What You Should Know...
You’ve had an accident.
Your vehicle is damaged.
Now you are counting on insurance to help pay for the
repairs...
This content answers the most common insurance-related questions
asked by consumers after an automobile accident. This information, based on
Minnesota’s insurance laws, will help you understand your rights and
responsibilities in the auto claims process and what you can expect from
insurance companies – whether you file a claim with your own insurance company,
or the company of another party in the accident. The Department of Commerce
encourages all auto insurers to show good faith by treating claims the same,
whether or not the claim is filed by their own policyholder.
Can I take my car to the repair shop of my choice?
Does
my insurance company have the right to inspect my vehicle?
How long will I have to
wait for an inspection?
Am I responsible for obtaining more than one
estimate?
Can the repair shop I select adjust its estimates and charges to
absorb the deductible required by my insurance company?
Can I have my vehicle
repaired with original equipment parts … and will the insurance company pay for
them?
If I do not agree with my insurance company about the amount of
damage, is there something I can do?
What is the difference between "betterment" and
"depreciation?" Can my insurance company reduce my settlement based on
either?
What do I do if the company gives me a "comparative negligence"
assignment?
How do Minnesota’s No-Fault laws apply?
Do I have the right to a
rental car?
How is the "fair market value" of my totaled vehicle
determined?
Can I buy back my totaled vehicle?
Should I use my own
insurance?
Will having an accident make my insurance rates increase, even if the
accident was not my fault?
What if my claim is denied?
What if I cannot resolve a
problem with my insurance company?
Can I take my car to the repair
shop of my choice?
You have the legal right to choose a repair shop to fix your
vehicle. When reporting your claim, immediately let your insurer know which shop
you’d like to repair your vehicle. Your insurer should not attempt to influence
your decision regarding where to have your vehicle repaired and is obligated to
cover the reasonable costs of repairing your vehicle to its pre-accident
condition no matter where you have repairs made.
Does my insurance company have the
right to inspect my vehicle?
Yes, they have a right to inspect your vehicle, but are not
required to do so. If your company chooses to perform an inspection, they can
require you to travel a reasonable distance to complete their inspection.
However, they cannot require you to drive your vehicle to one of their own
"drive-in" claim centers. Rather, an adjuster of the insurance company’s
choosing may perform the inspection.
How long will I have to wait for
an inspection?
If your vehicle cannot be safely driven, the insurance
company must inspect the vehicle within five business days after you notify them
of the claim. If your vehicle can be safely driven, the company must complete
the inspection within 15 days after you notify them of your claim.
Am I responsible for obtaining
more than one estimate?
Your insurance company may require more than one estimate
before settling your claim. Multiple estimates help insurers determine the
extent of your loss and prevent fraudulent claims. However, if the insurer
requests more than two, they must pay for each additional estimate. Also, your
insurance company cannot require "unreasonable travel" for you to obtain an
estimate or for the company to inspect your vehicle.
Can the repair shop I select
adjust its estimates and charges to absorb the deductible required by my
insurance company?
No. The repair shop cannot change the cost of repairs to
help you pay your deductible. Misrepresenting the cost of repairs constitutes
fraud.
Can I have my vehicle repaired
with original equipment parts … and will the insurance company pay for them?
If parts are being replaced on your damaged vehicle, your
insurance company is required to pay for original equipment (OE) parts, unless
you agree to aftermarket parts (parts not made by your vehicle’s manufacturer).
However, your insurance company is only responsible for restoring your vehicle
to the way it was before it was damaged. If your vehicle was not new at the time
of the loss, the insurer does not have to pay for new OE parts. They must pay
for parts of "like kind and quality" (OE parts of comparable age and condition).
If you request new OE parts on an older vehicle, you may have to pay the
difference.
If I do not agree with my
insurance company about the amount of damage, is there something I can do?
Yes. The insurance company is required to return your
vehicle to the condition it was in before it was damaged. The company can either
pay all costs to satisfactorily repair your vehicle, including all obvious and
hidden damage, or they may offer a cash settlement to pay for the satisfactory
repair of your vehicle.
