Insurance Payout After a Car Accident: What Do You Need to Know?

Car insurance can be divided into two types of coverage: mandatory car insurance against damage to others (liability coverage), and coverage for damage to your own car. For the second type of coverage, the value of the car plays an important role in determining the premium amount. The value of the car can also determine the amount of compensation for damage to the car.

Are you insured against damage to your own car?

Under the most basic form of insurance, third-party auto insurance, you are not compensated for damage to your own car. The insurer only covers damage caused by the insured vehicle to others. The damage must be covered under liability. You are responsible for paying for damage to your own car. With comprehensive coverage (third-party liability + full collision coverage), the insurer will also cover damage to your own car. With third-party liability + limited collision coverage, you generally won’t be compensated for damage to your own car resulting from a collision. However, you will be compensated, for example, for damage caused by fire, storm damage, and theft. Insurers pay out a maximum of the current market value. In exceptional cases, a higher value may be applied.

However, in the event of damage to the car, your own insurer may base the settlement on the replacement value. This applies until the car is a few years old, and only if the policy terms and conditions state that the replacement value provision applies.

Some insurers have also incorporated the replacement cost provision into their auto insurance policies. This means that, in the event of damage to your car, the amount you paid when you purchased the used car is used as the basis for the claim.

What kind of compensation will you receive if your car is damaged in an accident?

In that case, the person liable for the damage must compensate for it. Do you have liability and comprehensive auto insurance? Your own insurer will cover the damage. If necessary, the amount of the damage may be recovered from the party responsible for causing it. With a more limited auto insurance policy, your own insurer will not pay for your damages. Furthermore, the insurer’s coverage does not extend to recovering the cost of the damage to your car from the other party.

How can I get the compensation paid out?

To receive payment for the damage, you must contact the insurer as soon as possible and report the claim. Once the claim has been reported, the insurer will assess the damage. Insurers have different response times for this, but you’ll often receive a response within a week to 10 days. Once the claim has been finalized, the auto insurer will pay out the claim within 14 days. Is there also a personal injury involved? If so, it may take longer for the claim to be paid out, as these are often complex cases. The insurance policy terms and conditions specify how long it takes for your insurer to pay out the claim amount.

The insurance company won't pay—what should I do now?

Have you filed an insurance claim, but the insurer refuses to pay? In that case, the insurer believes that your auto insurance does not have to cover the damage. There may be several reasons for this. It’s possible that your auto insurance does not provide coverage for the damage incurred. For example, if your car has fire damage, but your auto insurance only provides liability coverage. It’s also possible that the insurer believes only a portion of the damage needs to be covered, or that the additional costs you incurred to minimize the damage won’t be reimbursed. Do you disagree with the car insurer’s decision? Always try to resolve the issue with your insurer first. If that doesn’t work, you can contact the Financial Services Complaints Institute or file a complaint with a court.