VEHICLE PROPERTY DAMAGE INSURANCE CLAIMS
Was your motor vehicle or automobile is damaged in a traffic accident? If yes, you can usually settle such property damage claim:
1. More quickly than an injury claim; AND
2. Separately from an injury claim.
Did the vehicle accident also cause damage to other belongings or items?
For example, the collision violence may damage things in your car interior or trunk (examples: cell phone, laptop, sports equipment, etc.) or attached to you (eyeglasses, wrist watch).
Such other damaged property is also recoverable as damages.
When I handle a personal injury claim for a client, in most claims, represent or assist them in the property damage portion of your claim at no cost.
But, if you’re not injured, don’t have an attorney (lawyer), and/or simply want to handle the vehicle damage claim yourself, this article can help you.
PROPERTY DAMAGE TO YOUR VEHICLE
Your car, van, truck, or motorcyle has been damaged in a collision. What do you do?
First determine the issues. There are three main issues…
1. Who’s at fault?
2. What are the damages?
3. Who pays for the damages?
1. Who’s at fault? There’s typically three possibilities:
You’re at 100% or partially at fault.
Someone else is 100% or partly at fault.
Note: Multi-vehicular collisions (3 or more vehicles) sometimes can be more complex regarding liability.
Nobody was at fault (e.g., tornado flips your car).
Note: California is a comparative fault (negligence) state. That means that:
If the other driver is 100% at fault in causing the damage to your vehicle, the other driver must pay 100% of the damages.
But if the other driver is only 60% at fault, and you’re 40% at fault, then the other driver only is responsible to pay 60% of your damages.
Note: Apportioning the percentage of fault is a negotiable issue.
2. What are the damages?
Damages are the compensation necessary to make you financially whole.
Charges must be both reasonable (in amount) and necessary.
If possible, you must mitigate (attempt to lessen the extent of) your damages.
3. Who pays the damage?
The insurance covering the other driver’s car pays in whole or part if the other driver is at fault in whole or part. The insurance company may be the car owner’s insurance, or, if he was on the job, his employer’s insurance company.
Your insurance policy through your collision coverage or, sometimes, your uninsured motorist coverage may be able pay for the damage. See later in the article for more discussion on these choices.
If the other driver’s car was uninsured and you don’t have coverage under your policy, then he or she may have to pay the damage directly (which of course, may be potentially difficult to collect).
Again, when filing a vehicle property damage insurance claim, you typically have three viable options:
Third Party Claim: Present a claim against the other vehicle owner’s and/or driver’s liability insurance policy if the other driver was wholly or partially at fault.
First Party Claim – Collision Coverage: Present a claim with your own automobile insurance via the policy’s collision coverage. You can use such coverage no matter who was at fault in causing the collision.
First Party Claim – Uninsured Motorist (UM) Coverage: File a claim against your own automobile insurance policy under UM coverage:
(1) If your UM policy includes property damage; AND
(2) If the other driver’s vehicle was uninsured or underinsured; AND
(3) if the other driver was wholly or partially at fault in causing the collision.
THIRD PARTY CLAIM (AGAINST SOMEONE ELSE’S INSURANCE COVERAGE):
If the other driver’s fault is relatively clear, you may immediately make a claim to car owner’s insurance company. Often the matter may be settled within days or weeks.
However, if the insurance claims adjuster disputes that the driver driving the insured car was not at fault (or partially at fault), then expect delays in resolving your dispute. In such case, you may wish to make a claim against and receive compensation from your own insurance company’s policy (under your policy’s “collision coverage”). Then, after paying your claim, your insurance company may elect to seek subrogation (recoup payment) from the other driver’s insurance company (or the other car’s driver and/or owner if he or she was uninsured).
FIRST PARTY (COLLISION COVERAGE AGAINST YOUR INSURANCE COMPANY):
If you have collision coverage, you may recover property damage from your own insurance company—even if you’re completely at fault (or partially at fault or not at fault) in causing the accident.
See article: Automobile Insurance Coverage Explained.
Further, if the liability (fault in causing the accident) is disputed, thus creating delay, you may wish to make a claim on your insurance policy via collision coverage. This is normally speeds up the process of resolving your property damage claim.
Thus, one advantage of using your collision coverage on your policy is the potential for a faster settlement due to the fact that such coverage pays regardless of fault.
On the other hand, the disadvantages of using your collision coverage are:
That your recovery is limited by the maximum coverage amount (called “policy limits”) listed on your policy or by other potential policy restrictions or exclusions for things like clothing or luggage.
Your policy may or may not cover the cost of a rental car.
Moreover, your collision coverage may have a deductible meaning that you may have to come up with money or use credit to pay for a portion of the repairs. Most people carry deductibles from $500 to $2000.
