Hopefully you will never suffer a serious loss or have a large claim filed against you. But if you do, be aware that insurance companies, like any other business, want to make a profit and the bigger the profit the better. Some carriers allow this goal to get in the way of fair decision making and claims processing.
So, prepare yourself before making a claim. Learn what to do at the scene of the accident and before you file a claim.
Scene of the Accident
If an accident occurs, do the following at the scene of the accident:
Make sure that everyone is all right. Call the police and paramedics immediately if anyone has been injured.
Do not make any statements to the effect that you were at fault. Wait until you have had time to get over the shock and consider what happened.
Record pertinent information. Our Automobile Insurance Forms contains a form for your glove box. This card provides the necessary information you need to record at the scene of the accident.
If you do not have an Auto Insurance Scene of the Accident form, at least remember to record such things as:
- Name, address, telephone number, and driver's license number of the other driver(s).
- License plate number.
- Automobile registration number.
- Name of the other driver(s) insurance company and agent.
- Names, addresses, and telephone numbers of other witnesses.
- A brief description of what happened and the damage that resulted.
- A sketch of the accident scene noting distance estimates, directions, roadways, traffic control devices, objects, skid marks, damage and other relevant matters.
- Name, badge number, and telephone number of the police officer(s) who visited the scene of the accident.
Preparing before submitting a claim
If anyone suffered bodily injuries or property damage, you must:
- Notify the insurance company of the accident. Do not go into great detail at this time. You may say something incorrect that operates to reduce or eliminate your claim. Wait until you have had time to analyze and consider carefully what occurred.
- Notify the Department of Motor Vehicles if required by the laws of your state.
Other things that you should do before filing a claim include:
- Obtain a copy of the police report for your records if the police came to the scene of the accident.
- Re-read your policy and these materials.
- If your automobile cannot be driven, check your policy to see whether the insurance company must provide a rental car. If you cannot work, check your policy to see of the insurance company must pay all or a portion of your lost wages.
- Write down your observations of the injuries or damage. Have a professional document your injuries and/or inspect the damage to the automobile and the cost of repairing or replacing the damage.
- Claims for damage to your car that are submitted to your own insurance company.
These claims would include claims under your own collision, comprehensive, uninsured motorist or underinsured motorist coverage. These claims also include most no fault claims (if you live in a state with a no fault law). In order to determine the amount of the loss, obtain detailed repair bids from at least two different repair shops. These should be shops of your own choosing. Make sure that the shops use factory replacement parts, not after market parts. The latter have been known to pose quality and even safety problems.
The amount of this loss that your company is responsible for paying is the reasonable repair amount minus any deductible or other applicable policy limitation.
Claims for bodily injury to you or other insureds that are submitted to your own insurance company.
These claims would include med pay, uninsured motorist or underinsured motorist claims. They also include most No-Fault claims (if you live in a state with a No-Fault law).
For med pay, in order to determine the amount of the loss, you must ascertain the amount of your present and future medical/hospital expenses. Obtain this information from your treating doctors. Do not sign any settlement agreements involving a med pay claim until the injured person's condition has stabilized and a true diagnosis and prognosis can be rendered.
For uninsured and underinsured motorist claims, in most states you are entitled to damages beyond your medical and future medical bills, such as damages for loss of earnings, future loss of earnings and pain and suffering. This is so because your insurance company steps into the shoes of the uninsured or underinsured driver. They are responsible for paying you for all of the damages you are caused- not just your medical bills. Calculate these items carefully. If necessary, obtain the assistance of a lawyer in helping you put a dollar amount on those aspects of your loss.
The same thing is true for estimating losses for bodily injury in No-Fault states. As mentioned earlier, the specifics of No-Fault provisions differ from state to state. To find out your recovery rights for your own bodily injuries or those of other insureds, check your policy provisions carefully.
Liability claims submitted to your insurer.
These would include requests (tenders) for a defense and indemnity in situations where a claim or suit has been filed against you.
If the claim is covered by your policy, your company is responsible for paying the costs of your legal defense and for indemnifying (paying on your behalf) any settlement or judgment obtained against you and within your policy limits.
Your company probably has the right and duty to settle a liability claim on your behalf - either with or without your consent.
If they should refuse to settle such a claim where a demand has been made that is for an amount of money within your policy limits, the carrier may be obligated to pay any ultimate judgment- even if it is beyond your limits. This is dependent on the particular facts of the case and the law of the state in which you live.
YOUR DUTIES after submitting an automobile insurance claim
As with other lines of insurance, after you submit an auto claim of any type, you must:
- COOPERATE with the insurance company's investigation of the claim.
- Preserve evidence of the loss. Do not have anything repaired without the written permission of the insurance company.
- File a Sworn Proof of Loss (under penalty of perjury) with the I insurance company if asked to do so.
Again, everything you submit to the insurance company should be precise and correct. Never overestimate, misstate or exaggerate any aspect of the claim. If you do so, you will lose all credibility and may give the insurance company a basis for denying your claim entirely. If you do make a mistake, correct it in writing as soon as possible and keep a copy of the letter in your file.
What happens AFTER you file an automobile claim
The insurance company must respond promptly to your claim.
TIP: If the damage to your car is substantial, you should have an independent scope of loss and repair estimate prepared by a reputable repair shop. This is so regardless of whether the damage is going to be paid under the collision coverage of your own policy, or under the liability coverage of the person who caused the accident.
For Fault insurance liability liability claims where you were at fault, your insurance company must determine whether a suit against you is covered by the policy. If your insurer agrees to represent you, but only with a "Reservation of Rights," that means your insurance company may be contending that the suit against is not covered under your policy. An example of this would be if you knowingly allowed an un-licensed driver to operate your car. In such a situation, you may wind up personally responsible for paying any judgment against you and in addition, may be asked to reimburse your insurer for all legal fees and costs incurred in your defense.
