Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 13, 2020

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Here's what you need to know...

  • Consumers do not have to work with a specific repair shop or accept any claim amount offered by an insurance company
  • Insurance companies may work with adjusters or private shops to determine the cost of repairs
  • Final determination of a car’s value is made using well-known publications like Kelly’s Blue Book, but this amount can be challenged based on the condition of the car and any upgrades

While some companies try to simplify the claims process, there is a still a series of steps that must be followed internally.

The company has to assign blame to a party, determine the value of a vehicle, and arrive at the final claims offer. The process can feel overwhelming and even a little mysterious, but it’s actually quite simple.

When shopping for new auto insurance, look for a company that has a solid reputation for moving through claims in an efficient and fair manner.

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Table of Contents

Fault Assessment

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The entire process starts with assigning fault to one or both drivers.

The process involves speaking with any drivers involved and determine what percentage of the blame belongs to each driver.

In at-fault states, the insurance company of the driver who is most at fault will typically have to pay for everything up to the policy limits.

In no-fault states, each driver will simply have their damages covered through their own insurance carrier.

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Cost of Repair and Value of Car

The insurance company must determine if a car will be repaired or if it’s a total loss.

In general, cars are totaled by the insurance company if the cost of repairs exceeds 60 to 75 percent of the car’s value.

The amount that’s owed on a car is not taken into account when determining what the current market value.

Instead, insurers will use publications like the National Association of Automobile Dealers or Kelley Blue Book to determine the basic value of a car.

The cost of repairs is often determined by a professional adjuster who will review the damage and estimate the final cost of repairs to get the vehicle back into pre-event condition.

The Repair Shop Estimate

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While many companies will work directly with an adjuster, others will allow an authorized auto repair shop to review the damage, determine the repair costs, make the decision on repairing or totaling the vehicle.

Independent shops that are authorized to perform this service are part of a larger network of mechanics.

They’ve all agreed to standard costs of repair, and they will communicate directly with both the company and the customer.

When working with this type of process there are a few facts that drivers should keep in mind:

  • It is not necessary to have the work done at the shop that provides the initial estimate
  • The deductible will have to be paid by the consumer when the work is done
  • An affiliated repair shop will typically be paid the balance by the insurance company

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Getting the Second Opinion

It’s entirely possible that a driver will agree with the initial offer that comes from the insurance company.

Whether the prices are based on an adjuster’s information or a nearby repair shop, there are steps that consumers can take to have the claims process reviewed and the amount reconsidered.

Here are a few options that people can consider using:

  • Get a second opinion from another shop or independent adjuster
  • Speak with a supervisor or manager about having the information reviewed
  • Look for consumer advocate through the state’s Department of Insurance

These are just a few things that consumers should be aware of when going through the claims process.

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What Consumers Should Know

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Keeping this information in mind will help drivers protect their rights.

Consumers can exert a little more control over the outcome by knowing that they:

  • Can never be forced to sign an agreement accepting the insurance company’s offer
  • Have the right to get independent estimates and submit that information to the insurance provider
  • Are not required to use any particular auto repair shop
  • Are entitled to receive the fair market value of a car that’s been totaled

Protection in the Policy for Custom Cars

The best way for drivers to protect themselves is to read the fine print in a policy to ensure that they have the coverage they need.

This is vital for people who like to upgrade their cars and add little extras that will boost the value when it’s time to sell the vehicle.

Here are just some of the additional coverages that people may want to consider investing in:

  • Accessory coverage for upgraded rims, high-end stereos, and other after-market additions
  • Agreed value policies that allow the driver and insurance carrier to agree on the value ahead of time
  • Special coverage for engine modifications

People can also protect themselves by having a car appraised after the modifications are completed.

It’s easier to have the car accurately appraised when it looks great and is in top condition.

Take photos of the car to prove that it was in immaculate condition and keep receipts to show any work that was done to the car.

People can protect their rights by carefully examining their coverage ahead of time.

It may be necessary to dispute a claim by presenting independent assessments or proof of upgrades, but it can be worth the extra time to get the fair price that they’re entitled to.

Disputes may be avoided by shopping for reputable companies with proven track records for customer service claims processing.

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