People file property damage claims with insurance companies for many reasons. Car or motorcycle accidents that result in damage to vehicles are among the most common. Homeowners also seek reimbursement for property repairs when a fire, tornado, or other disaster damages a home or its contents. Most people are insured for these types of damage, but you may not know whether the damage will be covered, which insurance company should pay for damage, or how to handle a disputed claim. This property damage guide will help you answer those questions.
First step to getting paid: get to know your insurance policy
Homeowner’s and Renter’s
Very few homeowner’s or renter’s insurance policies cover all the disasters that could harm or destroy their belongings. Acts of war and nuclear hazards are nearly always excluded. More common catastrophes such as floods and earthquakes are usually excluded from conventional coverage. If you live in a floodplain or along an earthquake fault line, you will probably need to pay extra to insure yourself against those perils.
Most homeowner’s policies pay the cost of repairing damaged property or the market value of the belongings, whichever is less. Some policies will pay you the insured value of a home that has been totally destroyed even if the market value is less than the insured value. To determine whether you have insured value coverage, read your policy. If you do not understand it, get advice from a lawyer.
If you paid extra for it, you might have coverage that will pay the replacement value of property that has been destroyed. If your house burns down in a fire, for example, replacement value coverage will pay the cost of rebuilding a substantially similar house. Market value coverage will only pay you the amount you would have received in a sale of your house. In most cases, market value is less than replacement value, so you need to understand what kind of coverage you have before pursuing compensation.
Most auto insurance policies cover liability, medical payments, and property damage arising from car accidents. Liability covers personal injuries that someone else sustained as a result of your negligent driving. Your medical pay coverage reimburses you for your own medical bills, up to the policy limits, as the result of a motor vehicle accident.
Most auto insurance policies include two forms of coverage for car accident property damage. Collision coverage applies when you are involved in an accident with another vehicle, provided a collision occurred. In addition, collision coverage usually applies when you collide with a fixed object, such as a building or pole. It assures that your property damage will be paid (subject to policy limits and any deductible) even if the collision was your fault.
Comprehensive coverage applies when damage was caused by something other than a car collision. It covers things like vandalism, hail and fire damage, and theft. In a typical policy, comprehensive coverage also applies when an unknown driver collides with your parked car. You will need to review your policy to determine whether exclusions may exist for specific causes of vehicle damage.
Sometimes (as when a “near miss” with another driver forces your car off the road), it is not clear whether a claim should be brought under collision or comprehensive coverage. The answer may depend upon your policy terms and the law of your state. If you have adequate policy limits and the same deductible under both coverage provisions, the distinction may be unimportant, but if you would receive more compensation from one form of coverage than the other, you may need to seek legal advice to assure that you are fairly compensated for your damages.
Many states require drivers to have liability insurance that covers personal injuries, but collision and comprehensive coverage are both optional. If you have a car loan, however, your lender might require that you maintain one or both forms of property damage coverage as a condition of your loan. Personal injury coverage generally includes coverage for damage you cause to another person’s vehicle through your own negligence, up to a specified dollar value.
How policy limits and deductibles affect you and your claim
There are two dollar amounts associated with property insurance, including vehicle insurance, that are important to you. The first is the policy limit. This is the maximum amount of money the insurer will pay when you pursue property damage reimbursement. It is not an amount that you automatically receive whenever your insured belongings are damaged.
Most policies are written to require an insurer to pay the lesser of:
- the repair cost required to restore damaged property to the condition it was in before the accident; or
- the market value of the property before it was damaged.
Suppose, for example, that you own a five-year-old car that has a market value of $6,000. If it would cost $7,500 to restore the vehicle to its pre-accident condition, the insurer will declare the vehicle a “total loss” and will only pay you the vehicle’s $6,000 market value. However, if your car was damaged in a collision and your policy limits for collision coverage are $5,000, your insurer is not obligated to pay more than $5,000.
The second important dollar value is the amount of your deductible. A deductible is the amount of the loss you must pay from your own pocket before your insurer will pay anything. For instance, assume that you backed into a building and your car repairs will cost $2,500. If your collision coverage has a $1,000 deductible, your insurer will only pay $1,500. You must pay the remaining $1,000 yourself. If your repairs will cost $700, your insurer will pay nothing because the repairs are less than the amount of your deductible.
Whose insurance will pay?
If you were injured in a collision with another driver and the other driver was at fault, ask your personal injury lawyer what you should do about your property damage compensation. Even if your lawyer does not represent you with regard to that claim, your lawyer can give you some general advice about how to handle it.
If you are involved in a collision with another vehicle and you will be handling your property damage compensation yourself (whether or not you were injured), your first question is whether you should submit your property damage claim to your own company or to the insurer of the other driver. In most states, the best answer will depend upon whether you were at fault.
