Understanding how does insurance work in a car accident will help you ensure you have the coverage you need. You will also be able to act quickly to resolve your claim with your insurance company if you do have a collision.
Defining Auto Insurance
When you purchase an auto insurance policy, you enter a contract with the company. They agree to protect you financially for covered injuries, theft, damage, or loss of your automobile in exchange for your premium payment.
Auto insurance is a necessity because motorists risk causing hundreds of thousands of dollars in damage every time they drive. In fact, WalletHub notes that uninsured auto accidents and catastrophes are one of the top three causes of bankruptcy, along with job loss and medical bills. Car insurance reduces this risk, so drivers do not have to pay for expensive damages.
Drivers are legally required to have car insurance in 48 of the 50 U.S. states. Thirty different states allow you to make a cash deposit of $25,000 to more than $150,000 in lieu of auto insurance.
Different Types of Auto Insurance Coverage
Your auto insurance policy most likely consists of several different types of coverage, each with its own purpose:
- Bodily liability insurance, legally required in most states, covers the cost of other people’s medical bills if you have an at-fault accident.
- Property liability insurance, also typically mandatory, covers the cost of damage to property if you have an at-fault accident.
- Medical payment coverage, required by some states, pays your medical bills after an accident, regardless of fault.
- Collision insurance is an optional policy that pays for repairs to your vehicle regardless of fault, according to The Hartford.
- Comprehensive insurance is another optional policy that covers non-collision claims such as weather damage, theft, or vandalism.
- Gap insurance, which is optional, pays the difference between the value of your car and the amount owed on your auto loan if you experience a total loss or unrecovered theft.
- Rental reimbursement coverage is optional coverage that pays for a rental car if your car needs repairs after an accident.
- Uninsured and underinsured motorist coverage, required by some states, pays your medical bills if you are in an accident with an at-fault driver with no or insufficient insurance.
Steps to Take After an Auto Accident
When an auto accident occurs, move your car out of traffic and off the road if you can safely do so. If not, turn the vehicle off and get out. Check in with the other vehicles involved and make sure no one has injuries. Call 911 if anyone needs medical assistance. You must also call the local police to make an accident report. The insurance company will review this report closely when investigating your claim.
Take notes that cover all the details of the accident. You should also write down the names, contact information, and insurance information of the other drivers, as well as the names and contact information of witnesses to the crash. This information will come in handy when you file an insurance claim.
Edmunds notes that you should avoid blaming yourself or the other driver for the accident. The insurance adjuster will determine fault after reviewing the evidence available.
If possible, photograph the license plates of all vehicles, the accident scene itself, damages to both vehicles, traffic signs, and other pertinent information. You can provide your insurance company with these images during the claims process.
You must exchange contact information and insurance information with the other driver at the scene of the accident. Write these details down and keep them in a safe place. Allstate also encourages drivers to note:
- The speed you were traveling when the crash occurred.
- The exact accident location.
- The names and ages of your passengers.
- The color, make, model, and year of all other cars involved.
- The time the accident occurred.
- The names and contact information of witnesses to the crash.
- The weather and road conditions at the time of the accident.
- The name and badge number of the officer who arrives at the accident scene.
File a claim with your insurance company as soon as possible after the accident.
During the Auto Accident Investigation
According to American Family Insurance, the insurance company will assign an adjuster to your case. This person will:
- Look at and take photos of the damage to your car.
- Visit the accident scene.
- Interview you, the other driver or drivers involved, and witnesses to the collision.
- Review the police report about the accident.
- Examine hospital bills, medical records, and proof of lost wages associated with the accident with your permission.
- Review your social media to confirm the details of your claim.
- Determine fault in the accident.
- Offer a settlement amount for your claim based on fault and other factors.
- Pursue the other driver’s insurance company if he or she was at fault.
You do not have to wait until this process has been completed to fix your vehicle and seek medical care as long as you have coverage for those items. Although you can get an estimate for repairs from your preferred mechanic, your insurance company may require you to use a certain body shop to receive reimbursement for the cost. The insurance adjuster can also ask you to provide multiple damage repair claims. If the repair shop you choose charges more than the estimate approved by your insurance company, you may have to pay the difference.
The insurance adjuster may total your vehicle if the cost to repair your car exceeds its worth. They use the actual cash value of the car to make the appraisal, though some policies may provide a settlement that covers the cost of purchasing another vehicle.
Understanding how auto insurance works should be a priority for any new driver. Talk to your insurance company if you already have coverage but want to learn more about your policy. An agent can help you decide on auto insurance that protects your personal assets from loss in an auto accident.
Sources:
https://www.edmunds.com/auto-insurance/how-car-insurance-companies-handle-car-accident-claims.html
https://www.allstate.com/tr/car-insurance/in-case-of-a-car-accident.aspx
https://www.amfam.com/resources/articles/understanding-insurance/car-insurance-after-an-accident
https://www.thehartford.com/aarp/car-insurance/how-car-insurance-works
https://www.caranddriver.com/insurance/
https://www.caranddriver.com/features/a34493228/10best-2021/
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