Car Insurance Settlement: Frequently Asked Questions

October 31, 2013

Get answers to common questions about car insurance settlements, such as how long they take, whether they're taxable, and what you're entitled to.

There are many questions which people waiting for car accident insurance settlements might be tempted to ask. The big questions such as "when will I get my money" can only really be answered by the company themselves, but other questions, such as knowing the car insurance settlement basics, can be provided as information to all claimants, no matter what company they are with. If you have a claim, then don't be shy about asking your insurer to provide answers, they are, after all, supposed to be helping you to get money after a car accident.

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Frequently Asked Questions about Car Accident Insurance Settlements
There are many questions which can occur to you during the long process of an insurance claim. If you have problems with your claim, and need specific questions answered, then this can be done by calling your company and asking them. Don't be afraid to read off a list of questions from a notebook if necessary. Make sure that all your questions are answered before you proceed with making a definite claim. Here are a few of the most common ones.

  • What is a car accident insurance settlement? A car accident insurance settlement is essentially a payout of monies owed to either the insured party covered by the insurance company or to a party injured by the insured. In the case of personal injury to another party, the insurance company will contact that person's healthcare provider to determine the extent of the injury and the amount of the settlement. As per the terms of an insurance contract, if the insured has their costs of personal injury covered in the event of an accident, the insurance company will pay out up to the limit after the deductible has been met.
  • What am I entitled to? This is the biggest question which almost every claimant on car insurance asks. The answer, of course, lies with your company, but there are ways in which you can work out the amount you are entitled to used an accident damage calculator. This is a mathematical formula which takes the injuries suffered (if any), and the damage to the car, deducts points for driver error, poor condition of car, and other factors which may reduce the amount, and then assesses the amount you will need to recover.
  • How long will it take? This will depend upon the type of claim that you are making. If it is a straight forward accident which was not your fault, then this claim should be processed quickly, so expect it within two weeks. Other claims, for example where the other party is not insured, or drove off without leaving insurance details, might take longer. Claims where you were partially or totally responsible will take even longer than this, perhaps as much as 3 months.
  • What if the car is stolen or written off? If your car was involved in an accident while it was being stolen, then you may have to cover any repairs yourself while the insurance company determines how much they are responsible for. If the car is written off, the claim might take more than a month, but you should be able to get a hire car while you are waiting for compensation.
  • Will I have to pay anything? You will have to pay for any costs which are higher than the amount for which you were insured. Your policy will have stated this at the outset, so you should be aware to these charges. You can avoid excess by claiming from the other car's insurance, or by taking the car to a recommended garage for repairs. Medical bills again, will have to be covered by you, or by the other party's insurance company.
  • Are bodily injury insurance settlements taxable? As a rule, you will find car insurance settlement taxes do not apply if bodily injury is involved. There is only one special case where something might be considered taxable, and that is if the settlement not only fixes but improves the vehicle's value. At that time, the IRS may consider it taxable because the value of something you own increases. Even then, the IRS usually doesn't get involved, so for all intents and purposes, car insurance settlements, whether bodily or property, are usually not bothered by the Internal Revenue Service. Bodily injury settlements are most assuredly not taxable.
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Successfully Appealing Auto Accident Insurance Settlement Decisions

If you are ever involved in an automobile accident, the insurance company might offer an auto insurance settlement that you feel is unfair or does not adequately compensate you for your losses. While you might consider speaking to an attorney to address your concerns or appeal the settlement of the insurance company, there are a few things you can do on your own to try to get the insurance company to be more conciliatory and perhaps convince them to offer you more.

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Determine What Is Fair
Before you get started with an insurance settlement appeal, you should sit down and carefully consider what you feel to be fair in terms of a settlement. Take notes and list reasons why you feel you are owed a specific amount for each type of expense you want to be compensated for. Be as thorough as possible when making your list and try to write down anything you can think of. Refer to this list often and update it as needed.