If you disagree with the insurance company about whether
they have met their requirements under the law, contact the Department of
Commerce Response Team. You may have the ability to pursue action in small
claims court if you are filing a claim against another party’s company, or you
can invoke the appraisal process (which is explained in your policy) if you are
filing a claim with your own company.
What is the difference between
"betterment" and "depreciation?" Can my insurance company reduce my settlement
based on either?
Both terms refer to reductions in your settlement.
"Betterment" means that your repaired vehicle is better than it was before it
was damaged. Your insurance company can only charge you for betterment if the
repairs increase your vehicle’s resale value over what it was before the
accident.
"Depreciation" refers to a reduction in your settlement
based on the age or use of a part that is to be replaced. Certain parts on your
vehicle have a "life expectancy" and your insurance company may take this into
consideration. For example, if a tire on your vehicle is expected to last 60,000
miles, but it was used for 30,000 miles at the time of the accident, your
insurance company may elect to pay only 50% for a new tire. The company can also
deduct the difference in cost if you insist on using a new part, rather than an
available used part, appropriate for the age and condition of the vehicle.
What do I do if the company gives
me a "comparative negligence" assignment?
Insurance companies are required to conduct a reasonable
investigation and offer a fair settlement once liability has become reasonably
clear. If you are making a claim for recovery from the other driver’s insurance
company, your settlement may be reduced if the investigation determines that you
are even partially responsible for the accident.
If the facts of the case seem clear and you believe the
other party’s carrier made an "unreasonable" determination of comparative
negligence, you may complain to the Department of Commerce. You may also take
the driver of the other car to Conciliation Court if the amount of your claim is
below the Court’s dollar ceiling. Note: Minnesota law does not allow insurers to
automatically assign a percentage of negligence simply because you were involved
in the accident.
How do Minnesota’s No-Fault laws
apply?
Many people misunderstand Minnesota’s no-fault law. No-fault
provisions relate only to medical loss, work loss, or loss of essential services
and are only available from your own insurance company. The No-Fault law is not
related to physical damage to your vehicle.
Do I have the right to a rental car?
If you have not purchased rental
car coverage and:
1.You were responsible for the accident, you would not be
entitled to reimbursement under your policy.
2.The other driver is determined
to be liable for the accident, you would have the right to seek reimbursement
from the other driver’s insurance company
If you have purchased rental car
coverage:
1.You can file a claim with your own company for
reimbursement, or
2.If you do not want to file a claim with your own
insurance company and the other driver was liable
for the accident, you have
the right to seek reimbursement from the other driver’s insurance company.
Generally, you are entitled to a vehicle comparable to your
own. However, in the case of certain high-value, high-cost vehicles, you may
have to demonstrate your need for a specific replacement vehicle.
How is the "fair market value" of
my totaled vehicle determined?
When an insurance company "totals" your car, the company
must pay you what the car was worth before the accident occurred. This amount is
called the "fair market value," and includes adjustments for the vehicle’s
features, mileage and prior damage. There are several firms that evaluate and
publish automobile market values (like the well-known Kelly Blue Book) and the
results can vary. Whether the insurance company uses one of these evaluation
firms or does its own evaluation, the method the company uses must be documented
and must comply with the procedures described in the Minnesota Fair Claim
Settlement Act. You can ask to see the evaluation and ask how the fair market
value was determined. If this information is not provided at your request, or if
you believe it does not comply with Minnesota law, you should make a complaint
to the Department of Commerce. You should check with dealers, newspaper ads,
used vehicle publications, and other sources to gather your own information on
your vehicle’s fair market value to compare with the value provided by the
insurance company. You have the right to negotiate with the company if you
believe your car was worth more than what they offer.
Can I buy back my totaled
vehicle?
Maybe. Once the insurance company has paid you the fair
market value for your vehicle, the company owns the vehicle. Accordingly, the
company can decide whether to sell the car back to you or retain it for its own
use. Technically, if the company does sell it back to you, it can determine the
price.
