This is the second of a three-part series entitled Car Accidents, Personal Injuries & the Insurance Carrier. Here, we will provide an overview of the claims process.
We purchase auto insurance to provide financial coverage for losses and damages that may occur. A claim is filed with an insurer for compensation after a party sustains property damage and/or bodily injury. In the U.S., there are millions of auto insurance claims filed each year. In 2016, claims exceeded 6 million from crashes, with over 37,000 fatalities and over 2 million injuries. In Colorado alone, there were 547 traffic fatalities in 2015 and 608 in 2016. When an accident occurs that results in injuries or property damage, several things may occur:
- A claim may be filed by individuals with their own insurer;
- The at-fault driver's insurance provider may receive claims for injuries or damage from victims; and/or
- A decision to proceed with a lawsuit may occur.
Types of Coverage to Cover Claims
Colorado insurers offer the following types of auto insurance:
- Bodily injury liability: Coverage if you injure or kill another motorist (minimum required).
- Property damage liability: Coverage if you cause property damage (minimum required).
- Uninsured/Underinsured motorist: Coverage for damages you incur from a motorist without liability insurance or insufficient coverage (optional).
- Medical payments coverage (Med Pay, or MPC): For coverage of medical expenses caused by an accident (optional). Currently, over 90% of those in Colorado have some form of health insurance that may cover medically-related expenses.
- Collision coverage: Coverage to pay for damage to your vehicle following a collision (optional).
- Comprehensive coverage: Coverage to pay for damage or loss to your vehicle in cases of theft, hail damage, vandalism etc. (optional).
Insurance Company Claims Processing
- Filing: Claim is initiated with insurance provider over phone, online, with agent etc. Typically a claim number is issued at this time.
- Coverage Review: The insurer will verify coverage, review policy terms and assess the types of damages potentially covered.
- Investigation: The insurer will likely use an examiner or investigator to gather information. They may contact the motorists involved, witnesses, review police reports, photos of the accident, and more. There may be some conflict and discussion of local traffic laws at this stage if there is a difference of opinion about which party is at-fault, this interaction may exclusively be between the insurers.
- Evaluate & Report: The value of the damages is calculated and a report of the claim is generated--with resolution to follow.
Total Loss Claims
An insurance company may classify a vehicle as a “total loss” when the costs of repair exceed their assessed value of the vehicle. The insurance company will calculate the actual cash value of the vehicle. They may reference current “blue book” pricing material and other automotive resources for guidance. The insurer will then pay the vehicle owner this amount, while considering any applicable policy limits and/or deductibles. There is an increasingly common problem in these situations where the actual cash value payment from the insurer is lower than the amount the vehicle owner still owes on the vehicle. In the U.S., automobiles are very commonly financed by a lender. This occurs from a combination of factors including: buyers increasingly finance more of the cost, buy with little or no down payment or choose loans with longer terms (for repayment) and the tendency for vehicles to lose value quickly (depreciation).
How Deductibles Relate to Claims
Insurance coverage such as collision, comprehensive and uninsured motorist may have a deductible. For the consumer, it typically results in lower premium costs because the motorist is responsible for paying “out of pocket” for repairs that otherwise would have been claims to the insurer for the cost of repairs. Deductible amounts are commonly between $250 and $2,000; therefore, if a collision led to $1,500 in damage and the deductible was $1,000, the motorist would be responsible for the first $1,000 and the insurer would cover the remaining $500. Often deductibles will apply even if the covered motorist was not at-fault; however, it is possible to recover the total amount (including deductible) from the other (at-fault) motorist's insurance company.
Auto Accident Claim Tips
Immediately following an accident the first priority should be your health and the health of others involved. In accidents involving more than one party, it is necessary to determine fault and file claims with that party's insurer. Unless the accident injuries or damage are very minor, it is best to consult with an attorney who regularly practices in this type of law. In many cases, the claims process can be difficult to navigate and insurance companies may cause delays or offer insufficient compensation to victims who are entitled to more. An experienced accident attorney will protect your best interest and will make a determination if a lawsuit is necessary.