Refer to Your State Department of Insurance
Before you begin with your appeal, take a couple of hours and visit the website of your state's Department of Insurance. Read everything you can about consumer insurance rights and the responsibilities of insurance companies in your state. State laws regarding insurance companies vary; therefore, become as familiar with the insurance laws in your state as you can--before you begin. Also, make sure that your particular areas of concern are legitimate grounds for an appeal or not.

Get Copies of Everything
Make copies of everything associated with the car accident and your car insurance policy (or the insurance policy of the other driver). Make copies of police reports, policy contracts, bills, notes from phone conversations, emails, letters and anything thing else to do with the insurance settlement. Never submit originals of anything to the insurance company--send copies only.

Keep a Phone Log
Always write down the time and date of calls to and from the insurance company. Also, make sure to take down the name of the adjuster or employee that you speak with. If the employees use employee ID numbers, be sure to get that as well. It is an even better idea to record the phone calls; however, make sure you are aware of the laws in your state regarding phone call recording, and always make sure to notify the other person that you are recording the call.

Write a Demand Letter
Carefully compose a letter that details your concerns and reasons that you believe that you are due a particular amount higher than the settlement offer of the insurance company. Be very specific with your reasoning and don't be vague or unclear in your demands and reasons for them. Always mail the letter via Certified Mail, so that you will have proof mailing and receipt (just in case you need to file a lawsuit for relief).

Be Reasonable
Always be reasonable in your demands to the insurance company. Their offer may be too low, but your demands may be unreasonable as well. Always take the time to consider if there is an amount somewhere in the middle that might be fair to both sides--you and the insurance company.

If all else fails, seek the advice of an attorney. Also, don't allow the insurance company to drag out negotiations for too long. All states have statutes of limitations for filing civil law suits, and if you wait too long--you may wind up getting nothing. In fact, if the insurance company will not make a reasonable offer reasonably quickly, you should see an attorney as soon as possible. The lawyer will know the best way to proceed with appealing the insurance company settlement.

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Getting the Best Car Insurance Settlement

There are many online sellers which seem to offer you good advice on how to get the best possible car insurance settlement, for a fee, but most of these can do no more than give you the same advice which you can also get for free on other websites. To make sure you allow for the best possible car insurance settlements when you agree to the list, there are a number of things you should do.

  • Be prepared. When it comes to getting a car insurance settlement, you can never be over-prepared. The consequences of being left seriously injured without suitable compensation is too frightening to contemplate. So before you make any kind of claim, be sure you know what you are entitled to, what you should be claiming, and the amount you will need to cover your costs. Plan your insurance knowing all these details, to offer you the best protection in case of serious injury.
  • Calculate your needs. Work out how much you will need. This includes not only any medical bills and repair of the car, but also living costs, rent and utility bills if you are off work for any amount of time. Bills can pile up during illness and quickly get to the point of no return, so make sure you negotiate a car insurance deal that will provide you with all of your needs.
  • Write a letter. As with the appeal process, if you have been unlucky enough to get injured in a car accident, then you will need to write a letter to your insurance company setting out your claim. This letter should include a number of details, including an introduction, which will give the basic assessment of your needs and who was at fault, the main body of the letter which will demonstrate who is at fault, and an assessment of the amount you should be paid, including any medical bills already incurred. You should finish your letter with a clear demand, the actual amount you will need at a fair price. Include with the letter any documentation that will back up your claim.
  • Phone your company. You can also back up your claim letter by calling the office and informing them you have sent the letter, asking to be notified when it is delivered. If you get a delay, it can sometimes be easier just to give the company a ring and sort it out in a conversation, rather than trying to do it by mail.
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The most important factor in getting a good car insurance settlement is to have a reliable insurance company handling your claim. You must also be patient but persistent, so call your insurance company regularly, without pestering them. One call a week should suffice.

Basic Auto Accident Insurance Settlement Guidelines

The claims process seems wired to take away any initiative which the claimant may have, leaving it up to the insurers, and if you are feeling like this, then are are things that you can do to help yourself understand the system. Reading settlement guidelines can show you what you can expect from your car insurance.

