think is at fault. Even if it is a minor fender-bender, it should be reported.
  • Confirm what your company’s representative needs in terms of forms and documents to support your claim. They will typically require a “proof of claim” form and a copy of the police report, if there is one.
  • Make sure you complete the required forms and keep good records. Maintain a log of everyone with whom you speak and copies of any bills you incur.
  • Confirm the following:
    • If your policy has a time limit for claims and bills submissions
    • If there is a time limit on claims disputes
    • How long will the insurance company take to contact you
    • If you need estimates for the damage to your vehicle
    • Does the policy cover a rental car while yours is being repaired

Keep in mind that every state has different laws covering claims so if you have any questions you should contact your insurance company, agent, or state insurance department.

Claims and Claim Payments

How do claims and claim payment work?
How much you receive for a claim will depend on how the insurance adjuster evaluates the accident. This will depend largely on the insurance company’s procedures. Nevertheless, there are a few basic criteria that will determine how much a claimant receives.

The accident itself
The adjuster will need to consider exactly what happened, the speed, those involved, if the police were notified and if so, if any laws were broken and/or tickets were handed out; plus other mitigating factors.Top of Form

Who is at-fault?
Before any checks can be cut, the adjuster must determine who is liable. Typically, if liability is an open-and-shut case then the adjuster may possibly write out a check right then and there.

If it isn’t clear who is at fault, then the accident will likely need to be reconstructed. In this case, the scene will be carefully scrutinized, as will the damage to the vehicles, and so on, in order to determine what happened.

If both parties are found negligent, then fault will likely be split.

Any injuries you sustain will need to be verified. Adjusters will typically ask for information such as how long you waited until you sought treatment, how it was treated, what kind of medications were prescribed, how the treatment is going, and other things. Injuries can often be fraudulently claimed so the adjuster will do a fair amount of due diligence. Be patient and provide the requested information and it should be no problem.

Expenses and losses
Expenses can include anything such as how much you spent on medical bills or how much time off from work resulted from an automobile accident. If you are self-employed or work from home, it may likely be more difficult to prove lost wages and could require a financial expert.

Be prepared to submit documentation to supplement your claims. You will need copies of your medical bills, pay stubs, pharmacy receipts, and any other expense that result as a direct result of the accident.

When it comes to property damage, if the at-fault insurer is paying, you will need at least one estimate. The insurance adjuster will likely have a look at the vehicle themselves to assess the extent of the damage.

Varying factors
There may be some other factors you might not immediately think of but will want to point out to the adjuster.

For example, if you have children to care for and/or keep a home, you may need to hire someone to help. Also, if you have a job that requires physical exertion and you are now temporarily or permanently disabled, this would be a wise time to address the subject.

Once the adjuster has all the required information, they will evaluate your claim and make an offer. The insurance company will likely lowball you and expect you to make a counteroffer. This is a good time to have an attorney to do the finagling for you. In any event, through careful negotiation, you should be able to arrive at a sensible agreement. If not, you may need to consider taking them to court.

Trouble Settling an Auto Insurance Claim

Do you know what to do if your claim is not being handled to your satisfaction? Here are some tips you can follow:

  • Voice your discontent with the insurance company
    Don’t be afraid to let the insurance company or your agent know that you are dissatisfied with their service. Talk to the head of the claims department or find out whether there is a consumer complaint division you can speak with.
  • Do your due diligence
    When you dispute a claim, you should make sure you have all the documentation and figures to back up your case. You will also need to lay out your argument in writing and include any important contact details the insurance company may need to easily get ahold of you.
  • Check your policy.
    Make sure you look over your insurance policy to see if your company offers arbitration or appraisal services to help settle your dispute. If so, they will be able to explain these options further.
  • Seek out your state insurance department
    You state insurance department may be able to help. Contact a customer service representative and explain your situation.
  • Have arbitrator hear your case
    You can have an independent arbitrator decide if the settlement you’ve been offered is a fair deal or not. Either your insurance company can refer you to one or you can contact the American Arbitration Association.
  • Hire an attorney
    If none of the above options help, you can seek out the help of an insurance attorney. Your state’s bar association should be able to refer you to qualified legal counsel for free. Lawyers are expensive so this should be an option of last resort. Make sure you get their fee structure in writing ahead of time.

Once you settle your claim, you should review your insurance policy to ensure it offers adequate protection against future damages and liability.

Consumer Rights Filing a Claim

Every auto insurance policyholder retains certain rights and every state has consumer protection laws.

Your insurance policy is a binding legal contract between your insurance and you and it will define any rights and obligations each of you have. Therefore, if you have any questions or concerns regarding your rights as stated under your policy, you should contact your insurance company or agent.

If you have any lingering concerns your insurance company cannot resolve for you, then you might consider contacting your state insurance department, attorney general’s office, or consumer affairs department.

Premium Increases after a Claim

Insurance policies vary from company to company but in general most insurers increase premiums according to a specified percentage for each chargeable claim.

A chargeable claim is one the insurer considers to be your fault. The percentage and maximum will depend upon the company. Generally, these increases will stick with you after the claim. If you end up with too many chargeable claims, your insurance company could decide not to renew your policy.

Insurers have different policies as to what constitutes an unacceptable driving record. In addition, more severe violations like a drunken driving conviction will virtually guarantee a non-renewal or at the very least, a large premium increase.

