These are the answers to some of the questions I am asked about car damage claims.
How many repair estimates do I have to get?
Normally, the insurance company that is paying to repair your car damage will have an on-the-road estimator go to your car and estimate the cost of the repairs. Alternatively, if your car can be driven lawfully, some companies may ask you to drive your car to their closest estimating facility.
Can I choose the repair shop?
Yes, with one exception.
If you are claiming under your (collision) insurance, some insurance companies are writing their policies to give them the right to select the repair shop.
Obviously, if they have the right, insurance companies will send you to a repair shop that gives them favorable rates . . . in order to save the insurance company money. These deals between insurance companies and repair shops are known as DRP (Direct Referral Program) Contracts.
Under these DRP contracts, the insurance company refers a great deal of business to the repair facility and, in return, the repair facility gives the insurance company price breaks. This is acceptable if the repair facility retains control over how the vehicle will be repaired . . . but in some instances, those decisions are given to the insurance company. Do you want some insurance type with a green visor and a calculator deciding whether to replace a car part that could affect your family’s safety?
Can the repair shop force me to accept used parts?
You would like the repair facility to use OEM (Original Equipment Manufacturer) replacement parts. More likely, however, they will use parts manufactured by someone other than the original equipment manufacturer — used parts or reconditioned parts. Why? They’re cheaper.
If you are dealing with the other driver’s insurance company, that company’s obligation is to put your car back into the condition that it was in before their policyholder crashed into you.
Since your vehicle had used parts before it was damaged, it is acceptable to use used parts in the repairs.
On the other hand, non-OEM parts – sometimes called “aftermarket parts” – may be markedly inferior junk parts that can, in some instances, be a safety hazard. You should not accept them without a fight.
If you are dealing with your insurance company under your collision coverage, there is probably a provision in your insurance policy that requires your company to provide parts of “like kind and quality.” To describe these parts, the shorthand “LKQ” is often used.
Here, also, your position should be that non-OEM parts are not of LKQ. You should insist on OEM replacement parts or, at least, used OEM parts.
Be persistent and there is a good chance you will prevail.
What if additional damage is found after the estimate has been done?
This happens quite frequently. Once the repairs are begun, additional damage is discovered that was not seen initially and was not included in the initial estimate.
When that happens, the repair shop contacts the insurance company and tells them what the additional damage is. They work together to get the additional work done without you having to be involved.
How is it decided if my vehicle is a total loss?
If it will cost more to repair your car than it is worth, your vehicle is “totaled” or a “total loss.” In that event, instead of repairing your car, the insurance company only has to pay you the actual cash value (ACV) of your car before it was destroyed.
Why? Because they are concerned that they will end up paying more than the value of your car if they authorize the repair and then get “supplements” because of previously unseen damage, have to provide a rental car for a long time while the repairs are being done and then, perhaps, have to pay you for your car’s diminished value.
So, if it’s close and you want your vehicle declared a total loss, push the insurance company. Simply mentioning the possibility of a diminished value (DV) claim may be all that is necessary to get what you want.
How is my vehicle’s actual cash value determined?
ACV is what comparable vehicles are selling for. In theory, you should be able to take the money that you are given and, with it, purchase the same vehicle that you had. At least, that’s the theory.
In making a settlement offer to you, the insurance company may rely on statistics from a company that it employs to provide these ACVs. Unfortunately, there are a number of such services competing for insurance company business. Do you think that the insurance companies will hire such a company, or continue dealing with it, if it comes up with higher prices for your totaled car, or lower prices? Lower, of course.
Therefore, you should do your homework and research the value of your totaled vehicle so you will know whether the insurance company offer is reasonable.
You should also look in the paper and online for similar cars that are for sale in your area. (Admittedly, the ads tell you what the cars are offered for, not what they were sold for, but this information can be helpful in determining the ACV.)
In addition, you should gather information to prove that your car was worth more than similar cars, if it was. For example, if you had just put on new tires, get the records of that purchase. If you recently had extensive repairs done, pull out your documentation. In short, pull together whatever information you have that shows that your vehicle was worth more than other similar vehicles.
Armed with that information, you can negotiate with the insurance company if you disagree with their offer
What can I do if I don’t agree with the insurance company’s appraisal of my totaled car?
If you are dealing with your insurance company under your collision coverage, you can employ the “appraisal clause” that is probably in your insurance policy. Basically, this means that independent appraisers will determine the ACV of your car. Look at your policy to determine the specifics of how this works.
If you are dealing with the other driver’s insurance company, you can always sue them (their driver, actually). The problem with this, of course, is that lawsuits take time. If you can’t afford to get another car without getting the money for your totaled vehicle’s ACV, as a practical matter, you may not be in a very good position to hold out while a court case decides whose appraisal is right.
Even if you use an expedited court case, such as the small claims court, the time until you get a court decision will probably still be measured in months, not days or weeks.
Here’s one other alternative. If the insurance company is totally jerking you around and acting completely unreasonably, you can submit a consumer complaint to your state’s insurance commissioner. Check here to learn how to reach the Insurance Department in your state.
Your complaint might motivate the insurance company to be more flexible or it might result in a favorable resolution by the Insurance Department. However, it will probably take more time than you have to spend. At the very least, though, your complaint makes a record of this insurance company’s unfair practices. At some point, action will be taken against them. At least that’s what I, the eternal optimist, choose to think.
Can I keep my totaled car if I want?
Normally, you simply sign over the title to your totaled car and the insurance company pays you its actual cash value . . . plus the taxes and title costs you will have to pay when you replace your vehicle.
However, if you want to keep the totaled vehicle, you can arrange that with the insurance company. They will reduce their payment to you by your vehicle’s “salvage value,” and you can keep the vehicle. Salvage value is usually about 10% of the total vehicle.
Am I entitled to a rental car while my vehicle is being repaired?
If you are dealing with the at-fault driver’s insurance company, they must pay for a rental vehicle while your vehicle is being repaired or, if it is a total loss, until you are paid for it (plus another couple days).
However, before this obligation arises, they are entitled to investigate to make sure they are responsible. They check “coverage” and “liability.” Checking coverage means checking to make sure they insure the vehicle involved in your collision and the driver of the vehicle. Sometimes there are coverage issues because of such things as “excluded drivers.”
The insurance company for the at-fault driver can also investigate liability, of course. The biggest source of problems here is when the driver who caused your accident claims that they were not at-fault and did not cause the accident.
On the other hand, if you are dealing with your insurance company, it will only pay for your rental car if you have rental reimbursement coverage. The amount, and the time period, they will pay are provided in your insurance policy. Check your policy for details.
Many insurance companies will arrange the rental and have a “direct bill” sent to them so you don’t have to pay anything. However, even in that case, you will have to present a credit card to the car rental company.
If direct billing is not arranged, you will have to pay for the rental and then submit your rental bill to the at-fault driver’s insurance company for reimbursement.
If you are renting the vehicle, be aware that the law differs from state to state on the question of whether the at-fault driver’s insurance company must pay for a rental which is comparable to your vehicle or whether they only have to pay for “basic transportation.”
Here’s another rental car issue you must know about. If you are less than 25 years old, rental companies will not rent to you. If that is your situation, arrange for someone else to rent the vehicle for you and make sure you are shown on the rental agreement as an “additional driver.”
I hope these answers to frequently asked questions about car damage claims have been helpful.