Car insurance claims how does it work
- Hit the road with the right car insurance policy
- Car insurance coverage types
- How car insurance rates are set
- Shopping for auto insurance
- Immediately After the Claim Is Filed
- Medical Care and Vehicle Repair
- Review of Your Side of the Story
- Review of Official Records
- Determination of Fault
- Review of Claims
- Options to Resolve Claim Disputes
There are a few questions in life that are more confusing than their answers. The blanket query into whether or not insurance follows the car or the driver in a particular jurisdiction is such a question – one we see regularly. It isn’t a dumb question. It is more like a MENSA brain teaser than a legitimate insurance question, and it is usually the wrong question to ask.
The answer to whether insurance follows the car or driver depends on many variables, most notably the kind of insurance coverage being referred to. There are coverages that follow the car and coverages that follow the driver. In general, auto insurance follows the car instead of the driver, but the specifics of a claim can differ since insurance laws and coverage vary depending on the policy, coverage and state being dealt with.Liability Coverage
Liability insurance coverage on a personal auto policy follows the driver no matter whose vehicle is being operated, provided it is an eligible vehicle. All states, except for one (New Hampshire), require at least liability coverage. Liability coverage protects the insured (i.e., follows the driver) when the insured operates a vehicle owned by someone else. In such a situation, they will still usually be covered under their own auto insurance policy. However, the best rule of thumb in looking for coverage under a policy is to begin with the exclusions.
While an “insured vehicle” may include a friend’s or neighbor’s vehicle or a rental car, if the vehicle was available for regular use, it might be excluded. A “replacement” vehicle will probably be covered, but in some cases only under circumstances where the insured’s vehicle cannot be operated for some specific reason, such as a repair. Coverage might not follow anyone if the insured is driving a vehicle other than a “private passenger vehicle not owned and listed on the insured’s policy.” There really is no such thing as a standard auto policy anymore and coverage for non-owned autos will be different under some policies and non-existent under others.Comprehensive and Collision
Comprehensive and collision auto insurance coverage, on the other hand, are tied to the insured vehicle (they follow the car). These coverages pay for damage that befalls the insured vehicle as a result of an accident or vandalism. One could say that if you loan your vehicle, you loan your insurance. With comprehensive insurance which covers almost everything, it is the car rather than the driver that is covered. This, however, requires many stipulations to be put in place, such as who is allowed to drive the car. If someone other than the insured is driving a vehicle covered by comprehensive coverage and is not listed as a covered driver – even if the other person has permission – the other person might not be covered in an accident. Family members (such as children or a spouse) are generally already included in the policy definition of “insured.” However, rarely will insurance cover a driver operating a vehicle without the owner’s permission.Other Drivers Driving the Insured’s Vehicle
When an insured allows other drivers to drive his vehicle, then, and only then, does the question of whether insurance follows the car or the vehicle become even awkwardly relevant. The right question to be asking is not whether insurance follows the car or the driver, but whether or not other drivers will be covered by the insured’s auto insurance.
Unfortunately, there is no bright line answer to the question, and it depends greatly on the language of the policies involved, the jurisdiction you are concerned with, and the specific facts involved. Permissive use is generally covered under the liability terms of an auto policy. As always, however, there are exceptions.
There are certainly insurance carriers and policies that will not cover any driver not specifically named in the policy. Other relevant facts include where the “other driver” resides and if they are related to the insured. In general, if someone is living in the insured’s household and regularly drives the insured’s vehicle, many insurance carriers expect you to have that person named on the policy. They will need to undergo the same underwriting and qualification process as any other policyholder.
In some cases, if a family member is visiting and has permission from the insured to drive the family vehicle, there will be coverage if there is an accident, but the coverage may be limited. All policies should be reviewed to determine if there are any excluded drivers and any limitations on coverage for anyone driving the car that is not specifically named on the policy.
When the policy of the vehicle owner and the policy of the permissive user have different limits, the matter becomes even more complicated. If the damages caused by the permissive user’s negligence exceed the owner’s liability limits, the policy of the permissive user might be tapped as secondary coverage, but usually only where the permissive user’s liability limits are higher than the owner’s liability limits.The Insured Driving Someone Else’s Vehicle
In general, insurance coverage for an insured driving someone else’s vehicle is the coverage he carries for his own vehicle. The driver’s personal coverage will apply in most cases when driving a vehicle he does not own. This includes any uninsured motorist coverage he carries and the medical portions of his policy. The driver’s property damage coverage might carry over while driving another’s car as well, depending on the policy language, the respective limits of the two policies involved, and the facts. If a person drives his own vehicle without insurance, he should not expect that he is covered when driving someone else’s vehicle.