Keep in mind also that if you fail to report an accident to your insurer, you could be taking a chance even if it appears the damage is minor. It’s important to remember that the other driver could come back with a lawsuit and if you’ve not kept your insurance company informed, they could choose not to honor the policy.

Even if they do, you’ve put yourself in a hole by not giving them adequate time to represent you.

Claims and Generic Auto Replacement Parts

You are not required to use certain auto parts from your insurance company. They will usually base rates on an established industry average rate so if you want a part that is more expensive than their rate, you might have to pay the difference.

Most parts used to repair cars are known as “crash parts” and are sold in two flavors: original equipment manufacturer (OEM) parts and generic. Either type of part is manufactured to meet federal safety standards but generic parts are less expensive and bring total repair costs down.

If generic parts are ordered for your car, that information will be made available to you. The fact is though most generic parts are made by the same manufacturers as OEM parts so the quality will be the same, though the warranty may differ. The generic part will come with a guarantee but if doesn’t fit properly, the OEM part will likely be substituted at no extra cost.

Some insurance companies might let you choose between OEM and generic parts. While many stipulate OEM parts must always be used such as in repairing new or recent cars, some states may require insurance companies to offer a choice while others may require OEM only.

You should ask your insurance company about their and your state’s settlement guidelines. That way you will know exactly what repairing your car after an accident will entail.

Determining Car Value and Cost to Repair

There are a couple of sources you can read to determine the depreciated value of a new or used car. One such book is put out by the National Association of Automobile Dealers and the other is the Kelley Blue Book.

Whenever you file a claim, an insurance company will send out an adjustor who will examine the damage to your vehicle and figure out your loss and what it will cost to repair it. Once the adjuster gives you an estimate, you can then compare it to an estimate from a reputable repair shop. The insurance company will not expect you to jump at their first offer. You should first satisfactorily determine how much it will cost to repair your vehicle and not simply take the insurance company’s word for it.

You are not required to have repairs performed at a particular repair facility but at least one estimate could be required before work can commence. The insurer will likely accept the lowest bid but if you feel that won’t be enough to adequately repair your car, you can refuse their offer.

An insurer can also try to reduce a claim’s amount if your older car is fixed with new parts. They can cite that by repairing your less valuable car with brand new parts, your car’s value has actually increased and they can reduce a claim by the difference between the new part and an old one. This is called betterment.

If it costs more to repair your car than its actual cash value (ACV), the insurance company may declare it a total loss and pay you the book value. Most insurance companies won’t pay to repair a vehicle if it cost more than its worth. If your car is completely totaled, you may argue your car is worth more based solely on the parts used to construct it. In order to seek a higher settlement, you will need to present evidence including service records, mileage, as well as statements from mechanics to prove your car was worth more.

Rental Car Reimbursement Coverage

No one likes to think about auto insurance until they really have to think about it. If you have an accident, do you know for sure how well you’re covered in case your car is knocked out of commission?

Most drivers are shocked to discover they aren’t covered for rental cars until they have an accident. Typically, it takes about two weeks for the average repair job. If you need a rental car for that time, it can add up quickly to over $500 and more if your vehicle is out for a longer time.

Smart insured drivers know that for just a few dollars a month, if they are ever in an accident and they need a rental car, their insurance policy will pay for one for as long as is needed. When most people buy their insurance policies, they aim for the lowest barebones premium without any add-ons. But if rental car coverage only costs $1 to $2 per month, it can quickly pay for itself even if you go for a long time without an accident.

In addition, if the accident is the other driver’s fault, it will take some time to sort out the details of the accident. By having this type of coverage, you don’t have to wait to be reimbursed for a rental car.

Frequently Asked Questions

How do I file claims?
If you have been in an accident and your car needs repair, you will need to make a claim. You should contact your insurance company and the other driver’s. If you want to expedite the process you will likely need to send them a copy of the police report if one was filed. You will need to have your vehicle appraised and an estimate will be provided, once you agree to an amount, the insurance company will cut you a check. If you are making a claim with your own insurance company, your claim amount will be minus your deductible, if you have one.

What are my options if I have problems settling a claim?
You should contact your insurance company immediately and voice your protest. Make sure you do your research and check your policy for any arbitration service your insurance company may offer. You may need to employ the help of your state insurance department or have an independent arbitrator hear your case. If you still do not find satisfaction, you may need to hire an attorney as a last resort.

Do I have to use certain auto parts for repairs?
You do not have to use a certain brand of auto parts for your repairs, however your insurance company or state may stipulate that original equipment manufacturer (OEM) parts be used or that generic parts be used whenever possible to hold down costs. Some companies may allow you to choose between generic and OEM parts.

How are my cars value and the cost to repair it determined?
You can determine the cost of your vehicle by consulting the National Association of Automobile Dealers or the Kelley Blue Book. You insurance company will use an adjustor and give you an estimate of how much they think it will cost to repair. It is up to you to have an auto repair professional give you an estimate with which to counter the insurance company’s numbers.

Do I have rights when filing a claim?
Your policy is a binding legal contract between your insurance company and you and it will define any rights and obligations each of you have. Therefore, if you have any questions or concerns regarding your rights as stated under your policy, you should contact your insurance company or agent.

Does filing a claim raise my premiums?
Insurance policies vary from company to company but in general most insurers increase premiums according to a specified percentage for each chargeable claim.

Does auto insurance cover car rentals after an accident?
You can purchase a special rental car add-on to your current policy which covers car rentals in case your car is ever out for repairs. This add-on typically costs about $1 to $2 per month.