Setting the record straight about insurance claims
6/2/14, 06:33 AM
#1
FR500 Member
Thread Starter
Setting the record straight about insurance claims
(I posted this a little while ago in response to a forum member's recent accident. I thought perhaps it might deserve it's own thread)
Hey guys and gals
First, let me apologize in advance for the length of this post. Those who have recently had an auto claim will probably read it twice. If it doesn't pertain directly to you though, it'll be pretty boring. Sorry!!!!
There's a lot of misinformation floating around about auto insurance and auto claims in general. I've only been a member of this forum for two weeks, and I've already read about a several collision and comprehensive losses with some of my fellow members Mustangs.
Let me first say that accidents suck, but they happen. I understand that it's difficult not to become emotional when your pride and joy is damaged for any reason. But never forget that if you walk away from a collision unscathed or with just some bumps and bruises, you dodged a bullet. The pain and stress of losing your car goes away in a very short time. Severe injuries sometimes never heal.
My background....
I just retired at the end of April after over 33 years as an auto claims adjuster. Most of my career was spent as a field adjuster/appraiser, and the last 7 years I was a Senior Salvage/Total Loss Specialist. Throughout my tenure, I've handled perhaps 15,000 or more total losses, and countless other repairable claims. I've inspected and settled some pretty gruesome collisions.
Every state has different procedures and regulations as dictated by their respective insurance departments. I'll speak to NJ because that's where I was based and the vast majority of claims that I was involved with either directly or indirectly occured there. Most of what I explain here is general in nature. There are always exceptions to every rule.
Also, the nature of the beast in my profession is to consider "worst case" scenarios when I discuss with my customers and friends their indivual claim and circumstances of their loss.
All that said, here are some things you need to know:
An insurance policy is a legal contract that you've agreed to. There are rights and obligations that both parties must adhere to.
The method in which your insurance company handles your claim is dictated by the laws in that state where the loss occured.
Who's at fault?
Most claims are not clear cut 100% at fault occurances. In most states each party involved in the loss bears some degree of responsibility for the accident. Nothing is etched in stone. Nothing.
But generally speaking, if you are directly rear ended, or if your car is parked when hit, then it is almost always the fault of the other driver. I have seen exceptions to that though, but it's rare.
All other cases are subject to shared negligence.
In most states, NO FAULT has nothing to do with the circumstances. It applies to how you collect for injuries sustained in a loss.
Who should I make my claim to?
a) FIRST PARTY = your insurance company
When you collect from your own company, who is at fault is of no consequence. They don't have to investigate to the point of delaying your claim statutorily. You have coverage, they owe you expeditious resolution of your loss as long as there is no fraud or misreprentation. Your insurance company is obligated to protect your interests.
Regardless of who you think is at fault, in most cases you are better off letting your own collision carrier handle your claim. You pay a premium for that service, and if you are a long standing customer, you have a chance of being treated better, and certain issues you have may be resolved in a little more lenient of a fashion.
Your deductible will apply, but if the loss is the fault (or majority of fault) of the other party, then your insurance company will make every attempt at collecting for the entire loss, including your proportionate share of the deductible.
b) THIRD PARTY = OVC (other vehicle's carrier)
The other carrier is obligated to protect their customer's interests. They, like your own company and in the face of any lack of impartial evidence, must take the side of their own customer. Your claim can be delayed legally for 30 days or more while they conduct an investigation. A police report is not the end all to be all. It's only a part of the picture....and sometimes just a very small part.
Even if the accident is 100% the fault of the other driver, if he/she only has a minimum policy, you won't be paid in full if your damages exceed that minimum.
For instance, you have $10,000 in damages, but the other person only has a $5000 policy, then that is the max they will pay for your damages, rental, towing, combined.
The OVC will settle your claim based on the state's regulations. The other driver could be drunk, speeding, have a pound of cocaine of the front seat, driving without a license, and transporting illegal aliens across state lines. But if you made a left turn in front of him, you are greater than 50% at fault in NJ as well as many other states, and you are barred from collecting. It's refered to as proximate cause.
REPAIRABLE LOSSES: aftermarket/used parts/OEM
The insurance company makes the call. Read your policy for specifics....it will address this issue. Usually if a car is older than one year, the insurance company will allow used or aftermarket parts.
