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When purchasing insurance, carefully review the application
before signing it to be certain that the coverages, policy
limits, and deductibles suit your needs. After you receive
the policy, review the declaration page. It contains
important information on who is covered, the vehicles insured, as
well as the coverage limits and deductibles. Make sure the
information is correct and the coverage is what you purchased.
If changes are needed, send your request to your agent
and/or insurance company in writing and keep a copy. Use
certified mail/return receipt requested to verify receipt of your
letter.
Become familiar with your automobile insurance policy before
it's needed. Read the policy thoroughly so you know what is
covered and what is excluded.
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Some of the most frequently asked questions about automobile
insurance claims are discussed below:
What to Do If There
Is an Accident
Q. What Should I Do at the Scene of an Accident?
A. Immediately stop at the scene.
- Call 911 if there are injuries.
- Call the police. In some areas police authorities may not
come to every accident scene. They may consider
factors such as the severity and location of the accident
(e.g., some police authorities will not come to the scene
if the accident is on private property). However,
you should attempt to notify the police. You should
also be aware that most policies require notification of
police within a specified time period if the accident is
a hit and run. Obtain names, addresses, telephone
numbers, and driver's license numbers from all drivers.
- Obtain license plate(s) and vehicle identification
numbers. Ask to see driver's license(s) and vehicle
registration(s) to verify that the information is
accurate.
- Obtain names, addresses, and telephone numbers of other
passengers and any witnesses.
- If you have a camera, take photographs of the damage, the
position of the cars, and the accident scene (e.g.,
traffic controls, visual obstacles).
- If the owner of a damaged car or damaged property cannot
be located, leave a note with the names and addresses of
the driver and owners of the involved cars.
- Notify your agent and/or your insurance company
immediately.
- If anyone is injured or the vehicle damage exceeds
$750.00, you must report the accident to the Department
of Motor Vehicles within 10 days. Failure to notify
the DMV may result in the suspension of your driver's
license.
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Things to Avoid at
the Scene of an Accident
- Do not argue with other drivers and passengers. Save your
story for the police and your insurance company.
- Do not sign statements regarding fault or promises to pay
for damage.
- If another party offers to pay your deductible, don't
sign anything releasing him or her from further
responsibility.
- By releasing the other party, you jeopardize your
insurance company's subrogation right, and the company
may refuse to pay for damage to your car.
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Frequently Asked
Questions
Q. What Happens After I File the Claim with My Insurance
Company?
A. Your insurance company will contact you for
additional information, such as a detailed account of the facts,
or a written or recorded statement. An examination under
oath may be requested. As part of the investigation, other
drivers and witnesses may be contacted. If you have medical
payments or an uninsured motorist claim, you must provide
documentation of your injuries, medical expenses, lost wages, et
cetera.
Q. What Should I Do If the Insurance Company Does Not
Contact Me?
A. A claim representative should contact you within a
reasonable period, usually 24-72 hours after you report the
loss. If you do not hear from anyone, call your agent or
insurance company for assistance. If they are not
responsive, or you believe there is an unreasonable delay in
settling your claim, contact the Department of Insurance.
Q. How Does the Insurance Company Evaluate Vehicle
Damage?
A. An adjuster or appraiser usually inspects the
vehicle. Do not authorize repairs until the adjuster has
inspected the vehicle and you are satisfied with the scope of
repairs and the repair facility. If the damage is
relatively minor, the company may ask you to submit competitive
repair estimates.
Q. What Will the Company Pay on a Physical Damage Claim
Under a Standard Auto Policy?
A. Generally, the company will pay the lesser of
The amount necessary to repair the vehicle or
The actual cash value (ACV) of the vehicle.
Read your policy to be certain of what is and isn't
covered. Pay particular attention to exclusions. For
example, there is usually no coverage for stereo equipment, a
telephone, or a citizens band radio unless the equipment was
permanently installed by the automobile manufacturer in the
normal opening in the dash or console. Coverage is usually
available for such special equipment for an extra premium charge.
Q. What Is Actual Cash Value (ACV)?
A. Actual cash value means the fair market value of your
car before the accident. This is the price that a willing
buyer would pay a willing seller, neither under pressure to buy
or sell.