If it is determined or agreed that you were partly at fault in causing the collision and the other driver is partly at fault, your insurance company will pay the entire property damage less the deductible as shown by the following example:
Your property damage totals $10,000 and
you are 40% at fault and
the other driver is 60% at fault and
you have a $1,000 deductible.
Despite being partly at fault, you will receive 100% of your property damage under your collision coverage less (minus) the deductible (i.e. $10,000 minus $1,000 deductible equal’s $9,000 total recovery).
FIRST PARTY (UNINSURED MOTORIST COVERAGE ("UM" COVERAGE):
Many people have UM coverage. I strongly recommend that you carry it. It is normally inexpensive. Further, with more or more people driving uninsured or underinsured, it is, in my opinion, worth having such coverage.
Many uninsured motorist coverages on insurance policies cover property damage (although many have certain exclusions). To recover on the UM policy, you must prove that the other driver was:
(1) Wholly or partly at fault in causing the damage to your vehicle;
(2) That the other driver was uninsured.
To prove that the other driver does not have insurance, typically, you request verification of no insurance coverage from the Department of Motor Vehicles (“DMV”) by filing an SR 19 (SR19c form).
The DMV normally takes approximately sixty (60) days to make a final response to the SR19c request. Such final response is presumed conclusive, but can be rebutted (i.e. contested with contrary evidence). If, of course, insurance coverage from the negligent driver is later discovered, you can process a claim against the negligent driver’s insurance company. There are other ways to establish lack of insurance coverage as well.
After your insurance company pays the property damage, they may, if they choose, seek subrogation (payment) directly from uninsured driver.
UM Claim and Comparative Negligence: If it is determined or agreed that you were partly at fault in causing the collision and the other driver is partly at fault, your insurance company will pay only part of the property damage, as demonstrated by the following example:
Say, for example, that your property damage is $10,000 and you are 40% at fault and the other driver is 60% at fault. You would receive 60% of your property damage (i.e. $10,000 x 0.60) which equals $6,000.00.
Note: Your recovery is also limited by the maximum coverage amount (called “policy limits”) listed on your policy. Thus if the UM property damage policy limits is $5,000, in the above example, you will receive only $5,000 per the UM coverage.
But, can I combine both collision and UM coverages on my policy to increase the payout? The answer depends on the policy language of your policy. But, probably, in most cases, the answer is likely “no.”
WILL YOUR RATES GO UP IF YOU FILE A CLAIM WITH YOUIR INSURANCE COMPANY BUT ARE NOT AT FAULT?
No. Insurance companies base rates on many factors. My understanding is that filing a collision coverage claim or a UM claim is not one of the factors. The fact you were in an accident, whether or not a claim was filed, may potentially affect your rates, but not making a claim.
HOW MUCH COMPENSATION FOR PROPERTY DAMAGES DO YOU RECEIVE?
Regarding damage to your car or other property items damaged (e.g., cell phone, wrist watch, etc.), for each item, you receive the actual cash value (fair market value of your car etc. just before the collision).
You are entitled to the cost of repair OR the value of the car, whichever is less.
If the cost of repair is greater than the value of the car, you will receive on the value of the car. (The same holds true for other property damaged).
Example 1: Your car is damaged in a collision. The cost to repair the car is $8,000 but the value of your car is $6,000. You receive $6,000. This is called a TOTAL LOSS recovery.
Example 2: Your car is damaged in a collision. The cost to repair the car is $8,000 but the value of your car is $10,000. You or the automotive repair facility receive $8,000.
The above two examples (and other examples in this article) assume that there is no policy limits issue. See article: Automobile Insurance Coverage Explained.
NOTE: A vehicle is usually considered a total loss when the cost of repair is 80% of its value. Different insurance companies use varying percentages.
Salvage value is a vehicle’s value as a wrecked and totaled vehicle. If you want to keep the totaled vehicle, the salvage value will be deducted from your recovery. The salvage value can sometimes be negotiated with the insurance company.
Fair Market Value. This will be done by the insurance adjuster (representative) investigating the so-called “blue book” value. But, you need to obtain from the adjuster the data from which he or she arrived at the value. Then you need to do your due diligence to verify that the offer is fair or unreasonably low. Sometimes, simply running a value estimation at www.kbb.com is sufficient. Other times, further or other valuation methods can or ought to be used.
CAR LOANS: WHAT IF YOU CAR IS WORTH $6,000, IS TOTALLED, BUT THE CAR LOAN BALANCE IS $8,000?
You receive $6,000 for the total loss, which is, by the way, typically paid directly to the car lender, but, after such payment, you still owe $2,000 to the car lender, even though you no longer have a car! That’s unfortunate. But that’s the risk of buying a car on credit!
EXCEPTION – GAP Insurance: If you purchased GAP insurance, it is designed to pay off the loan balance if your car is totaled but the recovery is insufficient to pay off the loan.