Making a Claim
The most difficult bit of the car insurance settlement is making the initial claim. In order to avoid being rejected, you will have to claim exactly the right amount, that is taking everything into consideration, you must know what the accident has cost you in terms of auto repair bills, health insurance and time taken off work. If you are not sure of any of these costs, then you will need to research them before you can begin thinking of making the claim. You also need to work out exactly what you are liable for, and how much your costs will or will not cover. Find out what your excess is, and adjust your claim to take this into account.

Negotiating a Settlement
Once you have put in a claim for the settlement, you will need to follow this up with your insurers. Make sure that you keep track of your claim, and don't allow it to stagnate somewhere for long periods of time. You can also write your claim out in a letter, setting down the basics of the claim, and giving a clear claim amount at the bottom of the letter. This will give you a position to negotiate from. You may now find that your insurers phone you up with queries, or even inform you that they have rejected part of the claim.

Getting a Settlement
Once you have put in your form and started negotiating, you may receive a statement from your insurers, offering you a sum of money which will probably be a lot less than the amount you requested from them. When this letter arrives, you have two options, you can either accept this settlement, and make up the other amount using your own money, or you can reject it and ask them to have another look at the claim. Every time you reject the settlement, you will be beginning again, so you will have to submit another claims form, with adjusted claims.

Not Getting a Settlement
It may happen that you are unlucky, and the company completely rejects the settlement. In this case, you can take the matter further by appealing to an adjudicator, or even taking them to the small claims court. This can be costly if you lose, so make sure that you are on good grounds before you go this far.

How to Calculate a Car Insurance Settlement
If you are trying to work out how much you should ask for when claiming a car insurance settlement, then the best way is probably by using an online settlement calculator. However, if this is not available, then you will have to work out your car insurance by hand. This can be more labor intensive, but working the calculations before you make your claim can help you to save money, and can also give you an idea of what to expect when you are pursuing your claim through the insurance company. In order to calculate the costs, you will need a simple calculator, and the documents which you are using to form the basis of the claim. Here is the process:

  • Collect the documents. Among these documents you should include things such as car repair costs, medical bills, any additional charges that you incurred as a direct result of the accident, and any further bills which will be a problem if you are incapacitated. You will also need your policy document, with details of any fees the insurers will charge, plus any other costs that you will have to pay, including the excess for car repairs.
  • Add the bills. You will firstly need to add together all the costs that you have incurred due to the accident. The trip to the laundry that was the main cause of you being in the car would not count, but a trip to the emergency room immediately or soon after would. You may have to pay the costs of repairing street furniture such as traffic lights, or even the costs of repairing someone's hedge. These are all costs that should be covered by your claim. You will now need to work out how much of these costs you can include if you were partly to blame. Your policy document may have a percentage figure, or you may be forced to phone the company and ask, or even cross reference insurance company policies with the other party.
  • Calculate the deductions. With every settlement claim, there are deductions. You will be charged for filing the paperwork and handling the claim, so these fees need to be deducted from the amount you can expect to receive. You will also need to deduct any costs that your company expects you to pay for, which will be detailed in your policy document. Study this and take a note of any fees or excess charges which it mentions.
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Calculating your settlement before you put in a claim can help prevent it being rejected by your company, and forcing you to try again. You should, however, be aware that this calculation is very much dependent upon your own policy agreement with the insurers, so always carefully read your documents before putting in a claim.

Problems with Claims Involving Aftermarket Parts

When you're looking to figure out a car insurance settlement with aftermarket parts, those with experience can tell you it's rarely easy. Rather than "just paying" a claim, insurers typically want to assess costs and negotiate a lower payout. One consideration for the settlement is the use of OEM parts. Knowing more about this will help you wisely settle a claim.

OEM parts are parts that meet the standards for what the auto maker originally put into an automobile. They are precise parts to fit a make and model. These are the best parts to use when repairing a vehicle, and they are commonly considered higher quality than a lot of aftermarket parts or generic parts sold cheaper on the auto parts market.