Most reputable insurance companies will not allow a/m structural, suspension, or safety related items. Certain items like air bags and suspension should be OEM. Structural parts such as 1/4 panel sections, or partial 3/4 replacement of rear sections are fine. Technically they are actually OEM because they came from a car just like yours.
The best thing you can do is to select a shop that you trust. They will fight for you. Most have good relationships with insurance companies, and the general rule of thumb is that if your carrier initially allows a/m sheet metal, as long as the shop proves that they replaced the part with OEM, then they will be paid the differance on a supplement.
But it's the insurance company's initial damage report that gets the ball rolling. The adjuster will only write for what he knows to be damaged, not what he thinks the ultimate cost of repair will be.
Likewise, when a shop writes you an estimate, that's all it is....an estimate. The true cost of damages isn't known until the job is completed.
Don't get spooked if your carrier writes a report for $3000 and the shop gives you an estimate for $5000. Somewhere in between lies the true cost of repair.
And this is very important.......
Any quality shop will agree.....the best way to repair a car is to do the least amount of work necessary to bring it back to pre-loss condition. In otherwords, you as the owner should want your car repaired with as little molestation as possible. Sometimes that means replacing the entire 1/4 panel...or perhaps just repairing the part. If a structural item such as a frame member, floor, or apron can be safely repaired within manufacturer's specs, that's what you want. You want to preserve as much of the factory integrity and corrosion protection as possible, and this includes paint.
TOTAL LOSSES: Repair vs. Replacement
Here's where it gets tricky, and every case is based on it's own merits.
It is the insurance company's decision to repair or replace. There is NO set percentage that is dictated by state law that I am aware of.
A general rule of thumb is 70-80% damage to value. But I have totalled cars at 50% if there is a liklihood of unseen damages that in my experience will result in very long down-time or structural compromise that is yet to be determined.
(I once inspected and totalled a brand new $25,000 Monte Carlo with less than 1000 miles that had what would have amounted to approximately $800 in damages...it's a long story and I won't get into it here)
The amount of potential salvage return is also a factor.
I've also agreed to let a car be repaired even when the damages are 90% to value. Again, it's the insurance company's business decision.
WHAT IS THE VALUE OF MY MUSTANG?
Sorry folks....what you think it's worth to you because it's your baby, or have an emotional attachment, or because you planned on keeping it until it became a collectible doesn't enter into the picture. State Insurance law will dictate the method in which the value is arrived at.
Most policies are ACV (actual cash value) and that means replacement cost minus deprciation.
If approved by state law, most insurance companies are using real-time market surveys based on what similar vehicles have been selling for, or have sold for over the last 30-60 days.
Generally speaking, sources such as NADA or the KBB are not considered. These are simply a dealer's opinion of what they'd attempt to get for the car if they had it on their lot. But if they can't back it up with actual used cars that they have in inventory, then the books are just a guess.
MODIFICATIONS YOU'VE DONE TO YOUR MUSTANG
You're not going to like hearing this folks!!!!
Generally speaking, if your Mustang's value by market survey is $20,000, but you've done $10,000 in suspension, engine, exterior and interior mods, your Mustang is worth $20,000.
Most insurance companies position is that when they wrote the policy on your 2013 GT/CS, it was for the car as it was intended from Ford. You're on your own if you modify the car after you've gotten your policy.
There's nothing wrong with altering your car, but installing a supercharger does not increase the car's market value. In fact, I can make a very good argument that modifications decrease it's value.
The company will allow you to remove parts you've installed as long as you replace them with the originals, but often times that's not practical.
MISC
Someone mentioned Mustang unibody having been just a recent development. For the record, most cars, and all Mustangs, regardless of year, are of unitized construction.
Here's a bit of trivia for you.....the first unitized car was the 1937 Chrysler Airflow.
If anyone has specific questions, please feel free to PM me.
Again, apologies for the long read, but I hope this helps.
Tom
__________________
When I die, I'll receive total consciousness. So I got that going for me.
Hey guys and gals
First, let me apologize in advance for the length of this post. Those who have recently had an auto claim will probably read it twice. If it doesn't pertain directly to you though, it'll be pretty boring. Sorry!!!!
There's a lot of misinformation floating around about auto insurance and auto claims in general. I've only been a member of this forum for two weeks, and I've already read about a several collision and comprehensive losses with some of my fellow members Mustangs.
