Here’s how car insurance works when you file bodily injury and property damage claims. Get a fair settlement after a crash.
Car accidents can be terrifying. When you suffer injuries and vehicle damage, it helps to know how auto insurance can help pay for your losses.
You’ll seek compensation for your injuries and property damage from the at-fault driver’s insurance company.
Property damage claims usually settle within a few weeks. Personal injury claims can take anywhere from a few months to a year or more.
How Car Insurance Injury Claims Work
When you’re injured in a motor vehicle accident, in most states you’ll file a claim with the at-fault driver’s auto insurance company. Vehicle owners in every state must carry liability insurance coverage to compensate victims if the driver causes an accident.
There are four main phases of a successful personal injury claim.
1. Establishing the Insured’s Liability
Your injury claim will be assigned to an insurance adjuster, who will first establish who caused the accident. It may seem obvious to you that the insured caused the crash, but the adjuster will demand proof.
Since an investigation is a big part of processing a car accident claim, it may take four to six weeks to complete. If the claims adjuster is missing information or your accident was complicated, it could take longer. You can help move the process forward by quickly responding to requests for information.
The burden is on you – the claimant – to establish the insured’s liability, meaning responsibility for your injuries. You must prove the at-fault driver did something wrong, or failed to do what any reasonable driver would have done in the same circumstances.
Evidence to prove liability includes:
- Police reports
- Pictures and videos from the scene
- Witness statements
The adjuster might ask you for a recorded statement to tell your side of the story. It’s not a good idea to provide a recorded statement without an attorney.
You have no legal obligation to provide a recorded statement to the at-fault driver’s insurance company. Adjusters are trained to manipulate your responses so they can deny or minimize your injury claim.
The adjuster might try to shift some of the blame for the accident on you. Most states have comparative negligence rules, meaning you can still claim damages if your share of blame is less than the other driver’s. Your compensation will be reduced by the percentage of shared fault.
2. Proving the Scope of Your Injuries
Once the adjuster has accepted liability, they will evaluate your injuries. Adjusters won’t take your word for anything. You’ll need to provide medical bills and records to verify that your injuries are a direct result of the car accident, your treatment is medically necessary, and your time off work is reasonable.
Never sign a “blanket” medical release form offered by the insurance company. Most blanket releases allow the adjuster access to all your medical records going back five or ten years.
The insurance company is only entitled to see treatment records and bills directly related to your car accident injuries. Your full medical history is none of their business.
Lost Income: You’ll need a doctor’s note for time off work. It helps if the doctor mentions the reasons you can’t work, like if you’re a roofer and can’t do your job wearing a cast on your leg. Ask your employer for an income verification statement, even if your absence was covered by sick leave.
3. Making a Demand and Negotiating Settlement
You might get a settlement offer soon after filing your personal injury claim. The adjuster wants to see if you’re desperate enough to accept a lowball offer. Until you’re fully recovered and have calculated the value of your claim, it’s too soon to discuss settlement.
Negotiations usually kick off when you (or your car accident attorney) submit a formal demand for compensation with supporting documentation. The adjuster will respond with a much lower counter-offer.
After a few rounds of discussion and counteroffers, most insurance negotiations end with a compromised settlement. Both sides make some concessions to settle the claim.
Occasionally negotiations stall or fail entirely. If your settlement talks break down, sometimes all it takes is hiring an attorney to get the adjuster back to the bargaining table.
4. Finalizing the Release and Settlement
The insurance company has a duty to protect their insured, so you’ll be asked to release the at-fault driver from further liability as part of the car accident settlement agreement.
Never sign an agreement unless you have read and fully understand what you’re signing.
If you might be filing an underinsured motorist claim with your own insurance company, talk to an experienced personal injury attorney before signing anything. You don’t want to risk jeopardizing your overall compensation.
If your injuries are severe enough to exhaust the at-fault party’s liability limits, you should hire a personal injury lawyer to protect your interests. There’s too much at risk with serious injuries to go it alone.
After the agreement is signed, the check will be sent to you or your attorney. Typically, any medical liens will be paid from your settlement before a check is cut to you for the remaining funds.
Car Accident Coverage for Bodily Injuries
Almost every state’s insurance laws require drivers to carry liability coverage. When you’re injured in an auto accident, you will usually make a claim under the at-fault driver’s Bodily Injury (BI) liability coverage.
Bodily injury liability coverage pays for the injured person’s:
- Medical Expenses: Hospital bills, doctor appointments, physical therapy, and related costs
- Lost Income: Compensation for lost wages because of an inability to work
- Replacement Services: Tasks you have to hire out while injured, like child care
- Pain and Suffering: Includes emotional distress, humiliation, and more
There are two coverage limits for bodily injury liability:
- Per-person limit: The amount of money that each person injured in an accident can receive
- Per-accident limit: The total maximum amount that will be paid if more than one person is injured
Case Example: At-Fault Driver Injures Three People
John is driving his mid-sized sedan with passengers Rachel and Kim. Susan is driving her SUV in the rain, misjudges the distance, and slams into the back of John’s car. John, Rachel, and Kim each sustain serious injuries.
Susan’s BI liability limits are $50,000 per person and $100,000 per accident. The limit means that John, Rachel, and Kim could potentially each receive up to $50,000 for their injuries (the per-person limit on the policy). However, the combined total that Susan’s policy can pay is $100,000.
In this case, John, Rachel, and Kim would not each receive $50,000 since that would total $150,000. This amount exceeds Susan’s per-accident limit.
