It’s just your luck. You were sitting at a red light, minding your own business, when another driver rear-ended you. Or, maybe you were sitting inside your favorite Italian restaurant when someone side-swiped your car while it was sitting in the parking lot.
Neither of these things are your fault, but what are you actually supposed to DO about them?
You can file a claim through the other person’s insurance company!
California’s car insurance industry follows a fault-based system. Or, in other words, whoever is considered to be at fault for the accident is responsible for paying for the damages. However, figuring out which driver is at fault isn’t always so easy. Sure, if you were inside eating a plate of spaghetti and meatballs while your car got hit in the parking lot, it’s obvious that the other person was at fault. But in more complex cases, insurance companies will rely on police reports, statements from both drivers, and physical evidence at the crash scene (like skid marks) to determine who was at fault.
Making things even more complicated is the fact that California is a “comparative fault” state. In layman’s terms, that means if the other driver is only deemed to be 75% at fault, he will only be responsible for paying for 75% of the damages.
So, what happens when the other driver is at fault?
Whether the other driver is 100% at fault or even just 50% at fault, you can file a claim through their insurance company. Known in the insurance world as “third-party claims“, these types of claims can pay for a variety of different things — from fixing the damage to your car, to paying your medical bills if you were injured in the crash, to paying for a rental car while your car is in the shop. Best of all, you won’t have to worry about paying any money out of your own pocket. That’s because third-party claims aren’t subject to a deductible.
How much money will you actually get?
That depends on the terms of the other driver’s insurance policy. Every insurance policy comes with specific limits — meaning the insurance company is only required to pay out a certain amount. The higher the other driver’s limits are, the more money you’ll get if you need it.
California law requires all drivers to carry basic liability insurance, so as long as the other driver is following the law, you’ll have some kind of coverage to tap into. Unfortunately, though, drivers here only need a small amount of insurance to comply with the law. Specifically, each driver is only required to have $5,000 worth of property damage liability insurance, $15,000 worth of liability insurance to cover the injury or death of one person in a crash, and $30,000 worth of liability insurance to cover the injury or death of more than one person in a crash. Because repair bills and medical costs can add up quickly, the basic state-mandated coverage may not cover all of the expenses you have!
OK, so what if the other driver has higher limits that can cover all of the damage?
If your car was totaled — meaning that it would cost more to repair it than the car is actually worth — you’ll be given a check for the actual cash value of the car. If your car wasn’t totaled, the other driver’s insurance company will pay to fix the damage. Just remember, every insurance company on the planet will require a written estimate before they hand over any money.
If you were injured in the crash, you can file a third-party bodily injury claim. These claims don’t just cover your actual medical bills, though. A third-party bodily injury claim can also include payment for your pain and suffering and any loss of earnings you may be dealing with. So, if you injured your back in an accident — and now you can’t do your job as a mover until the injury heals — the other insurance company would be responsible for compensating you for the money you will lose as a result.
And what if the other driver does not have high enough limits to cover the damage?
In the event that the other driver does not have enough insurance to cover your claim, you may end up having to pursue legal action to be compensated for the difference in coverage limits and actual damage. The best preventative measure for this situation would be to carry uninsured/underinsured motorist coverage. With this form of coverage, your insurance company will pay the discrepancy (up to your policy limits) in damages. With 1 in 7 drivers in California being uninsured, it would be wise to protect your self from this all-to-common situation.
What if the other driver’s insurance company doesn’t want to pay your claim?
It’s not uncommon for insurance companies to dispute who was at fault or how much their policyholder was at fault. You’re not required to accept the settlement that the other insurance company offers. If you can’t come to any kind of agreement with the other insurance company, you can always file a claim with your own insurance company — as long as you have collision coverage. They’ll pay for your injuries and damages in accordance with your own policy, and then they’ll most likely seek subrogation from the other insurance company — meaning that they’ll get the other company to reimburse them. Unfortunately, filing a claim with your own insurance company means you’ll have to pay your deductible. Luckily, though, you’ll most likely get it back during the subrogation process.
One final tip — don’t waste any time in filing a third-party claim. Here in California, both property and bodily injury claims come with a deadline. When it comes to property damage, your claim must either be settled or you must file a lawsuit within three years of the date of the accident. For bodily injury claims, you only have two years to either settle the claim or file a lawsuit. If you miss either of these deadlines, you’ll be completely out of luck!
Latest posts by Raphael Locsin (see all)
- How Credit Affects Homeownership - August 1, 2016
- New Business Restrictions: Santa Clarita Fire - July 26, 2016
- 5 Things to Know Before Signing a Rental Agreement - July 16, 2016