Your company may survey dealers, value guide books, and
private parties for a similar vehicle to approximate the
ACV. A computerized market analysis system might also be
used.
If you do not agree with your company's figure for ACV, you
may want to do your own survey of dealers and private party
sellers in your area. Companies are required to offer a
fair settlement. If you can show that your figure more
closely approximates the ACV, your company should be willing to
negotiate. Your policy may also contain an appraisal
provision.
Q. What Is an Appraisal Provision?
A. Most standard policies contain an appraisal provision
which can be helpful in the event that you do not agree with your
company on the amount of loss. Read your policy to see if
it contains one. Under this provision either of you can demand an
appraisal. Each party selects a competent appraiser.
The appraisers then select an umpire. If the appraisers
cannot agree on the amount of loss, their differences are
submitted to the umpire. An amount that any two agree upon
is binding. Each party pays its appraiser; the umpire fee
is shared.
Q. How Is the Check or Draft Prepared?
A. The check may be made payable to the insured and any
lienholder, such as a bank or finance company. If the
vehicle is repaired, the company may also include the repair
facility as a payee.
Q. Who Is Responsible for the Balance of a Car Loan?
A. The borrower is responsible for the balance of the
loan, even if the vehicle is stolen or damaged beyond repair.
If your claim payment is less than the loan balance, the
lender will expect you to pay the difference. Coverage
commonly referred to as "gap" insurance can usually be
purchased to protect against this situation.
Q. Will the Company Pay for a Rental Car While Mine Is
Being Repaired?
A. Yes, if you have purchased rental vehicle
coverage. Review your policy before you rent a vehicle.
Although policy limits vary, the company pays up to a specified
amount per day for a specified number of days. The coverage
ends when your vehicle is repaired, the loss is paid, or after
the specified period, whichever comes first.
If your vehicle is stolen, the policy may automatically
provide transportation expenses. Again, review your policy to be
sure. This type of coverage usually begins 48 hours after
the theft and ends when your vehicle is recovered, the loss is
paid or after a specified period, whichever comes first.
Q. What Is a Collision Damage Waiver and Will the
Company Pay These Charges for the Rental Vehicle?
A. The terms of the rental agreement make the customer
responsible for collision damage while he or she has possession
of the vehicle. Additionally, rental companies insure
themselves for damage to the vehicle caused by
collision. For an additional fee, the rental company will
waive all or a portion of the customer's obligation to pay repair
costs for damage to the vehicle caused by collision. Both
the amount of the fee and the language of the waiver vary.
Coverage for collision damage to the rental car under
your personal automobile policy depends upon the policy
language. Read your policy carefully. Ask your agent
or company before you rent a vehicle.
Q. What Is the Salvage Value?
A. This is the remaining value of your damaged vehicle
if your vehicle is determined to be a total loss. It is
usually determined through bids from salvage buyers. The
company may sell the salvage to the highest bidder.
However, it is not obligated to do so. If you decide to keep the
damaged vehicle, the highest salvage bid may be deducted from
your settlement. In effect, you are "buying
back" your vehicle for the salvage value. If you
retain possession of the salvaged vehicle, it is your
responsibility to file a salvage certificate with the Department
of Motor Vehicles.
Q. What Is Subrogation?
A. Subrogation is the right of the insurance company to
recover from a third party the amount of damages it paid to you.
For example, if another party is at fault in an accident
that damages your car, and you have a collision claim, your
company will ask the other party to reimburse the money it paid
on your claim. The policy requires your cooperation with
the company's subrogation efforts. Also, you cannot do
anything that jeopardizes the company's right of recovery.
For example, you cannot sign an agreement releasing the other
party in exchange for payment of your deductible.
Q. Is the Company Required to Help Me Recover My
Deductible?
