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What to do after a car accident that's not your fault

Dealing with your car insurance company after a car crash can be a time-consuming hassle. Now imagine what it's like to deal with the insurance company of the person who crashed into your car. Here are some tips to ensure you maintain your cool — and your sanity — when making a claim with an at-fault person's insurer.

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car insuranceThe driver that crashes into your car is responsible for reporting the accident to his or her car insurance company. However, it's a good idea for you to contact their insurer as well. Motorists who cause accidents are often reluctant to report them. So, it is important to obtain the most complete information from the at-fault person at the scene of the accident: insurance company name, claims phone number, address and even the insurance agent's name.

You should then inform the other person's insurer that you have been involved in a crash with one of its policyholders and disclose your property damages or injuries. Also, relay only the facts of the accident, even if you believe the other driver to be at fault. The police will ultimately determine who is at fault and the insurer will make its determination of fault based on the police recommendation, your commentary notwithstanding. (Here's what to do after a car accident for more on that.)

Although you may feel that you have not caused the accident, you should contact your insurance company anyway. This establishes your good-faith accident-reporting effort and can aid you if the other party's insurer denies responsibility for the accident.

Theory vs. reality

Theoretically, you should only have to notify the other party's insurer of your damages and injuries, take your car to a body shop, visit a doctor and expect the insurer to pay your bills.

But theories don't always reflect reality. Car insurance companies may demand that you obtain their authorization before proceeding with vehicle repairs and injury treatments. If the insurance adjuster doesn't authorize a repair before you take it to the auto shop, it can create a problem. At minimum, make certain that the insurance company has accepted liability before going ahead with repairs. Get that authorization in writing. Ask the insurer to e-mail or fax it to you.

If the insurer's claims adjuster resists paying for certain car repairs or injuries because they were not authorized, remind him that seeking approval on every repair technique and treatment can cause unnecessary delays, which increase the cost of your claim in the form of vehicle-storage charges and more legwork for the adjuster.

In addition, the at-fault driver's insurance company can't force you to take your vehicle to a specific repair facility. Most states allow auto insurers to recommend auto body shops but they aren't allowed to demand you use a certain repair facility. The choice is yours.

Pick your battles

The at-fault driver's insurer may tell you to seek payment from your own insurer because it has no evidence of its policyholder's fault. That's another reason why you should notify your insurer immediately after the crash. Although most states have made it illegal for an insurer to deny claims without reasonably investigating the facts, or to deny claims when its liability is reasonably clear, you may not want to fight the other person's insurance company.

If you decide to fight the at-fault driver's insurer, you'll need a lawyer — especially if you've been seriously injured (read when to hire a personal injury lawyer). An attorney can help you navigate the sometimes-murky laws that govern insurance. But keep in mind that if you hire an attorney, he will take a cut of any settlement he helps you get.

When the other driver lies

You may have evidence of the other driver's fault — maybe he even admitted it at the scene — yet you find your claim denied by his auto insurance company. Why? Because he probably told a version of how the accident happened that doesn't square with yours. His insurer may stand behind that story in order to avoid paying your claim.

car insuranceSometimes the insurance company will take  its policyholder's position, even if it contradicts the police report.

It is common for companies to take their policyholder's side in cases where no police accident report was made. In many states, if an officer at an accident scene determines the damage is minimal (usually less than $500), he or she will not make an accident report. Body shop estimates for that same accident, however, might run into the thousands of dollars. Take your car to a repair shop so you can determine the extent of the damage.

Don't forget to write down the other driver's address and policy information, along with statements and contact information from witnesses. This way, you'll have evidence gathered at the scene to bolster your position on the cause of the accident.

Also, when speaking with the at-fault person's insurer, ask it to demonstrate how the accident could have happened as the other driver said. If it's a small claim and you have the time, you can take the other driver to small claims court. Otherwise, you may need a lawyer. Insurance companies know that unless you've hired an attorney, they can tell you 'no,' or say they'll get back to you. The longer the matter drags on, the more likely you are to compromise or simply go away.

Another option: Your own insurer

Even if you're not at fault, you can make a claim with your insurance company for payment of damages and injuries.

If you have collision insurance, file a claim with your own carrier. The company may be more responsive and help you document the claim. Sometimes, your company will pursue the claim. If it takes this approach, often all you will be out in the short term is your deductible. You may get that money back when you settle with the other driver's insurer.

