WHAT YOU SHOULD KNOW ABOUT FILING AN AUTO INSURANCE DAMAGE CLAIM WITH ANOTHER INSURANCE COMPANY
When your vehicle is damaged in an accident with another car, you have the option to file a claim either with your own insurance company, if you have the appropriate coverages (a first party claim), or with the insurer for the owner of the other car (a third party claim).
In order for you to be able to file a first party claim, your policy must provide Collision or Comprehensive coverage. These are often referred to as Physical Damage Coverages.
Collision coverage protects you from damage caused to your car by a collision with another vehicle, a fixed object, or an object laying in the roadway. Collision coverage also protects you from damage caused by the upset of your vehicle.
Comprehensive coverage protects you if your car is stolen or vandalized or damaged by contact with an animal or falling objects (i.e., tree limbs, rocks, stones, debris). It also covers your vehicle for glass breakage, fire, wind, hail and flood damage.
If you file a first party claim, your insurance company will either pay to repair the damages to your vehicle or pay you the value of your vehicle if the damages exceed the cars worth. First, though, the company will subtract the deductible amount you have chosen for that coverage. (For more information on filing a first party claim, see WHAT YOU SHOULD KNOW ABOUT FILING AN AUTO DAMAGE CLAIM WITH YOUR OWN INSURANCE COMPANY.)
If you file a third party claim, the other drivers insurer will only pay for damages to your vehicle to the extent that their insured was legally responsible. In some instances, this may not be enough to reimburse you for the full amount of your loss.
MAY I COLLECT UNDER NO-FAULT INSURANCE FOR DAMAGES TO MY VEHICLE IF I WAS AT FAULT FOR AN ACCIDENT AND I DO NOT CARRY FIRST PARTY COVERAGE?
The answer is NO. No-fault or Personal Injury Protection (NJ PIP) insurance only pays for your own medical expenses if you are injured in an automobile accident, no matter who caused the accident. It does not pay for damage to a vehicle.
WHAT MUST I DO AFTER A LOSS?
Immediately report the accident to the police and exchange insurance information with the other driver. In fact, under NJ DMV-NJMVC Division of Motor Vehicle law you are required to report any accident involving property damage in excess of $500.00 to the appropriate authorities.
Immediately report the accident to the other drivers insurance company.
You must make the damaged vehicle available for inspection by the insurance company before you have it repaired.
Protect your vehicle from further damage and limit your losses. If you dont, the insurer could refuse to pay for any subsequent damage. For example, if your vehicles fender is damaged in an accident that causes it to rub against the tire, you have an obligation to make emergency repairs to the fender so no further damage will result to the tire. It is important to save all receipts for any emergency repairs as these can be submitted later to the company as part of your claim.
WHAT HAPPENS AFTER I FILE A CLAIM WITH THE OTHER DRIVERS INSURANCE COMPANY?
The other drivers insurer will investigate the claim and will make a determination whether to pay, negotiate or defend its insured against the claim.
During their investigation, the insurer will need to determine the following:
Whether their insured is legally responsible for the accident and to what extent.
The amount of your damages.
Whether your damages are directly related to the accident
While there is no law that sets forth the information you must provide the insurer, it is in your best interest to provide as much information as possible to substantiate your claim.
If you fail to cooperate fully with the insurers investigation, they could deny your claim altogether.
WHO DECIDES WHO IS AT FAULT FOR THE ACCIDENT AND HOW MUCH THEY OWE?
New Jersey has a comparative negligence law which means that more than one person can be at fault in an accident. Under this law, you can collect damages only if your degree of fault does not exceed that of other driver(s) in the accident. The settlement, however, can be reduced by your percentage of fault.
For example, if the other driver is 80% at fault and you are 20% at fault, you can collect for your damages because you were not more than 50% at fault. However, the other drivers insurer will only offer to pay for 80% of your damages.
Other points to remember:
While traffic citations and convictions under New Jerseys motor vehicle laws are factors often used to assess liability, neither necessarily means that a driver is 100% responsible for an accident. The fact that another driver may have been issued a citation or was even convicted of a moving traffic violation, and you were not, does not necessarily mean that some degree of liability still cant be assessed to you for contributing to the accident.
