Your car has been damaged in a car accident. You have collision coverage on your policy. The other vehicle has the mandatory liability coverage. How should you go about getting your car fixed?
Regardless of who is at fault for the accident, you can always go through your own collision coverage to get your car repaired. Even if you were completely at fault, your insurance company will pay the total amount to fix your car, minus any deductible you may have.
It’s Your Coverage or The Other Guy’s Coverage… But Not Both
To get your car fixed, you can file a claim for property damage under your collision coverage or through a third-party claim against the other driver’s insurance, but you cannot collect full compensation from both. If you go through your insurance company and settle, you give up the right to make a claim against the other driver for the same property damage. Once you settle with your own insurance company, your company assumes your right to make a claim against the other driver’s insurance.
Example: You’re involved in a car accident with John Doe, who is insured with CutRate Indemnity of Omaha. The accident happened at an intersection. You had the stop sign. You came to a full stop, looked both ways, and proceeded through the intersection. From out of nowhere, the rear panel of your car is struck by Mr. Doe’s vehicle. He apologizes and gives you all the pertinent information; the name of his insurance company and his policy number. The police appear on the scene and file an accident report. A witness tells the police the accident was all John Doe’s fault. Your property damage is $4000. You make a claim against CutRate Indemnity for your damage.
The adjuster from CutRate calls you and offers to settle. But since you had the stop sign, he is only willing to pay 50% of your loss, namely $2000. You tell him he’s crazy because there is a witness who told the police their policyholder was speeding and was totally at fault. The problem is that you won’t be able to get a copy of the police report for about two weeks and you don’t know if the witness will want to get involved with your claim.
You have enough coverage on your policy to cover the cost of your property damage. You decide you don’t want to wait weeks to get the police report and try to renegotiate with CutRate. You file a claim under your collision coverage and your insurance company pays you the full $4000, minus your deductible.
Now that you’ve collected from your insurance company, you have given up your right to collect from John Doe’s insurance company – except for your deductible.
The Advantages of Going Through Your Collision Coverage
There are two distinct advantages to getting your property damage paid for by your insurance company. The first is that your insurance company is likely to settle with you more quickly. There is no going back and forth with an adjuster over the issue of fault. It doesn’t matter. The second advantage is that if you also have a third-party injury claim, you don’t want to jeopardize that more important claim but talking fault with the other driver’s insurance company. That struggle over fault does not come up when dealing with your own insurance company.
Once your insurance company pays you, they will go after the other driver’s insurance company for reimbursement. If your insurance company collects 100% of the loss from the other insurance company, you will get paid back your deductible.
The Disadvantages of Going Through Your Collision Coverage
The main disadvantage of going through your insurance coverage is that you will have to lay out money to fix your car under two different scenarios. First, if your collision coverage (policy limit) is less then the amount it will cost to repair the car, you will have to come up with the rest of the repair costs out of pocket. In that case, making a third-party claim makes the most sense if the other vehicle is totally at fault. For example, your repair costs are $7500 and you have a $5000 limit. Your insurance company will write you a check for $5000 and the other $2500 is your responsibility. In the second scenario, even if your collision limit is adequate, you still have to absurd your collision deductible. Most people carry a deductible amount of $500 to $2000. Adding that kind of money to what the insurance company will pay to fix your car could be a problem. For example, if your repairs will cost $3000 and you carry a deductible of $1000, your insurance company will issue you a check for $2000 and you will have to come up with the other $1000 from your pocket.
With most car accidents, the victim not only suffers property damage but also personal injury. That is when you need to hire a personal injury lawyer to handle both your claims. Most personal injury lawyers will handle the property damage claim as a courtesy to the client.
If yours is only a property damage claim, it usually isn’t worthwhile to hire a lawyer to represent you. Most times there is not enough money at stake to take on the added burden of paying a lawyer’s fee.
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