Certain factors must be considered in determining if an insured is covered when driving someone else’s vehicle, including the reasons for driving the vehicle, if the insured had permission or not, or if it was a rental or dealership loaner. In each case, the individual circumstances and state law involved will factor into the outcome, but another policy might be considered primary over the insured’s.
When an insured borrows a vehicle from a friend, the insured’s liability coverage usually steps in only when the insured’s policy limits are exceeded. Collision and comprehensive coverage do not apply to a borrowed vehicle. Medical Payments (Med Pay) and Personal Injury Protection (PIP) coverage, as we will see below, also follow the insured into a borrowed vehicle.Med Pay and Bodily Injury Insurance
Med Pay and bodily injury insurance are two other types of coverage that usually follow the person, not the car. Med Pay coverage pays for any injuries that an insured or his passengers may incur in an accident, regardless of who is at fault. Such coverage usually follows the driver. It is based on people, not the vehicle. In fact, such coverage sometimes covers the insured when he is walking or biking. This coverage also usually follows the driver when he rents a car, because the rental vehicle is a substitute for the insured’s own vehicle. However, Med Pay coverage sometimes follows the car. If the passengers in a vehicle don’t have coverage of their own, Med Pay and PIP coverage can extend to their injuries.Drivers from Other States
Auto insurance will generally cover a driver from any state as long as he has the insured’s permission to operate the vehicle. However, this isn’t always the case. In all instances, when someone else operates the insured’s vehicle, the auto coverage and policy terms may vary greatly depending on the carrier and insurance options selected by the insured. That said, if an insured is driving a company/commercial vehicle which has Med Pay/PIP coverage, that coverage is usually primary over the driver’s personal auto policy, which will be secondary in terms of coverage. There are some exceptions.Insurance Coverage When the Insured Is Not Present
In order for insurance to cover an accident when the insured is not present, there will need to be comprehensive auto coverage. The facts of each such case definitely matter. If the driver is a relative, then most likely the absent insured’s insurance will cover the accident. The driver also needs to have had permission, express or implied, or the insured’s insurance may not cover the claim, unless the vehicle was stolen. Individual insurance companies and policies may vary in regard to these rules.Sub-Standard Policies
Cheap, sub-standard auto carriers write insurance for insureds with bad driving records. They are able to do this by setting their own limited conditions under which they will provide coverage. These sub-standard carriers do not cover claims that would be covered under a more standard policy. These policies can contain “named-driver exclusions” which limit coverage to persons specifically named in the policy. “Step-down” policies often lower liability coverage to a state’s minimum limits for permissive users, even if the insured pays for higher limits. Deductibles can be higher and/or a policy won’t extend coverage to a rental vehicle. Therefore, policy terms vary and directly affect whether a particular coverage follows the car or the driver.So Does Insurance Follow the Car or the Driver?
As we have seen, this is usually not the right question to ask. However, that won’t prevent inquiring minds from asking – over and over. An answer to the question that isn’t going to be universally correct, therefore, is that insurance that follows the car usually has the vehicle listed in the policy. If anyone who has your permission drives the car, that person is probably covered by virtue of the fact that the car is covered. However, as we’ve seen, this kind of insurance does not cover everyone. There are qualifications for the drivers covered. Other types of coverage such as collision or comprehensive insurance will usually follow the car. These coverages will usually not “follow the driver” to any vehicle which the “covered” driver operates.
Insurance that follows the driver will usually be limited to some form of liability coverage.
When an insured drives someone else’s vehicle, such as a rental car, a dealership loaner, or a friend’s car, he is usually covered for liability insurance. However, other policies which may be deemed “primary” over the insured’s personal auto policy may also come into play.
Therefore, a very basic and often incorrect answer to the wrong question is that auto liability coverage generally follows the driver, while auto physical damage coverage generally follows the vehicle. However, more often than not, you will be asking the wrong question. As long as a driver has the vehicle owner’s permission to operate the vehicle, the owner’s policy will provide coverage no matter who the driver is. The vehicle owner’s policy should cover injuries and property damage. However, exceptions do exist. In most cases, therefore, the right question to ask would be “Is there insurance coverage under these specific facts?”
