Which Insurer Should I Use?
Some Things to Consider When Deciding Where to Make Your Auto Claim
Jul 16, 2007
After being in a car accident, one of the most common choices consumers have to make is which insurance company to use when making a claim. Sometimes it’s simple. If you slide on ice and hit a tree, the only way to get your car fixed is to use your own collision coverage (if you have it). If more than one car is involved, it can be more complicated.
To keep things straightforward, this article will only address physical damage to your car and will assume you have collision coverage and the other car has liability coverage. However, the same basic principles apply to injury claims as well.
After every reported accident, each insurance company involved determines whose fault the accident was. This decision has an important effect on all parties. If the companies agree that it was your fault, you can only collect through your own collision coverage – the other company will only pay if their insured was responsible. If, however, they decide that the other driver is liable, you can choose to make your claim directly through the other insurance company.
There are several reasons why some people choose this option:
- There is no deductible
- They may get a better settlement offer
- They feel their own company should not have to pay if they were not at fault
- They are afraid their premium will go up if they do make a claim
There are some cases where this may not be the best choice. One major reason to stick with your own company is comparative negligence, which simply means that two people can share responsibility for an accident.
In most states, insurers are allowed to assign some portion of liability to each driver in an accident. How they arrive at the decision will depend on what led to the accident and what information is available.
Liability is divided out according to whatever percentage each insurer feels their own insured holds. For example, one driver may be considered 80% responsible and the other to be 20%. If each driver appears to be equally liable or they cannot tell who is at fault, they may split it at 50% on each driver. In such a situation, a liability insurer is only going to pay that portion of a claim that equals the insured’s degree of fault. So if you have $2500 in damage and they think their driver is 80% responsible, they will only pay you 80% of $2500, or $2000. If you have a low deductible, you may be better off claiming under your own collision coverage.
The two insurers also may not agree on fault. One company may find their own driver 60% liable, while the other company feels that person is 90% liable. So even if your company thinks it wasn’t your fault, the other guy’s company may not agree, and their payment to you will depend on their own assessment of liability.
Also be aware that, if you are not at fault, your insurer will try to recoup the money they paid to you. If successful, they will refund your deductible. Some companies have programs where they will waive your deductible up front if they think the accident was not your fault.
In short, if liability is clearly in your favor, the other company will ultimately pay for your claim, so it won’t make much difference which way you go; but again, if there is any question about liability, going to the other company may provide more headaches than benefits.