If your insurer is defending the case against you with one of these “reservations of rights” the attorney representing you in the case may have a "conflict of interest." This means that the attorney, who is being paid by the insurance company, has a conflict between representing your interests (in wanting there to be insurance coverage applicable to the claim) and those of the insurance company (in contending that there is no coverage).
In such a situation, you should ask the insurer to appoint, and pay for, an independent attorney who represents only YOUR interests in the case.
Getting Paid
Negotiating. Alternative Dispute Resolution (ADR). Time limitation provisions. State Departments of Insurance.
Negotiating is really about five things:
Knowing the facts cold.
Understanding your rights.
Being a good listener.
Advocating your position effectively.
Being firm but reasonable.
If you have prepared and documented your claim carefully, and you know the ins and outs of your policy, you are way ahead of the game. Understand not only your position, but the company's position as well. What are they saying and why are they saying it? Are they wrong? If so, why? Exactly. What would be the most effective way of convincing them to change their position? And if not, how should you go about reevaluating your position?.
Many negotiators believe you should start out with a high demand. Otherwise, you have nothing to bargain down from and you run the risk of creating an early impasse or of winding up with much less than you are entitled to, simply because bargaining is a part of the process.
Others say that an unreasonably high demand creates an antagonistic atmosphere and that it is an artificial and counterproductive tactic.
Either way, there is no substitute for painstaking preparation and analysis. That way, when you make a demand, you can back it up with the necessary facts and arguments.
If reasonable attempts to negotiate a resolution of the claim fail, most policies either require appraisal, mediation, or arbitration. Many ADR provisions, as written by the insurance company, are expensive, time consuming to administer, and limited in what they can accomplish.
While you are considering the resolution approach you wish to take, there is another thing you had better look up in the policy: contractual limitations period. Some policies contain provisions restricting your ability to recover benefits by requiring that any "claim" be filed within a certain time (typically one year) of the date of the loss (state law usually gives you one or two years from the date the claim is denied. But, if your insurance contract says something different and you signed it, then the insurance contract may control).
If your policy contains such a provision, watch out. It could mean that unless you do file a claim against the company within the designated period, you lose all right to do so.
Things you should not do include:
DO NOT cash partial checks from the insurance company unless you have a statement in writing that this is only a partial payment and that you are not releasing the company from further obligations.
DO NOT under-settle your claim. Be fair and reasonable. But if you are right, stick to your guns and do not be intimidated.
DO NOT make threatening phone calls or write intemperate letters.
Negotiating
The biggest problems encountered in the negotiating process arise when one or both sides are poorly-prepared, hold an untenable position, or are unwilling to compromise even in a situation that cries out for it. If you have followed the steps outlined above, these problems should be minimized. The negotiating process is greatly enhanced when both sides are knowledgeable and open-minded. In such situations the negotiation process comes down to five important principles.
You should:
- Advocate your position without being arrogant or obnoxious about it;
- Listen carefully to the other side's perspective and try to understand where it is coming from;
- Try hard to bring a sense of humor (dark though it may be) to the table; and
- Be firm but reasonable.
Mediation
If, in cases where the amount in controversy is substantial, you are unable to resolve the claim directly with your company, you should then consider contacting an outside mediator. You can do this whether your policy has an ADR provision in it or not.
Mediation is a process whereby an independent third party, chosen by the agreement of both sides and experienced (in this case in insurance matters), steps in and tries to facilitate a resolution of the disagreement. Mediation, unlike certain types of arbitration, is not binding. No decisions are made by the mediator. Instead the mediator simply tries to bring the two opposing sides together in a joint effort to avoid litigation.
There are professional mediators available through organizations such as The Judicial Arbitration and Mediation Services (JAMS), and other organizations which promote mediation services.
Be sure your mediator is objective and does not have a built-in tendency to favor one side or the other.
ADR
Insurers are keenly aware of the cost of prolonged internal claims processing and ADR options. For that reason, the company might be willing to have an experienced third party attempt to mediate a resolution to the impasse. This is so even if your health policy contains an ADR provision. Your provider would far prefer an inexpensive and non-binding mediation process, to the time-consuming, more formal expense of binding arbitration. The provider can assign a less highly skilled claims employee to the mediation process than would be required for formalized binding arbitration. Although it may often seem hopeless, a good mediator armed with experienced, non-threatening, persuasive skills, can often bring even the most headstrong parties together.
Statutes of Limitations
Note carefully that there are provisions under the laws of every state that place absolute restrictions on the length of time a person has to file a civil suit for damages. These laws are called statutes of limitations. The time limits imposed depend on the legal theories involved. For example, the statute of limitations for a breach of contract case may be different from the statute of limitations for misrepresentation or fraud causes of action. You need to consult with the laws of your state on this.
In addition, there are often limitation provisions in the insurance contracts themselves. Many policies impose such contractual restrictions on how long an insured has, following a claims denial, to file a claim or suit against the company. This is known as a contractual statute of limitations. If your agreement or contract has such a provision and you do not file a lawsuit within the time period set forth, you may lose all of your rights to recover anything on your claim - regardless of how valid it might be.
You must take these provisions very seriously. They are usually strictly enforced.
If all else fails
In many states, the Duty of Good Faith and Fair Dealing, which is implied in every insurance contract, allows you to recover losses and damage covered by an insurers unreasonable conduct.
These recoverable losses can include (depending on your state) all damages caused by unreasonable delay, underpayment or claims denial.
In many states, you can also seek general and exemplary damages. Exemplary damages are intended to reduce the profitability of unacceptable conduct.
Answers to Your Insurance Questions 