Let me first say that accidents suck, but they happen. I understand that it's difficult not to become emotional when your pride and joy is damaged for any reason. But never forget that if you walk away from a collision unscathed or with just some bumps and bruises, you dodged a bullet. The pain and stress of losing your car goes away in a very short time. Severe injuries sometimes never heal.
My background....
I just retired at the end of April after over 33 years as an auto claims adjuster. Most of my career was spent as a field adjuster/appraiser, and the last 7 years I was a Senior Salvage/Total Loss Specialist. Throughout my tenure, I've handled perhaps 15,000 or more total losses, and countless other repairable claims. I've inspected and settled some pretty gruesome collisions.
Every state has different procedures and regulations as dictated by their respective insurance departments. I'll speak to NJ because that's where I was based and the vast majority of claims that I was involved with either directly or indirectly occured there. Most of what I explain here is general in nature. There are always exceptions to every rule.
Also, the nature of the beast in my profession is to consider "worst case" scenarios when I discuss with my customers and friends their indivual claim and circumstances of their loss.
All that said, here are some things you need to know:
An insurance policy is a legal contract that you've agreed to. There are rights and obligations that both parties must adhere to.
The method in which your insurance company handles your claim is dictated by the laws in that state where the loss occured.
Who's at fault?
Most claims are not clear cut 100% at fault occurances. In most states each party involved in the loss bears some degree of responsibility for the accident. Nothing is etched in stone. Nothing.
But generally speaking, if you are directly rear ended, or if your car is parked when hit, then it is almost always the fault of the other driver. I have seen exceptions to that though, but it's rare.
All other cases are subject to shared negligence.
In most states, NO FAULT has nothing to do with the circumstances. It applies to how you collect for injuries sustained in a loss.
Who should I make my claim to?
a) FIRST PARTY = your insurance company
When you collect from your own company, who is at fault is of no consequence. They don't have to investigate to the point of delaying your claim statutorily. You have coverage, they owe you expeditious resolution of your loss as long as there is no fraud or misreprentation. Your insurance company is obligated to protect your interests.
Regardless of who you think is at fault, in most cases you are better off letting your own collision carrier handle your claim. You pay a premium for that service, and if you are a long standing customer, you have a chance of being treated better, and certain issues you have may be resolved in a little more lenient of a fashion.
Your deductible will apply, but if the loss is the fault (or majority of fault) of the other party, then your insurance company will make every attempt at collecting for the entire loss, including your proportionate share of the deductible.
b) THIRD PARTY = OVC (other vehicle's carrier)
The other carrier is obligated to protect their customer's interests. They, like your own company and in the face of any lack of impartial evidence, must take the side of their own customer. Your claim can be delayed legally for 30 days or more while they conduct an investigation. A police report is not the end all to be all. It's only a part of the picture....and sometimes just a very small part.
Even if the accident is 100% the fault of the other driver, if he/she only has a minimum policy, you won't be paid in full if your damages exceed that minimum.
For instance, you have $10,000 in damages, but the other person only has a $5000 policy, then that is the max they will pay for your damages, rental, towing, combined.
The OVC will settle your claim based on the state's regulations. The other driver could be drunk, speeding, have a pound of cocaine of the front seat, driving without a license, and transporting illegal aliens across state lines. But if you made a left turn in front of him, you are greater than 50% at fault in NJ as well as many other states, and you are barred from collecting. It's refered to as proximate cause.
REPAIRABLE LOSSES: aftermarket/used parts/OEM
The insurance company makes the call. Read your policy for specifics....it will address this issue. Usually if a car is older than one year, the insurance company will allow used or aftermarket parts.
Most reputable insurance companies will not allow a/m structural, suspension, or safety related items. Certain items like air bags and suspension should be OEM. Structural parts such as 1/4 panel sections, or partial 3/4 replacement of rear sections are fine. Technically they are actually OEM because they came from a car just like yours.
The best thing you can do is to select a shop that you trust. They will fight for you. Most have good relationships with insurance companies, and the general rule of thumb is that if your carrier initially allows a/m sheet metal, as long as the shop proves that they replaced the part with OEM, then they will be paid the differance on a supplement.
But it's the insurance company's initial damage report that gets the ball rolling. The adjuster will only write for what he knows to be damaged, not what he thinks the ultimate cost of repair will be.
Likewise, when a shop writes you an estimate, that's all it is....an estimate. The true cost of damages isn't known until the job is completed.
Don't get spooked if your carrier writes a report for $3000 and the shop gives you an estimate for $5000. Somewhere in between lies the true cost of repair.
