When should you settle a car insurance claim?

Gina Roberts-Grey

If an accident leaves you and your car battered and bruised, you could be offered a check to cover the loss. Whether it’s your insurance company or the other driver’s insurance company offering a settlement, you want to be assured that it'll cover all damages and injuries. It’s natural to wonder whether you’re being offered a good deal, and when you should settle the claim and accept the check.

Most accident claims involve two parts: one for bodily injury and another for property damage.

“Typically, the initial property damage settlement offer comes fairly quick -- within a week or two, depending on if the vehicle is repairable or a total loss,” says Gary Hewing, a principal at  Liberty Property Damage, a company that helps consumers settle claims.

Some insurance company representatives will arrive at the scene of the accident with a checkbook in hand, ready to issue a check on the spot. Does this seem too good to be true? It probably is. “Generally, the ‘on the spot’ offers are lower than what could be recovered with a little time and research,” says Russel Lazega, an insurance attorney in Miami.

If you’re injured, Hewing says, the injury claim will take longer to settle than a property damage claim because medical treatments may last for weeks or months.

Here’s what you need to know to make sure you receive the best auto insurance settlement possible.

Know who you’re dealing with

After filing the claim with your agent or insurer, expect the rest of the communication with your car insurance company to come from and go through a claims adjuster -- a company employee who examines and evaluates insurance claims.

If you caused the accident, expect your car insurance company to spring into action. It'll start examining the damage to your vehicle and ask whether anyone in your car was injured. “The liability portion of your car insurance policy should cover the costs for injuries up to your coverage limits,” says Frank Darras, an insurance attorney in California.

If you weren't at fault, you still may hear from your adjuster, along with an adjuster from the other driver's insurer. They'll ask for a statement proving your losses, including whether your car was damaged and whether you need a rental car while yours is being fixed, as well as for any accident-related medical bills and information about any wages you've lost. “They need this information to promptly, fairly and equitably make an offer to resolve your claim,” Darras says.

Partial property settlement

It’s common for insurance companies to offer a partial settlement for the property damage portion of your claim. “Carriers are mandated to resolve pieces or parts of the claim rather than holding you and the entire claim hostage to a low-ball settlement,” Darras says.

So if a partial settlement is offered – and chances are it will be – you can accept it without jeopardizing the injury part of your claim.

Experts say accepting a partial settlement – once you agree on the amount – can be a good idea. It can give you money to buy new wheels or have repairs done, without making you wait too long while your injury claim is pending.

However, be aware of the language attached to any settlement.

“Make sure any check you cash does not have any release language similar to 'This check is payment in full' or 'This check releases all parties,'” Henwig says. If you’re unsure, don’t cash the check until you consult with a lawyer or another professional.

Don’t hesitate to negotiate

Lazega says everything is negotiable when you’re settling any part of a car insurance claim.

“If you’re unhappy with the adjuster’s offer to repair or replace your car or to compensate you for injuries, just keep negotiating, or hire an attorney if you hit a stone wall,” Lazega says.

Experts advise you to no accept a final settlement too quickly; most states allow at least two years to wrap up a claim. Florida allows up to four years, while states like Maine and Minnesota give you six years.

The settlement negotiation process involves a lot of back and forth. You typically should ask for significantly more than the true value of the claim, and the other side typically will make a low offer, says Shane Fischer, an insurance attorney in Florida.

“As you reduce your financial demands, the insurance company offers more money," Fischer says. "If the parties agree on a final figure, the case settles. If not, off to court you go.”

If you file a lawsuit, the case either could be settled before going to trial, or a judge or jury could decide the final amount. Keep in mind that a judge or jury may award you absolutely no money.

“Consumers expect a … large settlement, like one they’ve read about. But in reality, the verdicts that make headlines are based on unusual circumstances,” Fischer says.

One of the best ways to prove you deserve more than what you’re being offered is by supplying top-notch documentation. Keep copies of all receipts and estimates that you get for repairing your car, gather receipts for aftermarket extras (such as upgrades that weren't installed by the automaker), and hang on to acdident-related medical bills and paperwork regarding any lost wages.

“If your car is totaled, the law requires an insurance company to pay you the ‘fair market value’ of the vehicle,” Lazega says.

To determine what’s considered “fair” in your area, check car prices at websites like AutoTrader.com and Edmunds.com. You also can ask used car dealers.

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