How Does an Auto Insurance Settlement Work?

Notifying an Insurance Company of a Claim

When your insured vehicle is involved in an accident, you need to notify your insurance company as soon as possible. You may even want to contact the claims center from your cell phone at the scene of the accident. Most insurance companies have a toll-free number to dial for accident claims. When you call, try to have your policy number available, the name of the driver, and the year and make of the automobile involved in the accident. The insurance company will also need the report number that the police officer at the scene of the accident gives to you.

Providing Estimates

Totaled vehicle

Once you have filed a claim with the insurance company, a representative will typically send an adjuster to inspect the vehicle damage. The adjuster will normally determine if the vehicle insurance company will authorize repairs or declare the vehicle "totaled." If the adjuster determines that the vehicle should be repaired you may need to provide estimates for the repairs. If you choose an approved facility to do the repair work you may only need the one estimate. If the insurance company determines that it would cost more to repair the vehicle than it is actually worth, it may decide that the vehicle should be totaled. When a vehicle is totaled, the insurance company will send a truck to pick the vehicle up and sell it for salvage. You have the option of purchasing the vehicle back at the salvage price yourself, just keep in mind that a new title will be issued indicating "salvage vehicle," to warn potential buyers that the vehicle has been wrecked.

Repairs or Replacement

An insurance company will typically issue a two-party check when repairs are authorized, making the check payable to the insurance policy holder as well as the repair facility. When the vehicle is "totaled," the check is made payable to the owner, unless there is a lien holder. If there is a lien holder on file, then the check will probably be made payable to both the owner and lien holder. Keep in mind that you can negotiate with your insurance adjuster on the value of your vehicle. You also need to point out special music systems, toolboxes and other add-ons.

Resources

• 12 things your auto insurer won't tell you
• More about vehicle total-loss disclosure legislation