How To Handle My Property Damage Claim

In many cases, the insurance company of the at-fault driver will need to accept liability before it will authorize payment of the repairs to your vehicle (or replacement if the vehicle is totaled). Because the at-fault insurance company may take some time to finish its investigation and accept liability, it is often quicker to begin the repair/replacement process by using your own insurance company. In many cases, you may also get better service from your own insurance company. However, this will mean that initially you will need to pay your deductible (or have your deductible deducted from the check to your auto repair shop). Once the at-fault insurance company accepts liability, your insurance company will recover your deductible and reimburse it to you.

If you have Uninsured Motorist (UM) property damage coverage as part of your policy, your insurance company will cover the costs of the repairs of your vehicle, or replacement if totaled.

Unfortunately, you will be responsible for paying the deductible (which you can personally try to collect from the at-fault driver or possibly go to small claims court to recover the amount).

Unfortunately, without insurance coverage on either vehicle, your only options are to: 1) Try to contact the other driver to negotiate payment for the repairs, 2) pay an attorney to file a civil lawsuit against that individual and have a judge order payment from the at-fault driver, or 3) take the matter to your local small claims court. (Please note that small claims court has monetary limits of the amount of the award available.)

You may wonder how the insurance company determines if a vehicle is totaled. When the cost of the repair is more than the value of the vehicle, it may be deemed a ‘total loss’ or ‘totaled.’ The insurance company is then expected to compensate you for the fair market value of the vehicle. It usually has 30 days from when you make your claim to pay you for the totaled vehicle.

The insurance company will compensate you for your vehicle based upon a number of factors that may determine the value of your vehicle, including mileage, general condition before the accident, and vehicle package options.

It’s not uncommon for a claimant and the insurance company to disagree over the fair market value of the totaled vehicle. If you believe your vehicle is worth more than the offer, check with a reputable used-car resource such as the Kelly’s Blue Book, or automax.com to determine the value of your vehicle, or check local classified ads for comparable cars/trucks and their values. Then, send your documentation to the insurance adjuster.

In some cases, you may want to retain title to a car or truck that has been declared totaled. Remember, the insurance company has the legal option to either repair your vehicle or declare your vehicle a total loss (and compensate you for its fair market value). Some insurance companies will allow you to keep title to the car or truck, but will deduct the ‘salvage value’ of the vehicle from the fair market value.

If your vehicle is totaled, you have the right to be reimbursed for the fair market value of your vehicle, plus the applicable sales tax (on the fair market value), cost of tag transfer and prorated annual tax and/or registration fees. Unfortunately, having a vehicle in “immaculate condition” is rarely appreciated by the insurance company. Instead, they evaluate a vehicle more on its mileage, general condition, and the model.

With an older model vehicle, you may find it difficult to recover the costs of recent repairs (for example, a new engine, transmission or tires). The insurance company assumes all such parts to be in good working condition at the time of accident. Usually new tires or a new transmission will only marginally increase the value of the vehicle. However, you may want to send copies of your receipts (which outline recent repairs) to the adjuster; they may help with a reevaluation of your vehicle.

Also, you may have had additional extras added to the vehicle (such as custom wheels). In that case, you can submit a receipt for that extra feature, which may increase your vehicle’s value somewhat.

You have the right to use a repair shop of your choosing over the insurance company’s ‘authorized’ repair shop. If you have no idea where to take your vehicle, ask trusted friends and family members for recommendations, rather than accept the recommendation of the insurance companies. Insurance companies routinely recommend auto body shops for financial reasons regardless of the quality of the repair. You want to make sure the body shop is working for you, not the insurance company.

The insurance company for the at-fault driver is usually responsible for all towing and storage costs associated with the accident. However, if you cause delays or refuse to act, you could be stuck with unnecessary storage charges. Storage fees should be paid until the insurance company decides to repair or total the vehicle. At that time, the insurance company will move it to the repair shop, another storage area or a salvage yard (if totaled). You will be contacted before your vehicle is moved from the storage area. If you do not allow the insurance company to move the vehicle, you are responsible for the storage costs from that time forward. If you want to keep the vehicle, you are responsible for towing it to the location of your choice. Be sure to remove your personal items from the vehicle prior to its relocation.

