Auto Insurance Claims: Can You Get Paid?

After a car accident, you may be able to collect money by filing an auto insurance claim. The process of filing a claim starts at the scene of the accident, where it's important to gather information and take photos of the damage. You can then file a claim with your own insurance company or with the other driver's insurance company, depending on the circumstances. Once the claim is filed, an insurance adjuster will assess the damage and determine the payout amount. You can then use this payout to repair your vehicle or, in some cases, keep the money and choose not to repair it.

First-party vs third-party claims

Yes, you can collect money by filing an auto insurance claim. However, the process can be complex, and it's important to understand the difference between first-party and third-party claims.

First-party and third-party insurance claims are distinct types of insurance claims that you can file after an accident or incident. Understanding the differences between the two can help you plan your next steps and ensure you receive the compensation you're entitled to.

First-Party Claims:

A first-party insurance claim is filed by the policyholder (the first party) with their own insurance company (the second party). This type of claim arises from a contractual relationship between the policyholder and the insurance provider. The specific coverage and terms outlined in the insurance policy will determine the compensation the policyholder can recover.

In a first-party claim, you are typically responsible for covering the expenses associated with the incident. Common types of first-party claims include reimbursement for rental car or towing expenses, medical payments covered under an auto or homeowner policy, personal injury protection under auto insurance, and property damage coverage.

Third-Party Claims:

Third-party insurance claims involve three parties: the insured first party, the second party insurance company, and a third party, who is typically an individual who is not the policyholder. In this case, the third party files a claim against the insured party's insurance company, not directly against the negligent party.

Third-party claims often involve proving fault and are also known as liability claims. The insured party has a contract with their insurer, who is obligated to act in the insured's best interests and protect them from liability for damages or losses. Common types of third-party claims include motorcycle accidents, slip and fall accidents, and auto accidents where the insured party is at fault.

It's important to note that bad faith practices by insurance companies can affect both first-party and third-party claims. This includes delaying payments, denying claims without proper investigation, failing to adhere to contract terms, and putting their financial interests ahead of the policyholder's. If you believe an insurance company is acting in bad faith, seeking legal representation can help protect your rights and ensure you receive fair compensation.

Understanding your rights

• First-Party vs Third-Party Claims: After an accident, you can file a claim with your insurance company (first-party claim) or the other driver's insurance company (third-party claim). Insurance laws differ for these two types of claims. In a first-party claim, your insurance company has a direct contract with you and is obligated to fulfill the conditions stated in your policy. In a third-party claim, the other driver's insurance company has no direct contract with you, and their primary obligation is to their own policyholder.
• Insurance Coverage and Requirements: The type of insurance coverage you have will determine what is covered in the event of an accident. Comprehensive insurance covers damage to your vehicle and other people's vehicles or property, while third-party property damage insurance only covers damage to others' vehicles or property. Additionally, some states have minimum insurance requirements. For example, in Texas, the minimum requirement is "30/60/25," meaning $30,000 per person, $60,000 per accident, and $25,000 in property damage.
• Choosing a Repair Shop: You have the right to choose where your vehicle is repaired and what parts are used. However, if you select a repair shop that charges more than the insurance company's suggested shop, you may have to pay the difference.
• Settlement Offers and Negotiations: It is your choice whether to accept a settlement offer, continue with negotiations, or pursue legal action. If you receive a settlement offer, carefully consider whether you are ready to accept a final amount before cashing the check or signing a release.
• Claim Denials and Disputes: If your claim is denied or you disagree with the insurance company's assessment, you have recourse options. You can file a claim under your own policy, seek legal counsel, or file a complaint with your state's insurance department.
• Non-Discrimination: Insurance companies are legally prohibited from discriminating based on race, color, religion, or place of birth. They can only use factors like age, gender, disability, marital status, and residence to calculate the likelihood of having to pay out on a claim.
• Good Driver Provisions: Insurance companies must offer coverage for "good drivers," typically defined as those with a clean driving record and a valid license for at least three consecutive years. Good driver rates must be at least 20% lower than non-good driver rates.
• Cancellation and Non-Renewal: There are specific reasons why an insurance policy can be canceled or non-renewed, including fraud, non-payment of premiums, or a substantial increase in the insured risk.
• Understanding Your Policy: It is essential to read and understand your insurance policy before needing to file a claim. Pay attention to the coverages, exclusions, and any applicable deductibles or limits. The declarations page is a useful summary of your policy details.
• Financial Responsibility: Most states require you to show financial responsibility, which can be fulfilled by purchasing auto liability insurance. Driving without insurance is illegal and can result in fines, license suspension, and vehicle impoundment.
• Comparative Negligence: In some states, such as Utah, there is a "comparative negligence" law, which means that more than one person can be found at fault for an accident. To collect damages, you must be less than 50% at fault, and the settlement amount may be reduced based on your percentage of fault.