An insurer also might allow you to make your claim under your uninsured motorist coverage, although in most states UM coverage will pay only for bodily injuries — unless you also have uninsured motorist property damage (UMPD) coverage. Your collision coverage could also pay for damages to your car.

Your car insurance rates aren't necessarily going to increase at renewal time if you make a claim under your own insurance policy for an accident that wasn't your fault. Most state laws prohibit insurers from surcharging policyholders or raising their premium rates for accidents in which they weren't at fault. However, those laws do not preclude your insurer from dumping your policy at renewal time if you've made a couple of recent claims. If you drive in a high-risk area and are subject to being hit, even if you are not at fault, your insurer might find you too high a risk to insure.

Different rules by state

Can't work? Totaled car? Get paid

If you miss work because of an injury you sustained in a car crash that was someone else's fault, you can expect that person's insurance company to pay for your lost wages. But their policy will have a limit on the amount you can recoup for lost wages.

If you're hit by a driver whose liability limits are not high enough to cover all of your medical expenses and lost wages, you can make a claim under your own uninsured motorist coverage for the remainder. If you live in a no-fault state, your PIP coverage will pay for your lost wages up to the limits of your policy.

When another driver wrecks your car beyond repair, his or her insurance company should pay you the actual cash value of your car before it was totaled. The industry standard definition of actual cash value is "replacement cost" minus "depreciation." Replacement cost is the amount of money it would take to replace your vehicle with a similar one. Depreciation is the amount of money your car has devalued over time.

State laws generally allow insurers to base the actual cash value of your totaled car on the prices of similar vehicles in your area. Insurers often hire outside sources such as ADP Claims Solutions Group or CCC Information Services to find out the cost of similar vehicles. The insurer also should pay for the sales tax on the new vehicle that you purchase with the insurance money. (See what to do when your auto insurer totals your car for more information.)

There are some states that require you to purchase personal injury protection (PIP) and have slightly different rules for collecting for your damages and injuries after an accident. For example, your PIP coverage pays for your medical expenses and lost wages, even if you are not to blame for the crash. Receiving your PIP benefits requires you to contact your own insurance company about the accident and to make a claim under your own insurance policy. You'll have to pay a deductible if you make a claim under your PIP coverage.

This is mostly the situation in "no fault" states — although the law differs in each one. Some no-fault states give you the option of contacting the at-fault driver's insurer to recover property-damage payments and medical expenses not paid by your PIP. According to the Insurance Information Institute, 12 states and Puerto Rico have "no-fault" insurance laws: Florida, Michigan, Hawaii, New Jersey, New York, Pennsylvania, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah. If you live in one of these states, check with your insurance agent, or your state insurance department, for the best way to handle third-party accident claims.

Reasonable rental cars

Insurance companies are always looking for ways to shave a few dollars from the cost of a claim, and reimbursements for rental-car costs often are the first to meet the blade. Insurance companies often tell accident victims that they pay only a certain amount per day for rental cars. As a victim of another person's negligence, you have the right to recoup the costs associated with fixing the disruption you experience, including all of the costs of renting a vehicle while your own vehicle is unusable.

To avoid having to pay for part of a rental, rent reasonably. Obtain a rental vehicle that is similar to your own and return it promptly when your own vehicle has been fully repaired. Rent a vehicle only if your own is not safe to drive or requires extensive time in the shop. And don't purchase a collision damage waiver from the rental company if your own insurance policy covers damages to rental cars.

If you rent reasonably and the insurer insists on cutting the amount of its reimbursement, ask the insurer to put its reason in writing. Insurers must inform you in writing of their decisions to deny or reduce payments.

Know what you deserve

Knowing your state's prompt-payment law is beneficial. Every state's unfair claims settlement practices act outlines the time frame in which an insurer must issue you a check for your damages.

Laws vary widely from state to state, with many simply mandating a "prompt" payment of claims, while others specify a number of days and the interest owed to you if the insurer fails to pay within the specified period. One last factor to keep in mind: Unfair claims settlement practices acts often do not extend the same rights to you if you're making a claim against another driver's insurance as opposed to making a claim under your own insurance policy.

Writing a matter-of-fact letter to the at-fault person's insurance company is a smart way to inform it of your expectations and rights. Telling the insurer that you expect it to pay all reasonable costs you incur as a result of the accident, including payment for repairs to or the total-loss value of your vehicle, diminished value of your car, medical expenses, lost wages, and rental-car costs will help smooth the claims process by highlighting the insurer's responsibilities under public policy.

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