A. Yes and no. The insurance company must advise you as
to whether or not they intend to pursue subrogation. If the
company pursues subrogation, they are required to include your
deductible as a part of the process. However, if the
company does not pursue subrogation they are required to advise
you of that fact so that you may pursue your deductible on your
own. If their efforts are successful, in whole or in part,
the company will reimburse you in accordance with the
recovery. For example, if 100 percent of the paid claim is
recovered, you will receive 100 percent of your deductible; if
the recovery is 65 percent, you will receive 65 percent of your
deductible. Any expenses or fees (e.g., legal fees,
incurred by the company in its recovery efforts) will be
apportioned between the company and you, if recovery is
made. However, if you choose not to have the company
include your deductible in its efforts, you can seek recovery
directly from the other party on your own. But before you
do, discuss the matter with your company to avoid jeopardizing
its recovery.
Q. Is the Car Covered Outside of America?
A. Most policies provide coverage in other states, U.S.
territories and possessions, and Canada. Most states and
territories have enacted financial responsibility laws requiring
drivers to carry a specified amount of automobile insurance to
cover losses resulting from ownership or operation of a motor
vehicle. If the financial responsibility requirements where
you are traveling are higher than your policy limits, your
company will meet the higher requirements. Most policies do
not provide coverage in Mexico, so if you plan to drive your car
there, it's wise to buy that coverage separately. Check
your out-of-state coverage before you travel.
Q. What Should Be Done If a Lawsuit (Summons and
Complaint)Arises Out of an Accident?
A. Notify your agent and insurance company
immediately. Keep a copy for yourself and mail or deliver
the original documents to your company. Do not give
statements or discuss the accident with anyone except a verified
representative of your company. If the lawsuit arises out
of a covered loss, your company will provide legal defense.
Q. Is a Newly Acquired Vehicle Covered?
A. Most policies provide 30 days automatic coverage for
a vehicle that replaces a vehicle already on your policy.
The coverage normally is the same coverage you had on your
previous vehicle. Notify your broker-agent as soon as
possible of any replacement vehicle. If you wish additional
coverage, there is usually a requirement that you notify your
agent or your company within a designated time period.
Most policies also provide automatic coverage for a newly
acquired vehicle that is an addition to the vehicles you already
have on your policy. There are usually specific conditions
that must be met. For example, the purchased vehicle must be
reported to your agent or company within a designated time period
(e.g., 30 days) or there may be a requirement that in order for
coverage to automatically apply, all of your other owned vehicles
must be insured with the company.
Important Tips
- Read your policy. Don't wait until after an accident.
- If you don't understand your policy, ask your agent
and/or company for clarification.
- If you have an accident, call the police. If there
are injuries, call the paramedics.
- Get as much information as possible at the accident scene
to furnish to your agent and/or insurance company.
- Immediately notify your agent and/or insurance company of
an accident.
- Cooperate with the insurance adjusters/investigators to
aid in their efforts.
- If you don't understand something about the claims
procedure (e.g., amount of settlement offer), ask your
agent and/or insurance company representative to explain.
- Notify your agent or company in writing of any change in
your vehicle ownership.
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Your Rights Under
the Fair Claims Settlement Practices Regulations
In general, insurance companies are required to do the
following:
- Advise you of all benefits, coverage, time limits, or
other provisions of your insurance policy.
- Acknowledge claim, start investigation, provide forms and
instructions, and provide reasonable assistance
immediately, but in no event later than 15 days after
receiving notice of claim. (Notice of claim is any
written or oral communication to the insurance company
which reasonably apprises the insurer that you wish to
make a claim.)
- Respond to communications received from you immediately,
but in no event later than 15 days.
- Accept or deny the claim immediately, but in no event
later than 40 days after receiving proof of claim. (Proof
of claim is documentation in your possession which
provides any evidence of the claim and supports the
magnitude or the amount of the loss such as estimates of
repair or police report indicating theft of your vehicle,
et cetera.)
- Unless the insurer has provided you with the name of a
specific towing company prior to your using a towing
facility, the insurer must pay reasonable towing
expenses.
- Offer a fair settlement. If you suffered a total
loss, settlement must include taxes, license and transfer
fees. The settlement must reflect the value of a
comparable deductions from the settlement for salvage
must be fair, measurable, and discernable.
- Once the claim has been accepted, the insurer must pay
the claim immediately, but in no event later than 30 days
from the date settlement was reached.
- Advise you whether or not they will pursue
subrogation. If the insurance company pursues
subrogation, they must include your deductible unless you
have already recovered your deductible.
