Repairs, Rental and Replacement of Your Vehicle

This article is about settling property damage insurance claims caused by a careless driver.  Mike Burman
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Concepts and Definitions:

I know, just give me the basics and forget about all this technical stuff.  But, to effectively communicate with the insurance adjuster who holds the checkbook, it pays to be prepared.  First, let's understand what is necessary to successfully settle insurance claims for property damage, rental, and total loss replacement.

Start By Reading the Police Report.  When a motor vehicle collision occurs, the police respond.  A police officer investigates and writes up a report with useful information for your case:
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• Driver information
• Passengers and witnesses
• Location, date and time
• Insurance information
• Fault and causes for the collision
• Statements by drivers and witnesses
• Photographs or body camera videos (sometimes)
• Accident reconstruction (sometimes)
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Now, We Need to Learn Some Insurance Terms.  I realize the following terms are unfamiliar to you. Refer back to these insurance terms as you study this article.
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• At-Fault Driver: The “at-fault driver” is the careless driver who caused the collision.
• Claim: A “claim” is when you demand an insurance adjuster pay you money under the insurance coverage.  For example, when you ask an insurance adjuster for a rental car, you are making a “claim” for the money it will take to pay for that rental car.  There are many different types of claims.
• First-Party Insurance:  “First-Party Insurance” refers to the insurance on the vehicle you owned or occupied at the time of the collision.
• Third-Party Insurance:  “Third-Party Insurance” refers to the insurance policy for the at-fault driver or vehicle operated by the at-fault driver.
• Third-Party Adjuster:  The “third-party adjuster” is employed by the Third-Party Insurance company to pay your claim.  This adjuster does not work for you.
• First-Party Adjuster: The first-party Insurance company employs the “first-party adjuster.”  The first-party adjuster works for you.
• Third-Party Claim:  When you make a claim with the third-party adjuster, you are making a “third-party claim” against the third-party insurance of the at-fault driver.  The at-fault driver is trusting this 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 first-party insurance policy on the vehicle you owned or occupied at the time of the collision.
• 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.  Likewise, you need to open your file where you keep all documents and information, such as the date, who you contacted, and what was communicated.
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How to File Claims for Damages and Rental:

Nothing can happen until you file your claims. So, contact your first-party insurance company and report the crash.  If you are asked about your injuries, kindly remind the adjuster you have an attorney for your personal injuries and your attorney will be more than happy to discuss that topic.  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 first-party insurance company to explain to you what coverage you have for property damage, new car replacement, and rental.  Keep notes.

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, contact me before giving a recorded statement.

After each claim is reported, 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.

Ask the third-party insurance company for the driver at-fault to issue you a rental vehicle.  Under Kentucky law, KRS 304.39-115 limits “loss of use to reasonable and necessary expenses for the time necessary to repair or replace the motor vehicle.” So, the time period for a rental vehicle is the time it takes to repair your vehicle or pay you for a total loss of your vehicle.  Make sure to get a firm understanding from the adjuster on what will be paid and for how long.
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Determining the Amount of Loss:

The amount of money paid for your claim depends on whether the property damage to your vehicle results in a total loss or a repairable 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 costs for 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:
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• Kelly Blue Book
• NADA Used Car Guide
• Recent Sales of Similar Vehicles
• Ads from Newspapers or Auto Trader websites
• Numerous websites can be located under an internet search for “automobile appraisal”
• Statements from a dealer or car salesman familiar with your vehicle
• Dealer service receipts, parts receipts and maintenance records
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Where the vehicle is not a total loss, you are entitled to compensation for the repair bill plus reasonable loss of use.   Loss of use is a fancy term for rental.  Talk to the first-party adjuster and compare rental terms with what the third-party adjuster gives you.  Whether your vehicle is a total loss or a repairable loss, you will need a rental vehicle.   Loss of use is the cost of a rental while you shop for a replacement vehicle, or wait on repairs.  Make sure to get a firm understanding from the adjuster on what will be paid and for how long.

For damages to your almost new vehicle, you should consider a diminished value claim in addition to the cost of repairs.  Diminished value is money you recover above and beyond the repair bills.  Diminished value to an almost new vehicle occurs because the vehicle is now reported as wrecked which decreases the fair market value of the vehicle even if the body shop does a perfect repair job.  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.  Diminished value is often difficult to prove and many adjusters will push back on diminished value claims.
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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.  If your paperwork shows you paid for gap insurance, contact the GAP insurance company and file a 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.
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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 repair bill for your vehicle.  You will need to review your automobile insurance policy to determine the amount of your deductible. When talking with an adjuster, 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 vehicle. 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 just be nice and stay calm.  Don't be afraid to ask questions.  Any honest adjuster will take the time to answer your questions.  Document your file with notes on all conversations with every adjuster.

You should not necessarily accept the first 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 unless your insurance policy requires it.
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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.
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Signing the Release:

Before you sign any property damage papers (usually called a Release of Property Damage Claims), 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 settlement check and the release should always contain specific words such as “for property damages only.”  If you are unsure of the “intent” behind the paperwork you are asked to sign, please contact me.