Hit the road with the right car insurance policy
Auto insurance is a must if you own a car. Most states require you to carry insurance, and without it, you face financial disaster if you cause a serious accident and get sued.
Car insurance can also pay to repair your vehicle if it gets damaged in a crash or natural disaster, like hail or wildfire, or is vandalized or stolen.
Car insurance coverage types
One policy can include several types of coverage.
Liability insurancepays for others' damage and injuries when you cause an accident. Most states require you to carry at least a minimum level of bodily injury and property damage liability coverage. See states minimum car insurance requirements.
The coverage limits are expressed as three numbers. Limits of 25/50/25, for example, would provide up to $25,000 per person injured in an accident, up to $50,000 of coverage for injuries per accident and $25,000 for property damage per accident. Remember, liability insurance pays out to other people; it does not cover you, your passengers or your car.
Personal injury protection (PIP) or medical payments (MedPay) coverage pays the medical bills for you and your passengers after a car accident, regardless of who caused the crash. PIP also covers lost wages and funeral costs. Some states require you to buy PIP or MedPay.
Uninsured motorist (UM) and underinsured motorist (UIM)comes to the rescue if you're hit by a driver who has no insurance or not enough coverage. UM pays your medical bills if you're injured in an accident caused by an uninsured driver. UIM kicks in if your medical expenses exceed the other driver's liability coverage limits. UM and UIM are required in some states.
Uninsured motorist property damage (UMPD)covers your car if an uninsured driver hits you, but the coverage isn't available in every state. Roughly one in eight drivers is uninsured, according to a 2014 Insurance Research Council report.
Collision coverage pays to repair your own vehicle after a crash. It's an optional form of coverage, although your car-loan lender might require you to have it. Collision will kick in if you hit a tree, for example. Or, if an uninsured driver hits you and you don't have UMPD, you could make a collision claim for your car's repairs. Any collision payment will be reduced by the amount of your collision deductible.
Comprehensive coverage has a misleading name because it applies only to certain circumstances. It pays out if your car is stolen (and not recovered) or damaged by a natural disaster, if you hit an animal or if your car is vandalized. Like collision, comprehensive is optional, but your lender might require it. Here too, a comprehensive claim payment will be reduced by the amount of your deductible.
Roadside assistance and other extras can come in handy in a pinch. Roadside assistance covers towing and emergency roadside service when your car breaks down. Rental reimbursement pays for a rental car while your car is in the shop after a covered accident. Gap coverage kicks in if the insurer declares your car a total loss, and the payout from the insurance company for the vehicle's actual cash value is less than the amount you owe on the car loan. See: Save yourself some car insurance grief: Buy gap coverage.
How car insurance rates are set
The price you pay for car insurance depends on the type and amount of coverage you buy, the deductible for collision and comprehensive insurance, the kind of vehicle you own and the characteristics of you and the other drivers listed on the policy. Here are the most and least expensive 2016 vehicles to insure.
Factors that insurers generally consider when setting your rate include:
- Your driving record. Speeding tickets and other infractions increase premiums.
- Your accident and claims history. There's no point trying to hide your previous problem. Insurers will access your C.L.U.E. report to find out your claims for the past seven years.
- Your credit record. A good credit history helps keep premiums low. Insurers say there is a link between spotty credit history and the likelihood of filing claims. Not all states allow credit to be a factor in auto insurance pricing.
- Your age. Rates are highest for teenagers because they are risky drivers. Their crash rate per mile driven is about three times that of drivers age 20 and older, according to the Insurance Institute for Highway Safety. Rates begin to drop around age 25, and you'll likely enjoy the best rates in your 50s and early 60s.
- Your sex. Young women usually qualify for lower rates than young men, but the difference diminishes with age.
- Where you live. Car insurance rates vary widely by state and also by ZIP code. Insurers base rates on where the car is garaged.
- How much you drive. Your daily commute and annual mileage will affect your rate. The more your car is on the road, the greater your chance for a claim.
Shopping for auto insurance
Consider your assets when deciding how much liability insurance to buy. The state minimum requirements for coverage are too low for many people. Collision and comprehensive insurance are important for newer vehicles but usually aren't cost-effective for clunkers.
