“This article talks about how to handle an insurance claim for damages to your automobile. Contact me if you have questions.” Mike Burman
What You Will Learn About Property Damage Claims
- Useful Concepts
- Helpful Steps
- Tips to Increase the Amount of Money You Receive
- Suggestions for Handling the Difficult Insurance Adjuster
Concepts and Steps Regarding Property Damage Claims
First, let’s learn some basic concepts and terms.
Police Report: When a motor vehicle collision occurs, the police respond. A police officer is assigned to investigate. This investigating police officer prepares a report containing key information:
- Driver information
- Passengers and witnesses
- Location, date and time
- Insurance information
- Fault and causes for the collision
- Statements by drivers and witnesses
- Photographs (sometimes)
- Accident reconstruction (sometimes)
Insurance Terms: I realize the following terms are unfamiliar to you. Refer back to these insurance terms as your read this article, or call me if you have questions.
- At-Fault Driver: The “at-fault driver” is the driver who carelessly caused the collision that damaged your automobile.
- First Party Insurance: “First Party Insurance” refers to the automobile insurance policy you purchased. Your are the “first” party to this insurance policy and your insurance company is the “second” party to this insurance policy. The insurance policy is a contract containing specific terms and definitions that are controlled by state law.
- Third Party Insurance: “Third Party Insurance” refers to the insurance policy for the at-fault driver. Because you are making a claim against the at-fault driver, you are outside this at-fault driver’s contract, that is, you are a “third party” to the insurance contract between the at-fault driver and the at-fault driver’s insurance company.
- Third Party Adjuster: An insurance adjuster, called the adjuster for third party insurance, or third party adjuster for short, is employed by the at-fault driver’s insurance company to work with you on your claims. This third party adjuster works for the at-fault driver’s insurance company, and does not work for you.
- First Party Adjuster: The insurance company that insures your vehicle will employ an an adjuster called the “first party adjuster.” This first party adjuster is employed by your insurance company to work with you.
- Third Party Claim: When you ask for money from the at-fault driver’s insurance adjuster (the third party adjuster), you are making a “third party claim” against the at-fault driver. The at-fault driver is trusting his insurance company to resolve your claim so the at-fault driver does not get sued by you.
- First Party Claim: When you ask for money from your insurance company, you are making a “first party claim” against the insurance policy that you purchased from your insurance company.
- Claim file: Every insurance adjuster, whether third-party or first-party, must open a file on your claim. The “claim file” is where all documentation and information is maintained on your insurance claim. By law, every insurance adjuster must maintain a claim file.
Step One: Filing a Claim
Insurance is highly regulated. Insurance adjusters must meet certain requirements to adjust claims in Kentucky and Tennessee. More on this later; however, nothing can happen until you file an insurance claim.
So, step one is to contact your first party insurance company and report the crash. You will probably be asked if you sustained injuries. Use the list of injuries that you and I discussed when we opened your case. Do not give a recorded statement unless I am present to make sure the statement is fair and balanced. Tell your first party insurance company that you are going to make a claim against the third party insurance company for your property damages. Ask your insurance company to explain to you what coverage you have for property damage, new car replacement, and rental.
Next, contact the third party insurance company for the driver at-fault. You can expect this third party insurance company to take down your information and open a “claim file” because you are making a “claim” for payment against the driver at fault. All the information you provide the third party insurance company goes into this claim file. If someone wants to record your statement, it would be best that you consult a lawyer before giving a recorded statement.
After your claim file is opened, the insurance company will assign an “adjuster” to work on any first party claim or third party claim. You should keep a file of your own to organize all your paperwork and notes. The first thing that goes into your file is the police report. Next, put into your file all your notes showing who you talked to, the date you talked, and the substance of your conversation.
Step Two: Determining the Amount You are Entitled to Collect for Your Property Damage Loss
The second step is to determine the amount of money to which you are entitled. The amount of money you collect depends on whether the property damage to your vehicle results in a total loss or a repairable loss.