Evidence and documentation

• Notify Your Insurer: It is important to contact your insurance company as soon as possible, even from the scene of the accident, regardless of who is at fault. This allows you to understand your policy coverage and any time limits for filing claims. You can do this by calling the number on your insurance card, using their website or mobile app, or contacting your insurance agent directly.
• Gather Evidence: Start collecting evidence and documentation as early as possible. This includes taking photos or videos of the accident scene, vehicle damage, traffic signs, license plates, and the surrounding area. Get contact information and statements from witnesses, passengers, and other drivers involved. If there is a police presence, obtain a copy of the police report, which can provide valuable evidence, including statements, observations, and opinions on fault.
• Medical Records and Bills: If there are any injuries, gather medical records and bills. This includes hospital and doctor bills, radiology and lab expenses, physical therapy, and any other relevant treatments. These documents are essential for proving the extent of your injuries and the associated costs.
• Vehicle Damage and Repair Estimates: Collect repair estimates for your vehicle. You can get these from repair shops or garages, and they will help you understand the cost of repairs and support your claim. If your vehicle is a total loss, you will need to determine its actual cash value before the accident.
• Lost Income and Opportunities: Keep track of any lost income due to time away from work as a result of the accident. This includes wages, tip records, previous year's income, and lost jobs or opportunities if you are self-employed.
• Other Relevant Information: Depending on your specific situation, there may be other relevant documents or evidence to support your claim. This could include dashcam footage of the accident, rental car receipts, and even social media posts.

Remember, the key to a successful insurance claim is providing comprehensive and timely evidence to support your case. The more documentation you can provide, the stronger your claim will be.

Working with an adjuster

An insurance adjuster investigates an insurance claim to determine the extent of insuring a company's liability. They work for the insurance company that is paying the claim and will review what happened and estimate the claims payment.

• Try to be there when the adjuster inspects the damage to your property. Make sure they don't miss anything.
• Ask when you should expect the insurance company's offer and get the adjuster's contact information and the best time to call.
• If you have trouble reaching the adjuster, or other issues, call the insurance company. If you still can't work it out, you can ask the company to assign a different adjuster.
• If you disagree with the adjuster's estimate, tell the insurance company why. They may adjust the offer. If you still disagree, you have several options, including making a claim under your own policy if you have the appropriate coverage, or filing a suit against the at-fault driver in small claims court.
• If you are hit by an accident, provide detailed descriptions of all the items lost and make sure to create a home inventory, especially through photographs and videos. Get your own estimates for repairs, and make sure to do your due diligence.

Remember, adjusters work for the insurance company, so it may be a good idea to consider employing your own independent claims adjuster, who works to protect your interests in a claim.

Receiving your payout

Once you've filed an auto insurance claim, the insurance company will need to approve it. This process can take around 30 days, but it may vary depending on the company. After approval, the company will mail a check or set up a direct transfer to your bank account. If you disagree with the payment amount, you can negotiate with your insurer.

The amount of money you receive depends on several factors, including whether you have a total or partial loss, and whether you have collision or comprehensive coverage. Partial losses consider the cost of repairing the vehicle, while total losses occur when the car is beyond repair, in which case the amount of money you get is based on the actual cash value (ACV) of the vehicle. ACV takes into account depreciation, mileage, cosmetic damage, local demand, mechanical issues, make, model, year, accident history, and other factors.

If you own your car outright, the insurance claim check is normally sent directly to you as the owner. However, if you still owe money on a car loan or lease, the lender or leasing company will likely receive the check or be included as a co-signer. In this case, they may require you to use the money to fix the vehicle and provide proof of repairs. If there is money left over after repairs, it is usually yours to keep, unless your auto insurance policy states otherwise.

If your car is declared a total loss, the insurance company will determine the value of the vehicle before the accident, using an appraiser and a third-party assessor to find a fair value. This value does not cover the cost of replacing your vehicle with a new model, nor does it guarantee it will cover any remaining car payments you may have. If you want this additional coverage, you will need to add it to your policy.

If you are making a claim against another driver's insurance, the claim check will typically only include your name. However, if you have a loan or lease, you may be required to spend the insurance money on repairs. Additionally, the other insurance company may not agree that their driver is entirely at fault, and may only pay a portion of your claim.

Frequently asked questions