Should I use my own insurance?
There are varying opinions on this. Some people feel that if
they file a claim with their own insurance company, even though they believe the
other party is at fault, the claim will be settled quicker than if they deal
with the other party’s insurer. In reality, it may not work that way. If you
file the claim with your own company, and the facts indicate the other party was
most or completely at fault, your insurer may "subrogate" the claim with the
other party’s insurance company to reimburse itself for the amount it paid to
you for your claim. The downside to this is that there is no requirement, either
by law or in your policy, that your insurance company must subrogate your claim.
If your company decides not to subrogate the claim, it may be able to surcharge
your policy for the amount it paid out to you. There is also no required time
frame for the subrogated claims process, so it may take months for your
insurance company to get reimbursed and to return your deductible to you.
Will having an accident make my
insurance rates increase, even if the accident was not my fault?
Most insurance companies will "surcharge" your policy,
meaning they can increase your premium based on an accident or a traffic
violation. The surcharge is imposed as a result of the claim payment and not
based on who was at fault. Sometimes there is a dollar threshold, or sometimes
the second or third "not at fault" accident can trigger a surcharge. The
surcharge is usually limited to a specific period of time, such as 36 months.
(Read the surcharge disclosure sheet provided with your policy.) A surcharge
would not apply, of course, if the other party’s insurance company paid the
claim or reimbursed your company for 80 percent or more of the costs for
repairing your vehicle.
What if my claim is denied?
First, find out whether the company has an appeals process
or an arbitration process. If they use arbitration, ask whether the process is
"binding arbitration," (which means the arbiter’s decision is final) or
non-binding (meaning you can still take the insurance company to court if you
are unsatisfied with the decision). Depending on the amount of money in dispute,
you can seek relief through Conciliation or District Court. Call the Department
of Commerce, Consumer Response Team for advice or assistance with your
claim.
What if I cannot resolve a problem
with my insurance company?
First, speak to the adjuster assigned to your claim or the
supervisor in charge. If you are still unable to resolve the issue, contact the
Minnesota Department of Commerce, Consumer Response Team (CRT) at 651-296-2488
(or 1-800-657-3602). The CRT helps consumers with insurance questions and
complaints. If there is a dispute with a company or person licensed by the
Department of Commerce, the CRT will attempt to resolve the matter informally.
If the issue cannot be resolved in this way, you may be asked to send a letter
to the department in order to begin a formal investigation.
Definition of terms used in this
guide:
Appraisal clause – A clause in all auto insurance policies
that provides a special appraisal procedure you can use to settle a disagreement
between yourself (the insured) and the insurance company over the amount of
loss. This procedure allows both parties to choose an appraiser to re-evaluate
the damages. If the two appraisers don’t agree, a third party (called the
"umpire") makes the final determination.
Comparative negligence – The amount or percentage of
negligence (responsibility or fault) assigned to one or more of the parties in
an accident.
Consumer Response Team (CRT) – Staff at the Department of
Commerce, which responds to consumers’ questions and complaints about insurance
matters. CRT staff can help resolve disputes between consumers and insurance
companies when necessary.
Deductible – A set amount the policyholder agrees to pay,
per claim or per accident, toward the total amount of an insured loss. You must
pay the deductible amount before the insurance company pays any benefits.
Department of Commerce – The state department that licenses
and regulates insurance companies, agents, and adjusters.
No-fault laws – No-fault coverage only applies to medical
costs, wage loss, or other costs related to injuries sustained in an
accident.
Preferred provider – A service provider, such as an
automotive repair shop, that has agreed to provide repairs and administer claims
under terms established by an insurance company.
Subrogation – The process by which one insurance company
seeks reimbursement from another company or individual for a claim it has
already paid.
Surcharge – An additional charge added to your premium for
accumulated traffic violations or accidents. The charge varies from company to
company and is typically assessed for a defined period, such as 36 months from
the date of the violation or accident.
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