If you have a new vehicle that is totaled, don’t expect the insurance company to hand you a check for a new vehicle (unless you have “New Vehicle” insurance as part of your policy). Your insurance check for your vehicle will be for its value at the time of the accident, not when you purchased it. If you owe on the vehicle, you are still responsible for the debt on the vehicle.

If you owe more money on your vehicle than the fair market value, unfortunately the insurance company is under no obligation to pay that amount.

If you examine your insurance policy’s property damage section, it will clearly spell out that all property damage claims will be repaired, unless the cost of the repair is more than the value of the car or truck (totaled). In some cases, with the purchase of a new car or truck, your insurance
policy may have a “new vehicle” clause that allows a new vehicle replacement within two or three years of the purchase of the new car or truck – but only if it is totaled.

After your vehicle has been repaired, its overall value may diminish, depending on the extent of the repair or if non-OEM (original equipment manufacturer) parts were used in the repair. Insurance companies do not routinely offer diminished value claims, and it is often
difficult to get them to pay a fair diminished value claim. (Diminished value claims are only applicable to repaired vehicles and not totaled vehicles.)

To build your case for diminished value, have your vehicle evaluated by at least two or more qualified vehicle dealers and have them provide documentation that shows the value of the vehicle without the repair vs. the value of the vehicle with the repair. Their inspection of the vehicle should also include identifying the installation of non-OEM parts. Submit those supporting documents to the insurance company. You may need to negotiate for some time before the insurance company makes you an offer for your diminished value claim.

However, it is possible that you may never suffer any loss of value if you keep the vehicle long enough that its natural depreciation catches up to the value or you may be able to sell it to a buyer who pays full value.

Finally, if there is an injury claim associated with the accident, you may not handle them separately by filing a lawsuit on either of them without including the other. You may not file a small claims action for the diminished value claim, for example, without including your bodily injury claim. If you do so, you forfeit the claims that you do not bring at the same time.

If the accident was caused by the other driver, you may have the right to a rental vehicle paid by the liability insurer while your vehicle is being repaired, or until you receive a check for the value of your totaled vehicle. If the insurance company takes some time before accepting liability for the accident, and your vehicle is not drivable, you should receive compensation from the insurance company for every day you are denied use of your vehicle. You should insist on a rental vehicle equal in value to your vehicle involved in the accident (don’t be surprised if they offer to put you in a sub-compact vehicle.) Usually, your own insurance should cover you while you are using the rental vehicle and it’s not necessary to buy expensive insurance from the rental company. We always recommend that you verify this coverage with your insurance agent. Also remember that most rental agreements only allow you to drive the rental vehicle, unless you agree to pay extra for multiple drivers.

Insurance companies are contractually bound to communicate with you promptly after you’ve been involved in an accident. Fortunately, nearly all reputable insurance companies are quick to become involved with an accident claim. When you file a claim with an insurance company, they investigate that claim to make
sure they are or are not liable. If your insurance company is unresponsive, they are opening up themselves to a ‘Bad Faith’ claim, meaning that the insurance company can be sued for not fulfilling its contractual obligations with you. Bad Faith claims are often successful and insurance companies are ordered by the court to pay large amounts to the claimant as punishment – for this reason, insurance companies prefer to provide you with service rather than risk a Bad Faith claim.

You should expect the insurance company to repair the vehicle to its pre-accident condition. If your vehicle is an older model, the repair shop may use reconditioned or non-OEM parts. However, you should insist on OEM parts with your repair, if they are available.

Warning: Some insurance companies will put language in your policy to allow the use of non-OEM parts in any repair. Make sure that you understand what your policy allows regarding OEM part repairs.

In a few situations, the insurance company may claim that your vehicle or truck was damaged prior to the accident or it may contest that the body shop found a mechanical failure unrelated to the wreck. In this case, you may need to find an independent mechanic or body shop to evaluate the vehicle’s damage or cause of the mechanical failure. Statements or documents supporting your position should be sent to the adjustor with a request for a reevaluation of your vehicle.