When you are involved in a car accident, you can have up to 2 claims:
A personal injury claim
A property damage claim (called “PD” in the industry).
- Property damage refers to the damages to your car, its contents, and other damages that flow out of not having a car to drive.
- The property damage claim is the easier of your two claims and can usually be resolved in a couple of weeks.
- The claims move very fast compared to personal injury claims, in part because insurance companies are paying for you to rent a car and want to get you back in your car as soon as possible.
- Most of your PD claim is handled over the phone unlike a PI claim that requires lots of paperwork. The only paper that will get passed back and forth are things like repair estimates, Blue Book quotes, and appraisals.
Property Damage Claims
Your property damage claim can actually be one of or a combination of the following:
Collision repair claim
Your car was repaired
Diminished value claim
Your car is worth less after an accident
Total loss claim
- Your car was “totaled out.”
- Totaled out can mean one of two things. It can mean your car cannot be physically repaired because of extensive damage or it can mean the cost of repairs exceeds the value of your car. In either of these two cases your PD settlement will involve arguing with the insurance company on what is the fair market value of your vehicle at the time of the accident, which is what your PD claim is worth. If your car is declared a total loss by the adjuster, he/she will move the car out of the body shop and to a storage yard for re-sale/salvage purposes.
If your car was repaired, you may also have a Diminished Value claim (called a “DV claim”). DV is the decrease in your car’s value because it has been in an accident. When your car is in an accident and/or repaired, it is reported to databases like CarFax. When you go to sell or trade in your car it will be worth less because the buyer will know it has been in an accident. If a buyer is looking at two identical cars but one has been in an accident and one has not, the one not in an accident is worth more. Your DV Claim entitles you to get paid for that decrease in value. 9 times out of 10 the insurance companies will not tell you that you have a right to a DV Claim. You need to know to ask for it.
What’s Covered in a Property Damage Claim
In addition to either repairing or replacing your car, your Property Damage claim also has several sub-components to it.
Loss of Use
When you lose the ability to drive your car, you incur certain expenses. These are called “loss of use” and include the costs of a similar rental car. If the other driver’s insurance company offers to get you a rental car, then you won’t get additional compensation for this component because the insurance company has paid you for this already.
Your PD claim also includes the loss or damage to your personal property. This includes such things as sunglasses, computers, iPods, cell phones, and ripped clothing. You are entitled to the current value of the damaged or lost items. You can try asking for the replacement value, or the cost to re-buy each thing. You will need to research the prices and then document each for the adjuster. The adjuster then will most likely discount each item’s new cost to get its current value.
Which Insurance Company to Use for Property Damage and Diminished Value Claims
Unlike personal injury claims, you usually have options on whose insurance company you want to make your PD claim against. You can:
Make the claim against the at-fault driver’s insurance company.
- This is called a Third-Party Claim because you are a third party to the insurance contract between the at-fault driver and his/her insurance company, meaning you are not a party to their contract.
- To make a Third-Party claim, the accident must have been the other person’s fault. If the other party’s insurance company denies its driver was at fault, then you can always turn to your own insurance company under a First-Party Claim, directly below.
Make a claim against your insurance company for collision coverage.
- This is called a First-Party Claim because you and your automobile insurance company have a contractual relationship together.
- You can make a First- Party Claim regardless of whose fault it is.
Your Insurance Company
There are some advantages to using your own car insurance to pay for damage to your car.
Dealing with your own insurance company is usually much faster than working with the other driver’s insurer. Your insurer pays on your collision coverage regardless of whether the accident was your fault, so they don’t investigate the claim prior to processing it. The other driver’s insurer, on the other hand, must investigate liability before accepting your claim because they will only pay if the accident was their driver’s fault.
Your insurance company generally owes you certain duties and responsibilities such as fairly and quickly processing your claim because they are in an insurance contract with you. This makes your Insurer move a little faster and take things a little more seriously. After all, you have been paying premiums for this service.
There are also several disadvantages to making a claim through your insurer:
You may have to pay a deductible under your policy. You will not have to pay a deductible if you use the at-fault driver’s insurance. You need to sit down and think about whether not having to pay your deductible is worth having to deal with an adversarial insurance company. You should know that most of the time your insurance company will act and behave just like the at-fault driver’s insurer so it is usually better to file your claim with the other driver’s insurer and not have to pay your deductible. Of course, you can only do this if the accident was in fact the other driver’s fault. Also, if your insurer gets reimbursed for your claim they will pay you back your deductible. It will just take some time to get this money back.