Shop around for car insurance quotes - rates, policy options and customer service vary by insurer. Insure.com's customer satisfaction ratings reveal which insurers get the highest marks.
And make sure you take advantage of discounts in order to lower your bill. Typical discounts include those for multiple vehicles on a policy, auto safety features, antitheft devices and good students. You might also be able to get a discount for paying in full, buying home insurance with the same insurer, or being a customer for a few years or more.Do you need PIP or MedPay coverage? By Penny Gusner, Insure.com / Apr. 3, 2017 RELATED ARTICLES
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Immediately After the Claim Is Filed
After you file your claim, a claims adjustor will be assigned to your case. The adjustor will review your policy to make sure that you are covered. He or she may contact you to ask for more details about the accident.
During the investigation, the adjustor may:
- Request you send a copy of the police report for review.
- Contact the other driver.
- Talk to any listed witnesses to the accident.
- Visit the accident scene.
- Inspect your car for damages.
- Take photos of your car.
- Ask you to sign a medical release form in order to view your records.
- Contact your medical providers for information regarding your injury expenses.
Medical Care and Vehicle Repair
Your insurance company will cover your injuries and repairs until fault is determined and then will negotiate with the other driver's insurance company to decide who pays in the end.
The process of initial payment is “indemnification,” which means coverage for damages and losses.
If the other driver is found to be at fault, your insurance company will seek payment from his insurance company through the process of “subrogation.”
Typically, you have several options when it comes to getting repairs for your vehicle:
- Using an approved body shop. Your adjuster may request that you take your car to one of your car insurance company’s approved body shops for an estimate.
- Getting quotes. The adjuster may ask you to go to several shops of your choice and obtain quotes to compare.
- Choosing your own repair shop. You can get the repairs done at any location you choose; however, you may have to pay the difference between that shop's estimate and the amount the insurer determines is a fair price.
If your claim includes medical expenses from injuries from the accident, your claims adjuster will need to see evidence of your medical bills.
He or she may request that you sign a waiver to grant permission for your car insurance company to access your medical records. Before signing this document, you may wish to speak to a personal injury attorney about whether signing it is in your best interest. Once she has access to your records, information in your medical history may be used to lower your claim.
Review of Your Side of the Story
You will need to provide as much information as you can to get the best possible settlement. The adjuster will ask for your recollection of the events.
In addition, you may need to submit the following to your car insurance company.
- Policy number (can be found on your insurance card).
- Date of the accident.
- Location of the accident.
- Description of how the accident occurred.
- Name and insurance information for the other party involved.
- Name of the police department involved and the police report number (if applicable).
Review of Official Records
During the investigation phase, the adjuster reviews the case. Your rep may review the following information:
- Amount of property damage.
- Police reports.
- DMV accident report.
Determination of Fault
One of the roles of your insurance adjuster is to determine fault. In most states, a driver does not need to be 0% or 100% at fault.
Your adjuster may decide that you are partially at fault (e.g., 70% responsible for the accident). If you are 70% responsible and the other driver is 30% responsible, your company may pay 70% of the settlement and the other driver’s car insurance company may pay the remaining 30%.
In some cases, the settlement is entirely paid by the car insurance company of the driver who has the majority of fault. Speak to your auto insurance agent to learn more.
Review of Claims
While reviewing claims, the claims adjuster may look at evidence such as:
- Medical records.
- Evidence of property damage.
- Proof of wage loss
The Role of Social Media
The adjuster will investigate the claimant (you). In addition to reviewing your claims history, car insurance companies are also likely to look you up online.
They may go to Facebook, Twitter, or other social media sites to make sure that you are not lying. For example, if you are claiming car damage for an accident Tuesday morning, and you post a picture of you with your car intact on Wednesday, your company will recognize the fraud.
Your car insurance company has a special investigations unit (SIU) to investigate suspected fraud. You can protect yourself on social media by:
- Setting your privacy settings so that only approved people can look at your photos.
- Avoiding posting photos or anything about your accident online.
- Not filing a fraudulent claim.
Options to Resolve Claim Disputes
If you are unhappy with the settlement offer, you have some options:
- Take the claim to the adjuster’s supervisor.
- Small claims court.
- Hiring an attorney.