When you file a third party claim with another insurer, you do not have a contract with that insurer and their primary obligation is to their own policyholder.
In a situation where your version of the accident differs from that of the other driver, absent any other persuasive evidence, the insurer will defend their policyholder, just as you would expect your company to defend you if a liability claim were brought against your policy.
THE INSURANCE COMPANY IS TELLING ME THAT THEY ARE GOING TO DENY MY CLAIM BECAUSE IT IS NOT COVERED UNDER THEIR INSUREDS POLICY EVEN THOUGH THEIR INSURED IS CLEARLY AT FAULT FOR THE ACCIDENT. WHAT CAN I DO?
You can file an Uninsured Motorist Claim with your own company, provided you have a standard NJ auto insurance policy, and you can be paid for your damages less the $500 policy deductible.
THE INSURANCE COMPANY IS TELLING ME THAT THEIR POLICYHOLDER DID NOT CARRY ENOUGH INSURANCE TO FULLY PAY FOR MY DAMAGES. WHAT CAN I DO?
You can file an Underinsured Motorist Claim with your own company, provided you have a Standard Policy, and you can be paid for your uncompensated damages less the $500 policy deductible.
For more information on making an Underinsured Motorist claim, see WHAT YOU SHOULD KNOW ABOUT FILING AN UNINSURED/UNDERINSURED MOTORIST CLAIM.
WHEN WILL THE OTHER DRIVERS INSURANCE COMPANY CONTACT ME AND HOW LONG DO THEY HAVE TO LOOK AT MY VEHICLE?
New Jersey insurance regulations require the insurance company to contact you within 10 working days after they have been notified of a loss, or if they intend to exercise their right to inspect the damaged vehicle, they must do so within 7 working days. However, the insurance company is under no obligation to inspect your vehicle if they do not believe that their insured was legally responsible (i.e., at fault) for the accident.
The insurer can only require your vehicle to be made available for inspection at a time and place which is reasonably convenient for you.
HOW LONG DOES THE INSURANCE COMPANY HAVE TO SETTLE MY CLAIM?
The insurance company is allowed 45 calendar days to settle your third party claim from the time they receive notice of the loss. However, this time may be extended if the company needs to conduct additional investigation or if you fail to cooperate with them.
The insurance company must provide you with written notice explaining the reason for the delay if the claim settlement process takes longer than 45 days.
WILL THE INSURER HAVE TO REIMBURSE ME FOR RENTING A CAR?
It depends. When you notify the other partys insurance company of your claim, you should ask them if you are entitled to payment for a rental car or other substitute transportation. While the insurance company must tell you how much they would allow for a rental car or other transportation, they do not have to commit to making any payments until it becomes reasonably clear that their policyholder was legally responsible for the accident. Simply stated, once the insurance company knows that their insured is going to be 50% or more at fault, they must commit to paying for a rental car or other substitute transportation.
Keep in mind that New Jersey insurance regulations require an at-fault drivers insurance company to reimburse you for the cost of a rental vehicle in proportion to their liability. For example, if the insurance company allows $30 a day to rent a car and their insured was found to be 60% at fault, they would only reimburse $18 a day to rent a car.
The regulation does not specify the type of rental vehicle. If your damaged vehicle is a specialty vehicle, the insurer does not necessarily have to pay for a rental of the same type. If the insurer offers to pay a flat amount (for example, $20.00 per day), the insurer must tell you where you can rent a vehicle for that amount.
An insurer is only obligated to reimburse you for a rental car, or other substitute transportation, for the period of time it would normally take to repair your vehicle; or, in the case of a total loss, until they make you an offer of settlement.
If your vehicle is able to be safely driven, the insurance company will only pay for you to rent a car when your vehicle is actually in the shop for repairs.
WHAT ABOUT STORAGE FEES?
If your vehicle is undriveable after an accident and is towed to a storage facility, the storage facility will charge you a daily storage fee. The insurance company must give you 3 working days notice before they stop paying for storage charges in order to give you time to move the vehicle to some place where you wont incur storage charges.
In no event would the insurance company be obligated to pay any storage fees if their insured was not legally responsible (i.e., at fault) for the accident.
WHO DECIDES WHETHER OR NOT MY CAR CAN BE REPAIRED?