Total Loss: If the vehicle is a total loss, you are entitled to property damage consisting of the actual cash value of your vehicle, plus taxes and title on a vehicle of like value, plus reasonable loss of use. Loss of use is the cost of a rental while you shop for a replacement vehicle. Property damage includes damage to your vehicle, or its contents, even clothing or glasses you were wearing. The actual cash value is also commonly called fair market value. The law defines fair market value as the amount of money a willing buyer would pay a willing seller for your vehicle before the crash occurred. The determination of fair market value includes facts like the year, the make, the odometer mileage, any previous damage and the general condition of your vehicle before the crash. There are various sources of information to help determine fair market value, such as:
- Kelly Blue Book
- NADA Used Car Guide
- Recent Sales of Similar Vehicles
- Ads from Newspapers or Auto Trader websites
- Statements from a dealer or car salesman familiar with your vehicle
Dealers service receipts, parts receipts and maintenance records are useful when trying to establish vehicle value.
Repairable Loss: Where the vehicle is not a total loss, you are entitled to compensation for the repair bill plus reasonable loss of use, and any “diminished value”.
Diminished Value Loss: Diminished value is money you recover above and beyond the repair bills. Diminished value is money you can recover because you have relatively new vehicle involved in a crash. When a new vehicle is repaired after a crash, the overall value of that new vehicle is diminished because the vehicle has been wrecked. To determine diminished value, you will need expert assistance. Obtain a statement from your dealer for the dollar amount your vehicle has decreased because the vehicle has been wrecked even though the vehicle has been repaired. This diminished value is in addition to the repair costs. Contact me to discuss this further if you have questions. Diminished value is often difficult to prove.
Loss of Use: Ask for a rental vehicle. Whether your vehicle is a total loss or a repairable loss, you will need a rental vehicle. Loss of use is different from repairable loss or diminished value. Loss of use is the cost of a rental while you shop for a replacement vehicle, or wait on repairs.
Other Insurance: Gap Insurance
Gap insurance is optional. If you have purchased a new vehicle and financed most of the purchase price, then you may have purchased “gap” insurance. Gap insurance is “on top of” your collision insurance coverage. Gap insurance pays the difference between what you owe on the vehicle and the total loss value of the vehicle.
Check your paperwork when you bought the vehicle and took out a loan. You may have gap insurance. If so, contact the GAP insurance company and ask for an adjuster to the claim. Read your gap insurance policy, or call me to help you with it, because some gap insurers won’t cover your primary insurance deductible, or will claim other deductions under the policy. Read your policy to be sure the gap adjuster is basing any deduction on the terms of the policy.
Working with the Insurance Adjuster
Getting payment from the insurance company that insured the driver at fault will avoid you making a claim against your insurance policy. If you make a claim against your insurance policy, then you will probably pay a “deductible” of $100, $250 or $500 against the damages to your vehicle. You will need to review your automobile insurance policy to determine the amount of your deductible. When talking with an adjuster, if you are being represented by an attorney on your personal injury claim, only talk about the property damage claim. Do not discuss your injury claim. The property damage adjuster assigned to your property damage claim will examine the damage to your car. Or, the property damage adjuster will ask you to get estimates. Adjusters are people just like you. Most will get you a little more if you explain calmly why you are being reasonable. Don’t be afraid to ask. Document in your file all conversations with every adjuster. If you have just put a new engine in the vehicle, or installed something extra, tell the adjuster about any improvements.
You should not necessarily accept any estimate, but should obtain two or three different estimates on your own. You may get your car repaired at the repair shop of your choice; you cannot be required to have any repairs made at any particular shop.
Is the Car Repairable or a Total Loss?
A vehicle is considered a total loss if the cost of repair plus the salvage value is greater than the vehicle’s fair market value. If the vehicle is not a total loss by this standard, then the insurance company will generally pay to have your car repaired.
Check for Quality Repairs
After your vehicle is repaired, check it over very carefully to make sure that all the repairs were done to your satisfaction. Pull the vehicle into the sun and look at any new paint to see that it matches the original paint. Point out anything that was missed to the body repairman. Do not pay until you are fully satisfied.
Signing the Release
Before you sign any property damage release, make sure you read it very carefully. Do not sign anything that says “damages resulting from the accident” or “in full and final settlement” until you are fully satisfied with the repairs. The check should always read “for property damages only.” If you are unsure about what you are signing, contact me.