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A car accident, theft or other loss can be a stressful event. However, you need to be on the ball to ensure that you get the best car insurance settlement possible. Follow these three tips to make sure that you don’t lose money on your car insurance settlement.
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Sometimes you might find that your auto insurance provider is less than helpful when it comes time to file a claim. While this is not always the case, your car insurance provider may be purposefully unhelpful in an effort to lower your settlement amount. You need to have all of your information ready before an accident or other loss occurs.
The Purpose of Car Insurance
No one plans to get into an accident, have their vehicle stolen, or tango with a deer in the middle of the road. Yet every driver purchases car insurance in part to ensure that they will not have the great financial burden of repairing or replacing a car if such an event occurs.
Claims and settlements are the real purpose of car insurance. You don’t pay your premiums just to comply with state laws. If you have a claim, then you should expect a fair and timely settlement. You have the right to hold your car insurance company to their promise of making you whole after an accident or loss.
#1: Ensure you Have Enough Coverage
The first thing that will help you to get a better settlement is having enough coverage before an accident or other loss occurs. If you are getting a settlement from your car insurance provider, then this means you have collision and comprehensive coverage. If you are getting a settlement from the at-fault driver’s insurance company, then this means collision coverage or uninsured/underinsured motorist coverage.
Collision and comprehensive are both optional forms of coverage, though you are likely required to carry them if you still owe on your car loan. If you own your vehicle outright, you may have dropped optional coverage types in order to save on your car insurance costs. Dropping optional coverage will cost you during settlement time. If you don’t have collision and comprehensive coverage, then you will be paying for damages from an at-fault accident, loss from a theft, or damages from hitting a deer or a violent storm.
If you do have optional coverage types like collision and comprehensive, then you need to review your deductible amounts before you are in an accident, are a victim of theft, or incur damages from nature. Your deductible is a dollar amount that you are responsible for paying; you likely specified the amount at the onset of your policy.
Many people choose a high deductible, such as $1,000 or $2,000 to lower the cost of the coverage.
Yet, few drivers consider whether they have $1,000 or $2,000 to contribute as a deductible towards repairing or replacing a vehicle.
For instance, if your car that is worth $2,300 is stolen and you have a $2,000 deductible, then your insurance company will only pay you $300 towards the value of your vehicle.
Deductible amounts generally start around $250, though the most common amount is probably $500. You need to choose a deductible amount prior to an accident that you will be able to afford to pay.
Another consideration if you have a car that is less than a year old is general asset protection (GAP) insurance. If you have a car accident or other loss that totals your car, your car insurance provider will pay you full market value for your car, not what you owe on it. A car’s value drops the moment you leave the dealership, and it takes a year or two for what you owe on the loan to match the value of your vehicle. GAP insurance will pay the difference between your loan amount and the vehicle’s actual value.
You also need to be prepared if you are getting a settlement from an at-fault driver’s car insurance. The insurance company will only pay you up to the amount of coverage the driver has purchased, and you need to be prepared if it is not enough to cover your losses. Uninsured/underinsured motorist coverage is a good idea, as is collision coverage.
#3: Know Your Rights
Now that you have your insurance coverage in order, there are a few things you can do after an accident or other loss the make sure that your settlement is as fair as possible.
Remember that it is the car insurance provider’s obligation to make you whole after an accident or other loss.
Therefore, you should only accept a settlement that returns you to where you were before the loss.
Knowing your rights concerning claims and settlements is one of the most powerful things that will help to ensure you get a fair settlement. Every state has different rules and laws concerning car insurance, so you should review those of your state before an accident or other loss. If you are in the midst of a claim, finding out what your rights are is also a good idea.
For instance, the Washington State Office of the Insurance Commissioner maintains that drivers have the right to recover their deductible from an at-fault driver or his or her insurance company. In fact, it is your insurance company’s responsibility to recover your deductible if you had to pay one to fix your vehicle from an accident where you were not at fault.
Furthermore, the Texas Department of Insurance gives drivers the right to deny an settlement that they deem as unfair from a car insurance provider, including if they feel the value of the car has been underestimated. In Texas, a car insurance provider must work with a claimant to come to a happy medium. Most states offer this right to drivers, but you need to make sure that your state does.
The State of New Jersey Department of Banking and Insurance also offers drivers the right to a fair claims process, as well as one that is timely. Essentially, car insurance providers cannot drag their feet to prolong a claim, hoping that you will settle for a lower amount out of frustration and desperation. It is important to view your rights concerning auto insurance in your state so that your settlement amount does not suffer.
#2: Know Your Vehicle’s Fair Market Value
If you are in an accident or other damage, or have your vehicle stolen, the car insurance company will offer you a settlement that either replaces the value of a totaled vehicle or pays to fix the damages. In most states, you have the right to refuse a settlement offer if you think it is unfair. But how do you know that it is unfair?
First, if your settlement amount is for a vehicle that has been stolen or deemed a complete loss, then your settlement should be for the fair market value of your car, according to the Insurance Information Institute.
Before accepting a settlement for the actual value of your vehicle, not what you owe for the vehicle, you need to research the fair market value for your car.
Websites such as Kelley Blue Book and the National Association of Automobile Dealers, or NADA, will allow you to research the actual value of your car so that you will be able to judge if a settlement amount is fair or not. Many factors are used to assess a vehicle’s actual value, such as the:
- Region you live in
- Age of the vehicle
- Condition of your vehicle
Make sure that you accurately judge the condition of your vehicle, taking into account wear and tear, rust, and any prior dents or dings.Furthermore, you can also give the insurance adjuster receipts and invoices for any work you recently had done to the vehicle. If you had parts replaced or you installed a fixed modification such as a turbocharger or custom exhaust system, then the cost of such repairs or modifications can be added on to your settlement amount. Make sure to keep receipts or ask your mechanic for a printout of work that was recently performed.
If you are getting a settlement for repairs, you also have specific rights granted to you by the state. Generally, you might have rights about:
- Using new or replacement parts
- Where you can have the repairs performed
- Refusing a settlement that won’t cover your costs to fix your vehicle
The smartest move is to have a few different repair shops give you an estimate to fix the damages. This way you will know if the settlement from the insurance company is fair.
Resources and Help
While a car accident or other loss can be a stressful time, you do have resources for help if you and your car insurance provider do not see eye-to-eye on the settlement amount.
Your strongest advocate when you are at odds with your insurance provider is your state’s department of insurance.
Most have a website, though you can contact them by phone as well. While they regulate the insurance industry in your state, they also work as a resource for consumers.
If you have a complaint or need assistance with resolving a claim, then you can contact your state’s insurance department. While they can’t make a decision concerning your claim, they can work as a mediator to resolve any issues. If your car insurance provider is acting in an unlawful manner, then your state’s department of insurance would also handle that aspect.
You also have responsibilities as well as rights when it comes to settlements and your insurance company. You likely have arbitration as part of your policy, though hiring a lawyer might be a good choice as well.
You certainly have the responsibility to report a claim in a timely manner, and to ensure that your claim is 100% legitimate.
Fraud is a major problem for car insurance companies, and the costs are passed on to everyone who buys car insurance. Make sure that your claim contains only damages that you received in the actual accident or loss.
Getting a fair settlement is your right, and making you whole again is the responsibility of your car insurance provider.
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