After evaluating the damages to your vehicle, the insurance company has the option of repairing your vehicle, replacing your vehicle, or reimbursing you for the vehicles actual cash value (ACV). Actual cash value is the amount your vehicle would have sold for on the date of the accident.
The insurance company will elect to replace your vehicle or reimburse you for the ACV, in those instances where the vehicle is economically impractical to repair.
Motor Vehicle regulations stipulate that a vehicle is considered economically impractical to repair, or a total loss, if the cost to repair the vehicle equals or exceeds the vehicles ACV on the date of the loss. In many instances, an insurer will total a vehicle if the appraised damages equals 80% of the vehicles ACV because often, once repairs are begun, additional damages or hidden damages are found which would render the vehicle a total loss by definition. (This is sometimes referred to as a constructive total loss).
CAN I CHOOSE MY OWN REPAIR SHOP?
Yes. Provided the repair shop is licensed, the insurer has to try to reach an agreed price with the shop of your choice. If the company cannot reach an agreed price, they will provide you with the names of licensed shops who can do the repairs for the price the company has determined.
CAN I ASK THE INSURER TO RECOMMEND A REPAIR SHOP?
Yes. At your request, the company must recommend a qualified repair facility convenient to the vehicles location that will repair the vehicle at the price the company is willing to pay and whose work is guaranteed. The insurance company further stands behind the repair shops guarantee.
DOES THE NJ INSURANCE COMPANY (or from other state) HAVE TO USE NEW PARTS TO REPAIR MY CAR?
No. The insurance company is only obligated to restore your vehicle to the same condition it was in before the loss. Sometimes this requires the use of original equipment manufacturer (OEM) parts and sometimes after-market parts can be used. After-market parts are parts made by a manufacturer other than the original manufacturer.
If your vehicle is being repaired with newer parts, the company doesnt have to pay for this betterment. For example, if your vehicles transmission is five years old, the insurer would only have to replace it with a five year old transmission. If a five-year-old transmission cant be found, the repair shop could use a new transmission but youd have to pay the difference between the value of a five year old transmission and a new transmission.
DO I HAVE TO ACCEPT NON-OEM PARTS?
No. While New Jersey regulations do permit the use of after-market parts as long as they are warranted by the manufacturer to be of like kind and quality as OEM parts, you dont have to accept them. The final choice is yours but if the insurer wants to use non-OEM parts and you decide to use more expensive OEM parts, you may have to pay the difference in cost.
The regulations also require the insurer to clearly indicate on the appraisal which parts are after-market parts and pay for any modifications necessary.
HOW WILL THE VALUE OF MY VEHICLE BE CALCULATED TO DETERMINE IF IT IS A TOTAL LOSS?
Each insurance company is required to select one of three prescribed methods for use in the settlement of all their total loss claims.
The three methods which have been approved by the Commissioner of Banking and Insurance are:
Taking the average of the retail values of substantially similar vehicles as listed in the current editions of the Automobile Blue Book (or Older Car Blue Book) published by National Market Reports and the N.A.D.A. homepage Used Car Guide (or the N.A.D.A. Older Car Guide) published by the National Automobile Dealers Used Car Guide Company.
Using a quote obtained by the insurer for a substantially similar vehicle available for you to purchase from a dealership within 25 miles of where your car is normally garaged.
Utilizing the services of an approved source, including computerized databases that produce fair market values of substantially similar vehicles. At this time, ADP and CCC are approved for use in determining fair market values.
If your vehicle cannot be valued using any of these three methods because they fail to represent a true cross-section of the market to determine the fair market value of your car, the company is then required to use the best available method and fully explain to you, in writing, how they calculated the amount they are offering you.
In addition to telling you which method is used to value your car, the insurer is required to provide you with supporting documentation, including an itemized list showing all additions, deductions, and sales tax applicable to your vehicle.
CAN THE INSURER DEDUCT FOR ANY DAMAGE OR RUST TO MY CAR THAT EXISTED BEFORE THE LOSS?
