A peek under the hood of your auto insurance policy

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A peek under the hood of your auto insurance policy

U.S. drivers will spend on average over $1,000 a year on auto insurance, according to AAA. But do you know what your auto insurance policy actually covers, or how the claims process works after you’re in an accident?

We spoke with a liability adjuster* for a major auto insurance company to learn what to look for in a good policy, and why you should always call your insurer after an accident, even if you weren’t at fault.

PolicyGenius: What is the most common claim?

There are a lot of parking lot accidents where both drivers are backing out and hit one another. The second most common is intersection accidents, followed by lane changes, then rear-end accidents.

PG: What’s the one thing people should do that would make the process easier?

Have all of their information ready when the adjuster calls. Information such as the other driver’s name, car make and model, and license plates. Many people fail to get the information from the other driver, and understandably so. But it is so important to get the name and contact information of the driver and their insurance company’s name and contact. If possible, use your cell phone to snap photos of license plates, damage to both vehicles, the other driver’s insurance card, etc.

PG: How long does it take to process a claim, and is there anything the insured can do to make things go faster?

Claims can take as little as 24 to 36 hours to determine liability and as long as two weeks. There are a lot of factors that can delay the liability decision; or instance, if the adjuster has a difficult time reaching one or both drivers to get statements, if there are delays in receiving police reports or other investigation reports such as light sequences, witness statements, etc. Insureds can provide as many details as possible of the accident when reporting the claim, and then fully and promptly cooperate with the adjuster during the investigation. No two claims are exactly alike, and adjusters try to determine liability as quickly as possible so the vehicles can be repaired.

PG: How do you determine whether to total a car?

Today, all major insurance companies use a software program to determine the ACV, or Actual Cash Value, of a vehicle. Total loss adjusters input the VIN (Vehicle Identification Number), and the software spits out an average ACV. If the insured’s car has less mileage than a car for that make and model, or less wear and tear, the owner and total loss adjuster can negotiate on the value. So, mostly cars that are older than five or six years are at a greater risk of being determined a total loss. This is because the insurance company will use the ACV compared to the repair estimate. If the repairs cost less, they will fix the car. If the ACV is less, they declare it a total loss.

PG: Is this ACV program available to consumers?

I don't believe so. It's only for the insurance companies. And it's separate from KBB (Kelley Blue Book) and the NADA (National Automobile Dealers Association) guide, which can be slightly outdated. This software tells you everything about the car based on the VIN; it automatically knows if the car had leather seats, or an extra fancy stereo system, or a luggage rack, or all those extra things that sometimes people forget to mention.

What I usually tell someone who wants to estimate ACV is to get five vehicles within a 200- to 250-mile radius of their home with the same year and mileage, and get the retail value of those cars. Keep in mind, of course, that it's retail, and there is a markup, but that gives them a pretty good baseline.

PG: What are some shopping tips for people buying auto insurance?

Each insurance company has their own policy declarations along with exclusions and riders. Basically, if an insured wants to make sure they have enough money to replace a newer vehicle, then they should look into "GAP (Guaranteed Asset Protection) coverage." GAP pays the difference between the policy limits and what the vehicle is worth. For example, Mr. Jones bought a 2016 Jeep and was in an accident two months later. He paid $28,500 for his Jeep, but the insurance company is only offering him $26,800. He will be out of pocket [for] the difference unless he has GAP insurance.

I would also look into buying more than the minimum coverage. I always carried minimum until I started working in this industry, and now I've bumped mine up to the next tier for more coverage. My state has a problem with lots of uninsured and underinsured motorists, so I would highly recommend that drivers carry uninsured motorist coverage as well. Say someone only has $25,000 in insurance, they were in a multi-car accident and it was their fault, and the total damage for all the cars involved is $75,000, but their policy limit is only at $25,000. They could potentially be liable for anything above the policy limits.

I know, myself, before I started doing this job, I never even read my policy, and a lot of people don't. They just go to an agent [who] they know, they get the minimum, they think they have "full coverage." And so they think they're okay. Then they're in an accident, and they find out they don't have rental, they don't have UM (uninsured motorist), and the other person doesn't have insurance, and they're like, "Well, what do we do now?" And that's a really hard conversation to have with somebody, to say, "I can't help you."

PG: You told me that you and your coworkers sometimes get into discussions about specific claims and debate who was at fault. Can you tell me a little more about how that process works?

An adjuster’s job is to be an advocate for their insured. So, sometimes if an adjuster is having a hard time determining who is liable for an accident, they will present the loss facts to one or more other adjusters to get feedback.

PG: What you mean by, "An adjuster’s job is to be an advocate for their insured"?

Well, it really depends on the area where you're an adjuster. Every state has different laws. I'm a liability adjuster, and my job is to make sure that my insured doesn't pay for any more than he or she is negligent for. So, in my state, instead of being 100% at fault, both parties could be found at fault, and they could split the percentage, so you'd have a 50/50, or 40/60, or whatever. So that's a big deal where maybe one of the other insurance companies would find my insured 100% at fault and I could, upon a thorough investigation, come back and say, "No, my driver was only 60% at fault." And so that saves us money, but it also helps them as well, because it helps with their renewal and policy. Their rates might not go up as much if they're only paying out 60%, as opposed to 100%, of a claim.

PG: What's something you have you learned about cars since working as an adjuster?

I've learned a lot about quirky traffic laws we have to abide by when making our decisions. And I know a lot more about car parts and body shops -- I know more than I ever thought I would about labor rates, painting, replacement parts, and aftermarket parts. I wouldn't be able to look under the hood and see if they'd replaced parts they said they had replaced, but when it comes to body work, I feel like I can hold my own now.

PG: What are some things you wish customers would do, or stop doing?

I wish they'd be honest. We're going to find out anyway once we investigate the accident.

I also wish they would be more cooperative with our investigation. A lot of times they will not respond to our attempts to contact them, and it just delays everything. It delays the liability decision, it delays the repairs to the car, everything. Sometimes they have legitimate reasons, but honestly, when you've left five or six voicemails, sent two letters, and a handful of emails, they know you're trying to get a hold of them. So I wish they'd be more prompt in responding.

Finally, I wish they'd have more details when they call in the claim or when you talk to them about the claim. So many times, people don't know which direction they were headed, they can't tell you the name of the street, and it makes it really hard for us to go back and try to investigate where the accident happened.

PG: If you’re at fault, is it better not to call your insurer?

No. Let's say you are at fault, and you know you're at fault, but you won't call in. And the other driver calls in on your policy and makes the claim, but you still refuse to make any kind of contact with your adjuster or your insurance company. By law, your adjuster has to deny the claim because they were never able to talk to their insured to verify the facts. So then the other person is upset because your insurance company has denied the claim and aren't paying for the car damages, so 99% of the time, they're going to seek compensation through litigation.

PG: What’s the biggest mistake you see people make when it comes to auto insurance claims?

People are so hesitant about calling in accidents on their policy when they just know the other person is at fault. And it's hard to make them understand that that's what insurance is there for. You pay for this insurance to protect you and to use it in situations like this. And a lot of times people will have to go several weeks -- maybe even a month or longer -- waiting to get their car repaired, because they're waiting for the other insurance company to make a decision on who's at fault, where it would be more practical to go ahead and use their own policy, pay the deductible and get the car repaired, and let their insurance company fight for them by going after the other insurance company. You can report the accident and have your insurance company investigate for you, and unless you're found at fault, your rates shouldn't be increased.

*The adjuster has asked to remain anonymous and does not speak on behalf of any specific insurer.