When to submit a claim to the other driver’s insurer
If the other driver was at fault, or if that driver’s fault was greater than yours, you might want to pursue compensation from that driver’s insurer. If you make the claim against your own insurer, you need to pay the deductible. If you collect from the responsible driver’s insurance company, you pay no deductible. If you and the other driver happen to be insured by the same company, however, you might be able to submit the claim to the company and avoid paying any deductible.
Unless you live in certain “no fault” states, if the other driver was entirely at fault, you are entitled to collect the full value of the repair cost or the market value of your vehicle prior to the collision, whichever is less. If you were partially at fault for the accident, the amount you can collect depends on how contributory negligence rules work in your state. If you live in a comparative negligence state and the other driver was 90 percent responsible for the accident, you can collect 90 percent of your property damage from that driver. If you shared a significant amount of responsibility for the accident or if comparative fault is in dispute, you might want to obtain compensation from your own insurer and let them resolve that dispute with the other driver’s insurer.
When to submit a claim to your insurer
If the accident was your fault or if responsibility for the accident is unclear, you should probably submit the insurance claim to your own company, provided that you have collision coverage. You would also submit the claim to your own insurer if the other driver is uninsured or if the limits of that driver’s property damage coverage are less than the value of your property damage. For example, if your repair cost is $7,500 but the other driver only had $5,000 in property damage coverage, your collision coverage will pay the remaining $2,500, minus any deductible that you are required to pay.
When you submit a claim to your own insurer, that company might make a claim against the other driver’s insurance company if it believes the other driver was at least partially at fault. Whether it will do so may depend upon how contributory negligence laws work in your state. If your insurer pays your property damage (minus the deductible) and pursues the other driver’s insurer for reimbursement, it must refund the deductible you paid if it collects the full amount of your damages from the other driver’s insurer. That does not often happen since your insurance company has little incentive to seek reimbursement of any funds it did not pay.
“No fault” states
Some states have “no fault” rules. If you live in one of those states, you may be required to submit your claim to your own insurance company. In some “no fault” states, however, the “no fault” rules apply only to liability, not to property damage claims. You should review your policy carefully to determine whether you are required to pursue compensation from your own insurer if you live in a “no fault” state.
How to make your claim for property damage compensation
Most states require drivers to exchange insurance information at the time of the accident. If that does not happen, the other driver’s insurer will probably be identified in the accident report that the police prepare. In any collision that results in property damage, you should make sure the police are called so that an accident report will document information you will need to process an insurance claim.
If you make a claim against another driver’s insurer, you can generally do that at any point until the statute of limitations expires. That time period (typically one to three years) depends upon the state in which you live.
If you make a claim against your own insurance company, a different (probably longer) statute of limitations period applies. However, your policy probably requires you to notify your insurer of the event giving rise to your claim as soon as you can, and to submit your claim within a fixed period of time. The policy may require you to provide a “proof of loss” within a certain number of days after initiating the process. Read the policy carefully and make sure to comply with the time limits. If you do not understand the policy’s requirements, seek legal advice.
Your insurer will only pay if:
- Your policy was in effect at the time the belongings were damaged
- The belongings were covered by the policy
- The policy insured against the cause of the property damage
- The belongings belonged to you
- You followed the procedures required by the policy
If any of those factors are in dispute, you should obtain legal advice.
Your insurer may require you to supply a written “proof of loss,” although many insurers only do so if the loss involves multiple items of property or if the value of the claim is in serious dispute. A “proof of loss” is a sworn statement that states the date, time, and cause of the loss. It itemizes your lost or damaged property and states the repair cost or market value that you are seeking. You may need to attach repair estimates or appraisals to the proof of loss. Ask your adjuster to give you the “proof of loss” form that your insurance company uses.
If your insurer disputes the claim, your policy probably gives it the right to question you about the loss under oath. Before you submit to an “examination under oath,” you should get legal advice. You do not want to say the wrong thing and face the potential loss of your entire claim or a criminal charge for perjury or fraud.
Documenting a claim
Some claims are easy to document. You can obtain the market value of your vehicle by consulting a recognized price guide, such as the Kelley Blue Book. You can obtain written repair estimates from body shops and mechanics.
If you are pursuing compensation for the contents of a house that was destroyed in a fire or tornado, documentation can be more difficult. It should start before the disaster strikes. Make a record of everything you own that has any significant value. Write down dates of purchase, model numbers, serial numbers, and the price you paid. You can use that as the basis for negotiating the market value of that property. To prove that you actually owned those items, you might want to walk through your property while making a video recording of its contents. Don’t forget your tools in the basement and implements in the garage. Consider obtaining professional appraisals of jewelry and valuable collections that you keep in your home.
When you have completed your property inventory and your video, store them (along with your appraisals) in a safe deposit box. They will do you no good if you lose them in the same fire that destroyed your property. Remember to update the inventory and appraisals and to supplement the video whenever you make a significant new purchase.