Your claim may have certain restrictions as set out in the actual language of your insurance policy, things such as the scope of what kinds of personal property they will reimburse.
Car Loan Financial Responsibility Clauses
Your policy may have a clause that gives your car loan lender rights over your settlement. These clauses essentially protect the bank over you.
Property Damage: Rental Cars
Getting a rental car in place through an insurance company is usually one of the most frustrating issues for a claimant. When the accident isn’t your fault, you may have an extra option for rental cars as opposed to when the accident was your fault. In addition to getting a rental car through the at-fault insurance company, you can also get a rental car through your own car insurance. Of course, you must have rental car coverage. Either check your policy declaration page, which is a one page summary of your coverage, or call your insurance company and ask them.
Insurance Company Delays
You know the accident wasn’t your fault and the police report says it wasn’t your fault. Yet, the at-fault driver’s insurance company is dragging its feet in getting you a rental car because it says it is still investigating the accident. What this really means is they haven’t gotten a statement from their insured yet confirming it was their fault. Unfortunately, you don’t have any leverage against the at-fault driver’s insurance company. You are not their customer so they won’t have any concerns over their customer service reputation. And if they do end up admitting fault and paying for your property damage and rental car, they will just have to pay up like they would have at the front end. This includes reimbursing you for a rental car, which is the same expense as if they paid for the rental car up front.
Type of Rental Car
Most states require an insurance company put you in a “similar” rental car. After all, you are being denied the use of your car because of someone else’s negligence and it is only fitting that you get the same type of car. Keep in mind “similar” deals with the type of car, not the brand. So, if you were driving a Mercedes don’t expect they put you in a Mercedes rental. What the similar car rule means is that if you were driving a mini-van or pickup truck, the insurance company needs to put you in that same type of rental car.
Length of Rental
You will generally be allowed to stay in the rental car until all the repairs are completed to your satisfaction. This is the main reason why PD claims move so fast – the insurance company wants you out of the rental car as soon as possible. If it becomes an issue, ask the adjuster for an extension and explain why. Most rental car companies are billing the insurance company directly, so there shouldn’t be a need for you to talk to the rental car office about paying for the extension. However, you should call the rental car company and confirm they have talked to the adjuster and know about the extension and are billing the insurance company. You don’t want the rental car company to be out of the loop because the un-returned car may be flagged as missing or stolen.
You shouldn’t let your wrecked car sit in storage running up storage fees (which are outrageously high). Most states require that you mitigate (lessen) your damages. This means taking action to manage and limit your storage fees. You should ask the at-fault insurance company to move the car from the tow yard to its storage facility. This will get your car out of the private towing company’s grips (i.e. high fees) and into the insurance company’s lot, which is usually free.
Property Damage: Total Loss Claims
A total Loss Claim is where your car has been written off as a total loss because either it can’t be repaired (severe damage beyond repair no matter what the cost) OR the cost of repairs exceeds your car’s actual cash value (ACV). The latter reason is the more common. The insurance company will only declare your car a total loss if it will save money paying you the value of your car instead of having it repaired. It is strictly a business decision.
Repairs Exceed ACV Percentage
Each insurance company has a different cut-off for the percentage of Actual Cash Value (ACV) for when they will declare your car a total loss. The cut-off percentage ranges between 70-80% of your car’s ACV depending on the insurer. For example, an insurance company with a 75% cut-off will declare your car a total loss if the repairs are estimated at $8,000 and your car is only worth $10,000. That is because $8,000 is more than 75% of your car’s $10,000 ACV.
**The adjuster will tell you fairly quickly that they have declared your car a total loss and offer you a final value. Do not take their first offer as the final offer. You need to investigate their reasoning and data before deciding whether to take their offer or whether to make a counter demand. Plus, it never hurts to ask for more money. All they can say is no. As soon as the adjuster tells you they are totaling your car, he/she already has an ACV in their file. How else could they make the financial calculation to conclude the car is a total loss? Every state requires the insurance company do a Fair Market Evaluation when handling a total loss claim. Your goal is to dig into their numbers and calculations to find out whether their offer is fair and reasonable.
If you need assistance navigating the claims process for your auto accident, call Brauns Law for a free consultation.