- Can I require my insurance to authorize the use of original equipment parts when repairing my vehicle? My policy says they will return my damaged vehicle to ” pre-accident condition.”
- Is my insurance company required to provide me advance notification if they are canceling my policy?
- My insurance company is denying my claim because the location where I keep my vehicle is not what is listed on the application. Is this right?
- The accident I was in was determined not to be my fault. The insurance company is offering far less for my vehicle than what I owe. Don’t they have to at least pay off my loan?
Q: Am I entitled to a rental vehicle and for how long?
If your car needs repairs after an accident, you may be entitled to reimbursement for the cost of a rental vehicle if your insurance policy has an endorsement for rental coverage or “rental reimbursement.” Rental car reimbursement coverage is usually an optional add-on to your policy. If you’re making a third party claim — that means you’ve filed a claim with the at-fault driver’s insurance company rather than with your own — your state may have a law requiring rental reimbursement.
Q: Are there any specific time limits for an insurance company to pay a claim?
While there are no specific time limits for the settlement of claims, most states require insurance companies to pay all claims in a prompt and reasonable amount of time. However, what constitutes “prompt and reasonable” can vary based on the circumstances. Unique situations or abnormal increases in case loads — for example, a large influx of claims due to a hurricane — can slow the process down. Check with your state’s insurance division for any specific time frames your insurer must follow.
Q: Can I require my insurance to authorize the use of original equipment parts when repairing my vehicle? My policy says they will return my damaged vehicle to ” pre-accident condition.”
Possibly. This can depend on both the state where you live and the terms of your auto insurance policy. Some insurance companies automatically use original equipment manufacturer (OEM) parts. Others use non-OEM parts. If the repair of the damaged part directly affects the operational safety of the vehicle, your state’s law may require the insurance company to swap in an OEM part as long as one is still available.
For non-safety-related parts, there may be more restrictions on the use of OEM, under both your state’s law and the terms of your policy. You may be able to insist on OEM parts, but where they aren’t required you will generally have to pay the difference in cost.
To read more about your rights to property damage compensation, see Auto Repairs and Insurance Claims After an Accident.
Q: Can my insurance company refuse to pay my claim?
This is often referred to as the insurance company “denying” the claim. Most insurance policies include a section that defines what you, the policyholder, are required to do when an accident occurs, in order to have your claim covered by the insurer. It’s essential to follow these procedures carefully.
Apart from a claim denial that can result from your failure to comply with the terms of the policy, a claim may be denied because the company has determined that the loss is not “covered” by the terms of the policy, or that the person who caused or suffered the loss is not an “insured” under your coverage.
If you become involved in a coverage dispute with your insurance company, you may want to get the advice and assistance of an attorney who has experience handling auto insurance cases. The resolution of coverage disputes often depends on careful analysis of both policy minutiae and applicable state law, and insurance companies are notorious for mounting an aggressive defense.
Q: Do I have to hire a lawyer to defend me if I’m sued because of an auto accident?
No. When you buy liability insurance, part of the insurance company’s obligation is to provide a defense for you if you are sued by the other driver — or by anyone else injured in an accident. The insurance company will hire and pay for an attorney to represent you in court. Even though the insurance company selects the lawyer and must approve the payment of all legal fees and other expenses of the lawsuit, the lawyer represents you. You do, however, have the option of hiring an additional lawyer of your own choosing — and at your own expense.
Q: I’m in a “no-fault” state. What does this mean if I have an accident?
In most states, auto insurance functions under a traditional fault-based system, meaning that insurance companies make payments based on each person’s degree of fault for the underlying accident. But if you live in a no-fault state and you get into an accident, your auto insurance provider automatically pays for your damages (regardless of fault) up to your policy limits. In exchange for this guaranteed payment, you give up some of your rights to sue the other driver, and there may be a limit on the types of damages you’re able to collect.
For more in-depth information, please see Key Points of No-fault Vehicle Insurance.
Q: Is automobile insurance required?
Every state requires vehicle owners to demonstrate some form of financial responsibility for any car accident that their vehicle might be involved in, assuming the vehicle is registered and “in operation” in the state. And most states specify the minimum amount of liability insurance that vehicle owners can carry as one way of complying with this financial responsibility requirement.
The mandatory requirements in your state may include minimum amounts of the following types of coverage:
- Bodily injury liability (BIL)
- Physical damage liability (PDL)
- No-fault personal injury protection (PIP)
- Uninsured motorist coverage (UM)
- Underinsured motorist (UIM)
The following types of coverage are not required by any state but if you have a car loan, your lender may insist you carry these until you pay off your loan:
Optional insurance coverage includes:
Q: Is my insurance company required to provide me advance notification if they are canceling my policy?
Yes. Generally, a 10-day notice of cancellation is required, but each state has its own rules governing the cancellation of automobile insurance policies. Your insurance company can cancel your auto insurance policy during the “binding period” (usually the first 30-60 days of a new policy) for almost any reason. After your policy has been in effect for 60 days, the insurance company generally cannot cancel it without a legitimate reason, such as your failure to pay the premium or revocation of your driver’s license. At the end of the policy period, the company may refuse to renew your policy, but they must give you advance notice of this decision.