How to negotiate with insurance claim adjusters
Different insurance companies manage property damage claims in different ways. Whether you submit a claim to another driver’s insurer or to your own, you will need to deal with an insurance claims adjuster. Remember that the claims adjuster works for the insurance company, not for you. Their job is to save money for their employer. You will probably need to negotiate to obtain a fair settlement. Be patient, polite and professional but do not be intimidated if the adjuster appears to be stubborn or unhelpful.
If your damage claim involves your car, some companies will have the claims adjuster inspect the damage and write an estimate based on the company’s assumptions about repair costs. Some companies have a “drive in claims center” where they will want you to take your car so that “specialists” can inspect the damage. Remember that they specialize in saving money for the company that employs them. Whether you get a repair estimate from a claims adjuster or a claims center, remember that they will make you an offer based on what they think the repair cost should be, not on the repair cost you will actually incur.
Do your own research
The claims adjuster will probably want to write you a check soon after the adjuster or a claims center examines your vehicle. The adjuster knows that the quicker they pay, the less it will cost. If you accept the check and it turns out that actual repair costs are higher than the estimate, you are stuck eating the difference. As a general rule, the first offer you receive is not the best offer you will receive.
Never accept a settlement based on a claims adjuster’s opinion of how much a repair should cost. Take your vehicle to a reputable mechanic or body shop and get your own estimate. You may learn that replacement parts and labor costs are greater than your claims adjuster tells you they will be. If the adjuster insists that his or her estimate is reasonable, insist that the adjuster show you a reputable garage or body shop that is willing to perform the repairs for the settlement he is offering. If the adjuster is basing an estimate on used or surplus parts, insist that the adjuster show you where quality used parts can be purchased for the estimate the adjuster is giving you. Remember that if you only have 10,000 miles on your car, you do not need to accept parts that have 40,000 miles of wear.
Some companies will ask you to get an estimate or two (or three) from mechanics or body shops and will offer to pay the lowest estimate. That might seem like a fair approach, but you should choose those estimate providers wisely. The claims adjuster will pressure you to settle for the least expensive repair, even if it is performed by the least reputable company. Research mechanics and body shops and only obtain estimates from places that have a good reputation.
If your vehicle is a total loss, do not rely on the adjuster’s estimate of its pre-collision value. Look up the Blue Book value yourself. You will have a better understanding than the adjuster of your car’s condition, mileage, and options. You may find that your car was worth more than the adjuster tells you it was worth.
One advantage of dealing with your own insurance company’s claims adjuster is that your company has a duty to deal with you in good faith. An adjuster working for the other driver’s insurer has no such duty. The duty to deal in good faith means your insurance company is required to pay a valid claim. That does not mean the company cannot dispute your claim, but it must have a legitimate reason for doing so.
If your insurer does not deal with your claim in good faith, you can sue them for acting in bad faith. Those lawsuits often recover considerably more than the value of your property damage. For that reason, if you have a strong bad faith claim, you can probably find an attorney who will be willing to handle it, even if your property damage claim is small. Sometimes threatening your claims adjuster with a bad faith lawsuit will induce a sudden willingness to make a reasonable settlement offer.
What to do if the company will not pay
If you are making a claim against another driver’s insurance company, they have no obligation to deal with you in good faith. If you cannot negotiate a fair settlement, you may have to bring legal action against them. If you think you can prove your repair costs or the value of your vehicle was larger than the insurance company is willing to pay, a lawsuit might be your only recourse.
Check the limits in your state for bringing a small claims action. Generally claims of up to $5,000 or $10,000 can be brought in small claims court. The simplified procedures and relaxed rules of evidence make small claims court a good alternative for claims that are too small to justify the expense of a lawyer. You county or state probably has a written guide to small claims court. That guide should explain what kind of evidence you need to bring to court to prove your claim. In many cases, insurance companies that do not want to deal with court proceedings will settle with you prior to the small claims hearing.
How to tell if you need to hire a lawyer
If you are making a claim against your own insurance company, your insurance policy might require you to engage in a process of mediation or arbitration before, or instead of, filing a lawsuit. State law may place restrictions on the requirements that an insurance policy can impose. You should talk to a personal injury lawyer before taking legal action against your own insurance company to make sure you comply with necessary requirements.
Since your insurance company must deal with you in good faith, you may be able to find a lawyer who will represent you for a contingent fee if you can seek damages in a “bad faith” lawsuit. If that happens, you will pay no fee unless the lawyer wins the case. Since there is often the potential for “bad faith” litigation when your own insurance company resists paying a reasonable claim, it is usually a good idea to talk to a lawyer about representation if you think you might need to take legal action to collect a property damage claim against your own insurer.
Those seeking representation for a personal injury claim or have further questions arising from an accident that involved an injury, call (800) 838-6644 for a free consultation and case evaluation from a Timothy J. Ryan & Associates legal professional. They can help guide you through the process and get you the compensation you deserve.