When you buy auto insurance, you’re buying both a product and a promise. Policyholders who bind coverage are entering into a contract with a Property and Casualty insurance carrier.
With a well-built policy, you’re protected against financial loss if you’re in an accident. That’s why it’s important to be thorough when you shop for a policy.
No one ever wants to use their insurance, but it’s nice to have it when you’re involved in an accident. If you’re ever in a situation where you need to use your auto insurance, you need to make an auto insurance claim.
A claim is technically a request for benefits under your policy or another party’s policy following an auto accident. Here’s what you need to know before you file.
Understanding the Different Types of Auto Insurance Claims
There’s not just one type of claim that you can file as a policyholder or a claimant. How claims are handled depend on who files the incident, what types of damages are sustained, and how the injuries or property damages occurred. Here’s a list of some of the various types of claims that you may need to file if you’re ever in an accident:
- First-party accident claims
- Third-party accident claims
- Property Damage Liability claims
- Bodily Injury Liability claims
- No-fault or first-party medical benefit claims
- Physical damage claims
What is a first-party claim?
A first-party claim is one that you make against your own insurance policy. These claims typically only refer to claims being made to pay for your medical expenses, future medical bills, medications, medical transport and other related services. They don’t involve making a claim for repairs to the property.
There are a few scenarios where you might make the claim for personal injury-related benefits against your own policy.
Be sure that you realize that you must have the applicable coverage options for your claim to be accepted.
Some first-party claims that are filed can also be classified as no-fault claims, but only in a state that operates under a no-fault auto insurance system for the quick settlement of personal injury claims. Here are reasons for a first-party filing:
- The at-fault driver in the accident was uninsured or underinsured. (You must have UM coverage to pay for these injury damages)
- You’re in an accident and in a no-fault state and carry Personal Injury Protection
- You’re carrying medical payments coverage and don’t have time to wait for the claim to be investigated so that your medical bills can be paid
Are there drawbacks to filing first-party claims?
If you’re filing a no-fault first-party claim, it’s nice to get a benefit regardless of who caused the accident. You’ll be compensated for your past and future bills without the wait and you don’t have to worry about the stress of settlement delays. However, there are some drawbacks that you should know about.Here are the disadvantages:
Here are the disadvantages:
- If there’s a deductible for medical coverage, you may have to satisfy it before your benefits will be paid
- If you have a voluntary medical payments benefit, the limit may not be very high
- Some benefits won’t pay for lost wages and disability like a third-party benefit would
- In some pure no-fault states, you may have to surrender your right to sue the at-fault party to receive no-fault first-party benefits
- If you receive a settlement from the other insurer, you may have to reimburse your insurer for the benefits already paid after the subrogation process
What is a third-party accident claim?
A third-party claim is one that’s made against someone else’s auto insurance policy. The other party is primarily at fault for the car accident and their insurer is taking responsibility to pay for your injury damages or property damages.
When you’re making claim against someone else’s insurance, you’ll file for compensation under their Bodily Injury Liability coverage or their Property Damage Liability coverage. Claims for your medical bills and related expenses are made under Bodily Injury and claims to repair or replace your car or property is made under Property Damage.
What are the dangers of making a third-party claim?
If you decide to bypass your insurance company entirely to make a claim, you’re taking a serious risk. Auto insurance claims adjusters work for carriers and they are looking out for the best interest of their clients when they make fault determinations and settlement offers.
When you don’t notify your insurer that you have a claim, you don’t have much protection. You’re also left handling all of the pesky details on your own.
Since your auto insurance contact says that it’s your duty to notify them when you have a loss, failing to do so could result in a future claim denial. It’s best to just tell your insurer what happened and let them help you get third-party benefits.
Claims Made Against your Auto Insurance Policy
If you injure someone in an accident, that party has the right to make a claim against your auto insurance policy for their medical bills and their property damage repairs. Your policy will only pay up to your limits for Bodily Injury and Property Damage. Anything paid out for an at-fault accident can affect your rates in the future.
What is a physical damage claim?
You can only make a claim for physical damage losses when you carry comprehensive, collision or Uninsured Motorist Property Damage on your policy. The claim will be made to get funds to pay to repair or replace your own vehicle. These claims are subject to a deductible and can increase your rates if you’re the at-fault driver.
As you can see, there are several types of auto insurance claims. Some will affect your rates and your risk class and others won’t. It’s your job to look at the consequences of filing a claim before you file one.
If you’re looking for affordable rates after filing a claim, it’s time to shop around. Use our FREE online rate comparison tool, enter your zip code, and see if you can save money.