Q: May I keep my auto if I have a claim and the insurance company declares it a total loss?
Usually, no. If your car is deemed a “total loss,” your insurance company is entitled to any salvage value the vehicle may have, and will typically take title to your car once it pays your claim. You may be able to negotiate with your insurance company to purchase the vehicle from them, however.
Q: My auto was declared a total loss. Is my insurance company required to pay me the replacement cost?
No. When your vehicle is declared a total loss, your insurance company will only pay you its “actual cash value” at the time of the loss, not the cost to replace the vehicle. Your car’s value can be determined in a number of ways:
- Retail value for a similar car (make, model, year, condition, add-ons) prior to the accident
- Price paid for the car plus the value of prior, documented improvements to the car at the time of the accident
- Actual purchase cost of an available car of like kind and quality
Note: If your car has substantial value because of its exceptional condition — maybe it’s an antique, classic or restored auto — you should have it appraised and then insure it for the appraised value.
Q: My insurance company is denying my claim because the location where I keep my vehicle is not what is listed on the application. Is this right?
Yes, it could be. If you give false, misleading or incomplete information on the application, and if such information increases the insurance company’s risk of loss, the company may later be able to refuse to pay the claim under your state’s laws.
Q: My state has a Full Tort or Limited Tort Option. What does this mean?
Under “full tort,” if you’re in an accident, you may sue for all injuries you sustain. If you choose the “limited tort” option, you generally limit your right to sue except for serious injuries, as defined by your state. In return for selecting the limited tort option, you often save a percentage off your total premium.
Q: The accident I was in was deemed the other driver’s fault. The insurance company is offering far less for my vehicle than what I owe. Don’t they have to at least pay off my loan?
No. The insurance company is not required to take into consideration any outstanding loan on the vehicle. They generally are only required to pay the actual cash value of the vehicle.
Q: What factors can an insurance company look at to determine if they will insure me?
Typically, insurance companies weigh the following factors to determine if they will write, or continue, coverage for an individual:
- Your age
- Car make and model
- Your claims history
- Your driving record
- Your credit report
- Where you live
- What your car is used for
- Complexity of the vehicle to repair
- Cost of replacing vehicle components – airbags, headlights, etc.
Note: Insurance companies cannot decide to deny coverage based on an applicant’s race, sex, religion, national origin or ancestry.
Q: What if I fail to keep insurance on my vehicle?
The Department of Motor Vehicles (or similar agency) in the state where you live is generally authorized to suspend your driving privileges, and perhaps even your vehicle tag and registration. You may also face a fine for failing to maintain insurance, and once you’re properly insured, you may be required to appear in court to prove it.
Q: What is “Bodily Injury Liability” (“BIL”) insurance?
Bodily Injury Liability (BIL) coverage pays for injuries that you, the policyholder, cause to someone else. It will also usually cover an accident caused by a family member who is living with you, or by a person using your car with your consent. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
Your insurance company will pay for injuries up to the limits of your policy and provide legal representation for you if you’re sued. This coverage does not pay for bodily injury you may sustain. If you’re sued over a car accident and the jury or judge awards a verdict to the injured party that is larger than your bodily injury liability insurance limits, you may be personally on the hook for the difference.
Q: What is collision coverage?
Collision coverage pays for damage to your car resulting from a collision with another car, object (such as a tree, telephone pole or building) or as a result of flipping over. It also covers damage caused by potholes. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your insurance company may try to recover the amount they paid you by going after the other driver’s insurance company. You’ll usually be reimbursed for your deductible if they end up recovering from the other insurance company.
Q: What is “comprehensive coverage”?
Comprehensive coverage reimburses you for damage that is caused by something other than a collision with another car or object. For example, loss from theft, fire, windstorm, vandalism, glass breakage, falling objects, explosion, earthquake, hail, flood or contact with animals such as birds or deer may be paid under your “comprehensive” coverage.
Q: What is “Personal Injury Protection” insurance (“PIP”)?
PIP is insurance coverage that pays for medical expenses, lost wages and the cost of replacing services normally performed by someone injured in an auto accident, regardless of who was at fault. It may also cover funeral costs.
Not all states require PIP coverage, and states with no-fault laws may limit the right to sue for non-monetary damages such as pain and suffering.
In most states, those covered by a PIP policy usually include:
- Policyholder’s relatives in the same household
- Other authorized drivers
- Policyholder and family members if they are injured while riding in someone else’s car or as a pedestrian if struck by another vehicle
Q: What is “Property Damage Liability” (“PDL”) insurance?
Property damage liability (PDL) coverage pays for damage you (or someone driving your car with your permission) cause to someone else’s property as a result of an accident — up to the limit stated in your policy. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hits. It may also cover the contents of the other party’s automobile.
Q: What is Uninsured or Underinsured motorist coverage?
Uninsured coverage will reimburse you for medical expenses, lost wages and other injury-related losses if you are hit by an uninsured or hit-and-run driver, up to the limits of your coverage. Underinsured motorist coverage pays you for damages in excess of the amount of coverage carried by the at-fault driver (again, up to the limits of your coverage).
For more, see What Is Uninsured Motorist Coverage?