STARTING THE CLAIMS PROCESS
Unlike the personal injury part of the claim, the property damage claim settlement process normally starts shortly after the traffic collision.
OBTAIN GOOD QUALITY ESTIMATES
Get estimates from the place where you will actually get the vehicle repaired.
Verify that the repair shop is qualified and is diligent to find ALL of the damage to your car.
If possible, seek to obtain an estimate from a factory-authorized repair facility.
If you can, obtain several estimates.
Insurance Company Estimates:
The insurance company has the right to inspect your car and obtain an estimate. But it should be at your convenience, not theirs. You ought not to have to drive a great distance.
You are advised to be present during the inspection if practical.
The insurance company should only be given one inspection.
Exception: You or the repair shop later discover damage that the adjuster is not yet aware of.
But seek to be reasonable with the insurance company; otherwise extended delays may happen.
Starting Repairs: Normally, it is unwise to get your car repaired before the insurance company agrees on the price with the repair facility. There may be limited exceptions to this rule.
OTHER PARTY’S INSURANCE COMPANY - TWO CLAIMS ADJUSTERS:
Frequently, but not always, the opposing driver’s insurance company has two claims representatives (adjusters): One adjuster handles the property damage and another one handles the personal injury portion of the claim.
TACK ON DAMAGES TO MAKE YOU WHOLE:
Other Driver’s Insurance - Reasonable charges.
Your Insurance - Depends on your policy.
Warning: Some states, including California, require you to mitigate damages (i.e. remove the vehicle from storage after a certain period of time).
If you don’t rent a car, you may seek to claim damages for “loss of use” of your car which is the reasonable rental value of your car if it was not damaged. Insurance companies normally will agree to pay something in that regard. See article: Loss of Use.
Other Driver’s Insurance – Reasonably priced and necessary charges (but not for insurance for rental vehicle) during time or repair or, a total loss, until replacement of your car (although insurance companies will seek a lesser period).
Your Insurance – No recovery unless specially covered in your policy.
Pro-rata unused DMV fees if the car is totaled; and
Sales tax for purchasing another vehicle if the car is a total loss.
Deductible: Other Driver’s Insurance - Recoverable if your insurance company paid for repair.
Diminished value of a repaired vehicle: Regarding “inherent diminished capacity,” there is no “rule of thumb,” of valuing such loss. But if a vehicle has been involved in an accident, when one sells the vehicle, one is often required disclose the history to a customer or buyer. Assuming a perfect repair (although, as a footnote, a perfect repair is rare), a dealer or informed buyer, knowing about the prior accident, will automatically reduce the price. The bad news is that insurance companies rarely will voluntarily pay for “diminished value.” To recover same, some form of trial and/or binding arbitration (i.e., contested litigation) is normally required.
Underinsured hypothetical (pretend) example: Your car (with a market value of $22,000) sustains $16,000 damage and is repaired.
$5,000 is the other driver’s maximum property damage policy limits and is paid to you.
$10,000 is your UM property damage policy limits coverage.
You need $11,000 to be made whole ($16,000 – 5,000 = $11,000).
Typically, one can recover only $5,000 from the UM policy, not $10,000! Why, because, under the policy and/or California law, the $5,000 prior payout generally must be subtracted first!
But, demand the $10,000 or even $11,000, and see if your insurance company provides evidence that the lower payout is applicable.
WARNING: STATUE OF LIMITATIONS DEADLINES:
PLEASE BE ADVISED that California (as well as other states and federal) law requires legal actions be commenced within specific time limits. If actions are not commenced within these specific time limits, the right to sue may be forever lost. These limits are called statute of limitations. Because statute of limitations laws can be extremely complex in some cases, you are urged to promptly seek an attorney if you wish to pursue a claim or legal matter so that your right to sue is not lost due to the passage of time. Below is a link that discusses general statute of limitations for various matters in California - See: Statute of Limitations.
Further, in making a claim against your own insurance company, policies make have requirements that you report your claim within certain time limits, sometimes as little as 24-48 hours after an accident or you risk not being covered for the loss by your insurance company. But even if you believe that you might have waited too long or are actually denied coverage, talk immediately to an attorney with experience, knowledge and skill in insurance coverage matters and/or bad faith.
Disclaimer: The above is general information whose accuracy is not guaranteed and not legal advice. The above is a simplified explanation of insurance claims. Property damage claims can be simple or complex. This article provides some generalized basics but is not exhaustive in covering all the particulars, nuances, variables and issues that may arise. Laws change frequently which may make certain statements herein obsolete or no longer accurate. Therefore, don't rely on the information above in making final determinations regarding handling property damage claims. But consult with or retain an experienced and knowledgeable lawyer for advice and/or representation. See also further Disclaimer.
By MB Tozer Esq.