If the injured parties can’t agree on a fair division of the available limits, the insurance company may file an “interpleader action” to ask the court to decide how to divide up the $100,000 per accident limits.
Many states also require other types of insurance, such as:
- Personal Injury Protection (PIP) is mandatory in no-fault insurance states and an optional form of coverage in tort states. PIP covers the driver and their passengers for injury-related costs, like medical treatment costs, lost wages, and sometimes replacement services. PIP doesn’t cover pain and suffering.
- Medical Payments (MedPay) is an optional coverage in most states. Similar to PIP, MedPay pays for injuries to a driver and their passengers, no matter who caused the accident. MedPay only covers essential medical expenses, and often has low limits. MedPay does not cover lost wages or replacement services.
- Uninsured Motorist Coverage reimburses you for losses caused by an uninsured driver. Most states require auto policies to include uninsured motorist coverage in case a non-insured driver hits the policyholder.
- Underinsured Motorist Coverage is an optional add-on to auto policies in most states. An underinsured driver has an auto insurance policy, but their coverage is limited, meaning that it’s not high enough to cover your damages. This coverage kicks in when you have accident-related injury expenses that exceed the at-fault driver’s liability limits.
Insurance Coverage for Property Damage
In addition to bodily injury liability coverage, auto insurance policies also include property damage liability coverage. This coverage pays for damage to your vehicle and personal property, like eyeglasses, laptops, or groceries you just picked up from the store.
Towing charges can also be included in a property damage claim.
Using Your Own Collision Coverage
Sometimes policyholders use their collision coverage for car repairs after an accident caused by someone else. They leave it to their car insurance company to collect the cost from the at-fault driver’s policy. This is called subrogation.
Your collision coverage will pay for approved car repairs, less the amount of your deductible, no matter the circumstances of the accident. However, if the accident wasn’t your fault, your insurance company will seek subrogation from the at-fault driver’s insurance company to recover the money they spent on your behalf.
You should cooperate with your insurer in their efforts to subrogate. For example, don’t make agreements or sign waivers that release the other driver from responsibility.
Subrogation is typically sought at the end of the insurance claims process. If subrogation is successful, the insurance company must recover the cost of your deductible and refund it to you.
Getting a Fair Property Damage Settlement
The claims adjuster will determine the cost of repairs to your vehicle. You have the right to ensure that their estimate covers the costs of necessary repairs. Insurance companies typically require claimants to get at least one repair estimate.
Don’t be surprised if the adjuster chooses the lowest estimate for the repairs. They want to protect their interest by only paying the minimum cost to get your car repaired.
If the repair shop replaces your car’s parts with brand new components, the insurance company might argue that your car’s new features enhance its value. They can use this point, commonly referred to as “betterment,” to justify reducing the amount of your property damage settlement.
You can take your car to your own repair shop or a shop chosen by the insurance company.
Depending on the repair shop you select, you can work with the insurance adjuster to have payment made directly to the shop, or you can pay for the repairs out of pocket and seek reimbursement from the insurance company.
Insurance companies will not pay for upgrades or improvements to your vehicle, and will only approve what the adjuster deems to be “reasonable” repair costs.
For instance, if the insurance company is willing to pay $2,000 for damage to your car, but you take it to a shop that charges $2,500, you will pay the additional $500. If you have a $100 deductible, you will pay that in addition to the $500, for a total of $600.
If you decide to have your car repaired at an insurance company-approved repair shop, they pay the shop directly. You will need to pay your deductible, if applicable, directly to the repair shop when the repairs are complete.
What Happens When a Vehicle’s Damages Exceed Its Total Value?
Some vehicles sustain so much damage that repair costs exceed the vehicle’s worth. You won’t know if this applies to you until after the insurance company has examined the damages to the car.
About half of all states allow insurance companies to use the Total Loss Threshold (TLT) to determine if a car is a “total loss.” Generally, if the repairs exceed 50 to 75 percent of the value of the vehicle, the insurance company will deem it a total loss.
Other states use the Total Loss Formula (TLF). With this method, the insurance company adds the repair costs to its salvage costs. If that number exceeds the Actual Cash Value (ACV) of the car at the time of the accident, it will be a total loss.
If your car is a total loss, you have two options. The first is to surrender your vehicle to the auto insurance company in exchange for the amount that they say your car is worth. You can use the money to purchase a new vehicle, and the insurance company will sell your damaged car to a salvage yard.
The second option is to keep your car and pay for the repairs yourself. The insurance company will pay you its ACV and the amount your car could have been salvaged for.
Know What You Deserve and How to Get It
You deserve fair compensation for your damages. Be aware of your state’s prompt payment laws and unfair claim settlement rules, which establish the time frame in which an insurance company must pay you for your damages.
Based on the severity of your injuries, you can expect something in the range of average settlements for car accident claims.
If you’ve been in an accident, it’s a good idea to consult with an experienced personal injury attorney before deciding to handle your own insurance claim. An attorney can find out exactly how much money is available to cover your damages.
The insurance company won’t voluntarily tell you the at-fault driver’s policy limits. A skilled car accident lawyer can get this information, and knows where and how to look for other funds. For example, an at-fault driver may have an umbrella policy, or a teen driver may be covered under both divorced parents’ policies.
Most injury attorneys offer free consultations and will take your case on a contingency basis, meaning they won’t get paid unless your car accident case settles or you win an award in court.
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