And this is very important.......
Any quality shop will agree.....the best way to repair a car is to do the least amount of work necessary to bring it back to pre-loss condition. In otherwords, you as the owner should want your car repaired with as little molestation as possible. Sometimes that means replacing the entire 1/4 panel...or perhaps just repairing the part. If a structural item such as a frame member, floor, or apron can be safely repaired within manufacturer's specs, that's what you want. You want to preserve as much of the factory integrity and corrosion protection as possible, and this includes paint.
TOTAL LOSSES: Repair vs. Replacement
Here's where it gets tricky, and every case is based on it's own merits.
It is the insurance company's decision to repair or replace. There is NO set percentage that is dictated by state law that I am aware of.
A general rule of thumb is 70-80% damage to value. But I have totalled cars at 50% if there is a liklihood of unseen damages that in my experience will result in very long down-time or structural compromise that is yet to be determined.
(I once inspected and totalled a brand new $25,000 Monte Carlo with less than 1000 miles that had what would have amounted to approximately $800 in damages...it's a long story and I won't get into it here)
The amount of potential salvage return is also a factor.
I've also agreed to let a car be repaired even when the damages are 90% to value. Again, it's the insurance company's business decision.
WHAT IS THE VALUE OF MY MUSTANG?
Sorry folks....what you think it's worth to you because it's your baby, or have an emotional attachment, or because you planned on keeping it until it became a collectible doesn't enter into the picture. State Insurance law will dictate the method in which the value is arrived at.
Most policies are ACV (actual cash value) and that means replacement cost minus deprciation.
If approved by state law, most insurance companies are using real-time market surveys based on what similar vehicles have been selling for, or have sold for over the last 30-60 days.
Generally speaking, sources such as NADA or the KBB are not considered. These are simply a dealer's opinion of what they'd attempt to get for the car if they had it on their lot. But if they can't back it up with actual used cars that they have in inventory, then the books are just a guess.
MODIFICATIONS YOU'VE DONE TO YOUR MUSTANG
You're not going to like hearing this folks!!!!
Generally speaking, if your Mustang's value by market survey is $20,000, but you've done $10,000 in suspension, engine, exterior and interior mods, your Mustang is worth $20,000.
Most insurance companies position is that when they wrote the policy on your 2013 GT/CS, it was for the car as it was intended from Ford. You're on your own if you modify the car after you've gotten your policy.
There's nothing wrong with altering your car, but installing a supercharger does not increase the car's market value. In fact, I can make a very good argument that modifications decrease it's value.
The company will allow you to remove parts you've installed as long as you replace them with the originals, but often times that's not practical.
MISC
Someone mentioned Mustang unibody having been just a recent development. For the record, most cars, and all Mustangs, regardless of year, are of unitized construction.
Here's a bit of trivia for you.....the first unitized car was the 1937 Chrysler Airflow.
If anyone has specific questions, please feel free to PM me.
Again, apologies for the long read, but I hope this helps.
Tom
__________________
When I die, I'll receive total consciousness. So I got that going for me.
6/2/14, 06:43 AM
#2
Shelby GT350 Member
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I saw this in the other thread...Good post.
Maybe you can answer this question...I have a claim that is roughly a year old now. I've already been paid for the damages back when it happened, but I was very busy and never had time to get my car in the shop. My insurance pays for a rental while my car is in the shop.
So a year later, should they still cover the rental? Or will they find it suspicious that I waited so long?
Maybe you can answer this question...I have a claim that is roughly a year old now. I've already been paid for the damages back when it happened, but I was very busy and never had time to get my car in the shop. My insurance pays for a rental while my car is in the shop.
So a year later, should they still cover the rental? Or will they find it suspicious that I waited so long?
6/2/14, 06:49 AM
#3
FR500 Member
Thread Starter
I see no problem with the rental. You paid for the coverage and you're entitled to it.
However, if the cost of parts have increased significantly since the loss, they could give you a little static about that. Again, keep in mind that i consider worst case scenarios, so that probably won't be an issue.
Don't wait too much longer. Mustangs are pretty. Unrepaired damage makes them ugly.
Tom
However, if the cost of parts have increased significantly since the loss, they could give you a little static about that. Again, keep in mind that i consider worst case scenarios, so that probably won't be an issue.
Don't wait too much longer. Mustangs are pretty. Unrepaired damage makes them ugly.
Tom
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