While you may feel fortunate to have escaped a car accident without any injuries, you also may be concerned about covering the costs of repairing your vehicle. In most situations, insurance will cover these damages, which are usually much less substantial and contested than damages related to injuries. You should be aware, however, that the insurer will pay for costs only up to the limits of its policy. It does not need to pay for any additional costs, regardless of how severely your vehicle was damaged.
The question of which insurer pays for repairs will depend in part on whether you live in a fault or a no-fault state. If you live in a fault state, you will need to seek compensation through the at-fault driver’s liability coverage, which involves proving that this driver was at fault. If you live in a no-fault state, on the other hand, you may be able to get compensation for your repairs through your own no-fault insurance. Sometimes no-fault coverage does not cover vehicle repairs, however, so you should look up the rules in your state.
Understanding Collision Coverage and Comprehensive Coverage
Collision coverage and comprehensive coverage are types of car insurance that arise only in specific, narrow situations. Collision coverage accounts for any vehicle damage when the other driver was uninsured or underinsured, or when you were at fault. However, if you were at fault for an accident that caused only property damage, and the costs are relatively minor, you may want to cover them on your own instead of making a claim against the policy. This could result in increased premiums, which may be more costly over time than paying for the repairs.
By contrast, comprehensive coverage applies to parked cars. It covers situations outside car accidents, such as damage caused by animals colliding with your car or objects falling on your car while it is parked. You would not need to use this coverage unless there was not a human cause for the damage, or unless the driver who hit your car was uninsured or underinsured. A driver who hits a parked car is usually presumed to be at fault, so it would make more sense in that situation to get coverage through their liability insurance if they have it.
Paying for Repairs
Once you report the accident that caused the property damage to the insurer, it will inspect your car and estimate the cost of repairs. You can use your own mechanic to make the repairs, even if the insurer recommends a different mechanic. If the mechanic accepts the insurer’s estimate for the cost of repairs, you should be able to move forward. Otherwise, the mechanic and the adjuster probably will be able to negotiate an acceptable amount. In the rare event that an insurer refuses to make an acceptable estimate, you can file a lawsuit if the difference is substantial enough to make it worthwhile.
A car is considered “totaled” when the cost of repairing it is greater than the value of the car. An insurer does not need to pay repair costs that are greater than the fair market value of your car. Instead, it will declare the car a total loss, pay you its fair market value, and take away the car. The fair market value is the value of the car at the time of the accident, rather than the value of the car or the price that you paid for it when you bought it.
If your vehicle is totaled while it is still on a car loan or lease, you may need to pay back the lender or dealership for the difference between the actual value of the car and the amount remaining on the loan or the lease value. However, you can get gap coverage for your car to cover this expense if you see the need.