The above represents a paraphrased brief overview of some of
the Fair Claims Settlement.
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Automobile Insurance Fraud
Red Flags
Automobile insurance fraud in the U.S. historically has
taken several forms. The most common fraud schemes involve
automobile property and automobile accidents.
Automobile Property - This type of fraud most often involves
dishonest auto body and repair shops and/or insureds who may
employ a variety of illegal or questionable techniques including:
- Reporting parts of vehicles as damaged or lost when in
fact they were not damaged or lost prior to the shop
receiving the vehicle.
- Making final cost in excess of the original estimate of
damage.
- Billing for repairs that were not authorized.
- Charging for genuine parts when aftermarket or used parts
from a junkyard were used.
- Pounding out dents or using bondo when charging for brand
new auto parts.
- Falsely reporting stolen vehicles or vandalism of
vehicles in order to collect insurance monies.
It is always important for the consumer to review carefully
all paper work from auto body and repair shops in order to
protect against potential fraud. Also, consumers should be
cautious of any auto body or repair facility that makes referrals
to medical or legal offices. This practice may be an indicator of
"capping." Capping (a felony in most of the U.S.) is
the illegal referral of clients to legal offices for a fee.
Automobile Accidents - Automobile fraud often involves
organized auto accident rings. Staged auto accidents, which are
not accidents at all, follow several basic schemes including:
- Suddenly stopping for no apparent reason
- Intentionally disregarding the right-of-way
- Giving up the right-of-way in order to cause an accident
- Claims report list passengers who were not in the vehicle
at the time of the accident
- Witnesses are listed who were not at the scene of the
accident
- Injuries claimed are excessive compared to vehicle damage
- Driver has a temporary vehicle registration
- Prior damage to the other vehicle
- Contact by an attorney without being solicited
If you have been in an auto accident, be cautious of any
unsolicited referral to a body shop, law office or medical
office. Organized accident rings and cappers actively
solicit others in the community to participate in the creation of
accidents. Often these accidents only exist on paper
(referred to as paper accidents), and no innocent parties are
involved. Paper accidents have gained in popularity among
fraud perpetrators, as they are less dangerous from a bodily
injury standpoint, and there is less likelihood of police
involvement.
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Auto Body Repair Shops
Under California Insurance Code §758.5, for example, an
insurance company cannot require that an automobile be repaired
at a specific repair shop. However, an insurance company
can recommend that an automobile be repaired at a specific repair
shop under the following conditions outlined by law:
- The consumer specifically requests a recommendation from
the insurance company to a repair shop.
- The consumer has been informed in writing of the right to
select a repair shop of his or her choice.
- If the consumer agrees to use the recommended repair
shop, the insurance company must restore the damaged
vehicle to its condition prior to the accident or loss
with no additional cost other than as stated in the
policy or as otherwise allowed by law.
- If the company makes an oral recommendation to a repair
shop, and it is accepted by the consumer, then the
company must follow the oral recommendation with the
prescribed written notice within five calendar days as
specified by law.
If the vehicle is repaired in a shop chosen by the consumer,
then the insurance company must pay the reasonable costs to
repair the vehicle in a workmanlike manner. The insurance
company is prohibited from limiting or discounting reasonable
repair costs based on charges that would have occurred if the
vehicle had been repaired at the company's recommended repair
shop. Also, the insurance company must stand behind the
repairs of the recommended shop if the vehicle is not repaired
properly.
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Auto Replacement Parts
In some cases an auto repair may include replacement of
damaged parts with after-market parts. After-market parts
are parts which are not made by the original manufacturer.
After-market parts may be equal, better, or worse in quality than
original equipment manufacturer parts. Consumers should
take note of the following:
An auto repair shop is required to provide a written repair
estimate of the cost of repairs prior to initiating repairs to
the vehicle. Once the work is completed, the shop must then
provide a written repair invoice. State law requires that
the type of auto parts used in repairs must be identified on the
repair invoice. Consumers should carefully check their
invoice to ensure that the auto body shop has identified each
auto part replaced as being used, reconditioned, rebuilt, an
original equipment manufacturer part, or an after-market
part.
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