Auto Insurance Companies on Aftermarket Parts
In a claim situation, the insurer wants to minimize the cost to them. That's why they will often ask a car owner to fix with aftermarket parts in a settlement instead of the more expensive OEM parts options. An insurer may rule out OEM replacement options entirely, and present this kind of choice: over a certain dollar amount, the vehicle is considered "totaled" and the owner gets a check for its book value or other assessed value. If the car owner can bring the repair bill in to under this amount, he or she can afford to have it repaired out of the auto insurance settlement.

So are OEM parts better than aftermarket parts? Although many experts would say that generally OEM parts have greater quality than generic ones, that's not always the case. A parts buyer doesn't have to just go with OEM vs. aftermarket. Someone looking critically at parts quality can read all of the appropriate specs on a part to see what materials it's made of, how it has been engineered to stand up to pressure or wear, and how it is compatible with a car's electrical or other systems.

Sometimes, you can get a great deal on aftermarket parts. However, in cases where specific compatibility is key, OEM is generally going to be your better choice, as these parts are guaranteed to fit in where they need to. There's also the warranties that come with quality parts for securing a good future on the road. A mechanic shop will often recommend parts that carry a warranty as part of guaranteeing the fixes they perform on your vehicle. Mechanics know that coming back again to fix the same problem will cost a lot of money, and if they are honest shops, they will try to provide you with parts that will last, though they may not always be helpful in finding the most affordable parts. Talking to a shop about their "parts philosophy" will help you see where they are coming from.

Avoiding Auto Insurance Settlement Hidden Fees
Your satisfaction at the ease with which your settlement is accepted may be diminished when you look at the amount you receive, and discover that it is significantly reduced. This is the burden of hidden fees. Charges which the insurance company suddenly drop upon you when you make a claim, without you even realizing you are liable. These charges can include deductions for being responsible for the accident, paperwork, office charges, and even costs for paying you money. You may be shocked by these hidden fees, but there are ways in which you can avoid them in the future.

  • Always read the small print. No matter how many times you are told, it seems like some people always forget to take a careful note of what the small print says. Companies, including large insurers such as Allstate, will claim to offer you a policy which does not remove the deductible, even if you have an accident. Though, they have ways of doing this by removing money from the amount you don't have to pay in the future. Other companies will have similar small print in their policy documents, so you should read everything carefully before you sign your name. If you don't agree with everything on the policy, take your insurance money to a different company.
  • Shop around. This follows on from reading the small print, and will help you to get the best out of the company you finally choose. By looking at several companies at once, you may be able to decide between them, and get the deal which suits your needs the most. Shopping around will also give you an experience of what companies will and will not charge.
  • Check your policy for charges. You may find that your insurance company will charge you for certain claims while not charging you for others. This can influence your claim, which is of course what the company wants to do. Before you make a claim, go through the documents, taking out anything which can incur a charge.
  • Discuss charges with your insurer. You will also have a contact in the insurance company through whom your claims are assessed. This person is probably the best one to help you work out the charges which can be incurred, and help to avoid them by working with you. They may even be able to do a deal on some items which otherwise would cost you. Speak directly to your insurance representative, and see what they can do for you.
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When taking out an insurance policy, as well as finding a reliable insurance company, you should be able to locate any hidden fees which the company will use to deduct money from your settlement. By looking at several companies at once, you can find the one which most suits your needs.

Related Questions and Answers

Is a Car Accident Injury Lawyer Necessary for Filing a Claim to Your Provider?

It is not necessary to hire a car accident injury lawyer when filing a claim with your insurance company. This is especially true for small accidents and fender benders. On the other hand, if you are in a serious accident and have multiple injuries that require hospitalization, it may be a good idea to hire a lawyer. Insurance companies are businesses and they will try to limit their payout on any and all claims. If you feel your insurance company has denied your claim unfairly or not paid a fair amount, retaining a lawyer may be your next step.