Yes. However, deductions for previous damage or prior condition must be itemized with a specific dollar amount and are limited to the amount by which the resale value of the car is increased by the elimination of the previous damage or the correction of the prior condition. In other words, if your car was damaged in a previous accident and you decided not to get it repaired, or if you neglected the condition of your car which resulted in the vehicle sustaining rust, your car would not be worth as much on the open market if you tried to sell it than it would be had you elected to repair the previous damage or maintain the car in good condition. The amount by which the resale value of your car increases by eliminating the previous damage, or correcting the prior condition, is the amount the insurance company can deduct from your total loss settlement.
As New Jersey does not have a law which specifies just how insurers can take deductions for previous damage or prior condition, the example below is provided solely for the purpose of giving you a better understanding of this concept to assist in your negotiations with the insurer.
A quarter panel damage prior to the covered accident which the insurer estimates will cost $600 to replace may result in the following deductions:
If the vehicle is 1 and 2 years old $600 deduction for previous damage
If the vehicle is 3 and 4 years old $450 deduction for previous damage.
If the vehicle is 5 through 7 years old $300 deduction for previous damage.
If the vehicle is over 7 years old $150 deduction for previous damages.
IF I FIND A CAR JUST LIKE MINE THAT COSTS MORE THAN WHAT I GOT FROM THE INSURANCE COMPANY FOR MY OLD CAR. WHAT CAN I DO?
Provided you have located a substantially similar vehicle within 30 days from receiving the companys settlement check, the company will have to either
Pay you the difference between the cost of the car that you found and the amount of the claim settlement.
Negotiate the purchase price of the car that you found.
Locate a substantially similar vehicle within a 25-mile radius of your vehicles principle place of garaging which you can purchase at the market value established by the company in their original offer of settlement.
DOES THE INSURER HAVE TO GIVE ME THE OPTION TO KEEP MY CAR AFTER THEY HAVE DECLARED IT A TOTAL LOSS?
No. Once they settle a total loss, the insurance company assumes the rights to your car and can dispose of it however they wish including selling it or its parts for salvage. They can, at their discretion, let you keep the car and let you try to salvage it yourself.
If the insurer lets you keep your car, they will deduct its salvage value from your total loss settlement.
IF THE INSURER SETTLES MY TOTAL LOSS AND LETS ME KEEP THE CAR, CAN I USE THE SETTLEMENT MONEY TO FIX IT INSTEAD OF SELLING IT FOR SALVAGE?
Yes. However, if your vehicle was manufactured 8 or fewer years from the current model year, you must first obtain a salvage certificate from the New Jersey Division of Motor Vehicles.
After the repairs are made, the vehicle must then be presented to DMV for a special inspection before it can be driven on public roads.
For more information on New Jerseys salvage procedures, contact:
NEW JERSEY DIVISION OF MOTOR VEHICLES
DOES THE INSURANCE COMPANY HAVE TO PAY OFF MY CAR LOAN?
No. The insurer is only required to pay the actual cash value of the vehicle. If your cars value is less than the loan, you are still responsible for the difference.
MUST I CONCLUDE MY CLAIM WITHIN A CERTAIN TIME FRAME?
Yes. You must either accept a final settlement or file a lawsuit within the time period specified by the appropriate statute of limitations.
If you fail to accept a final settlement offer or to file a suit before the statutory period runs out, you may jeopardize your right to receive any settlement at all.
WHAT IF THE INSURER DENIES MY CLAIM OR IF I DISAGREE WITH THEIR SETTLEMENT OFFER?
If the other drivers insurer and you cant reach an agreement to settle your property damage loss, you can:
Make a claim under your own policy if you have the appropriate coverage.
File an appeal with the insurance companys internal appeals panel. If you are still unsatisfied after the companys internal appeals panel renders its decision, you can request a review of that decision by the Insurance Claims Ombudsman.
File a written complaint with the
Department of Banking and Insurance
20 West State Street
P.O. Box 329 Trenton NJ 08625-0329
Seek appropriate legal counsel.
If you have any further questions or would like additional information, you can contact the Department of Banking and Insurance either through the Office of the Insurance Claims Ombudsman at (800) 446-7467 or the Enforcement and Consumer Protection at (609) 292-5316.
IMPORTANT NOTE TO REMEMBER
Only a judge or jury can ultimately decide who is at-fault for an accident or how much another person owes you for your damages.