How to Make Sure Your Car Insurance Policy Pays for Your Repairs

By Jessica Bosari
After 13 years in personal and commercial insurance, Jessica Bosari now writes about personal finance, car insurance, risk management and related topics. Since 2008, she has been simplifying complex ideas through engaging articles for her readers.

How to Make Sure Your Car Insurance Policy Pays for Your RepairsMost people only have a basic understanding of car insurance: You get in an accident, and then the policy pays for the damage, right? Well, there’ s a lot more to it than that, and knowing how car insurance works when it comes to car repairs can help you make sure you get what you pay for.

Car Insurance Policies and Car Repairs

When it comes to repairs, there are two basic kinds: repairs needed because of 1) damage from an accident, or 2) mechanical breakdown. You might also simply have the costs of routine maintenance, but that’s not really a repair; that’s just the cost of keeping the car. So we’ll focus on accident damage and mechanical breakdowns.

Accident Damage and Car Insurance

Strictly speaking, we should call it “accidental damage,” but the industry generally shortens the term when speaking of the dents, dings and cracks a car wreck can cause. We usually think of accident to the car’s body, but it can also penetrate to mechanical parts like the wheels and suspension. In serious accidents, even the frame can suffer damage. If it gets this bad, your car is probably a total loss.

After an accident, either your car insurance policy will pay for repairs or it will declare the car a total loss and negotiate a settlement with you. Assuming your car isn’t totaled, the process goes like this:

  1. Car appraiser inspects damage and writes an appraisal.
  2. Car insurance policy pays damage, less deductible, to either you or your shop.
  3. The shop usually finds additional damage after teardown.
  4. The appraiser comes to inspect the newfound damage and writes a supplement.
  5. Your car insurance policy pays the additional damage to you or the shop.
  6. The shop completes repairs.

Yes, teardown is a normal part of the repair process. Here, the shop removes the damaged car panels which will need repair or replacement. That’s when they often find other damage beneath and have to call the appraiser back out. Although this may seem inefficient at first, it’s important to understand that an appraiser can only write for visible damage. Dents and cracks are obvious on first inspection, but damage to interior parts isn’t necessarily visible right away, and the appraiser isn’t allowed to guess at what might be damaged.

Total Loss Claims

A total loss settlement is one of the most difficult claims for a person to navigate when they don’t know a lot about car insurance. By doing a little research and sticking to your guns when you talk to the insurance adjuster [link to “What You Need to Know Before Talking to an Insurance Adjuster”], you can get the highest compensation for your car.

After a total loss accident, it’s important to stay in touch with your insurance company and follow their instructions for moving the car out of storage. Don’t drag your feet in making a claim, because you’ll want to avoid non-covered rental vehicle charges. But most importantly, know the value of your car before you accept any total loss settlement.

Even in the Information Age, car valuation is still an imprecise science. Unless you have a new car with “New Car Replacement” coverage, car insurance companies have to come up with an estimated market value for your car. That value depends on the kind of car, its condition, your location and the number of similar cars on the local car market. Sometimes, insurance companies have to search hundreds of miles away to find cars they can compare to yours. And you can’t assume they are looking everywhere they might to find a comparison car.

Placing a Value on Your Car

Insurance companies use services that search the market with automated tools to find similar cars for sale in the area. When a human searches, instead of an algorithm, the results are more likely to be accurate. You should do your own search to come up with your car value. You’ll want at least three listings for cars very similar to your own. You can take an average of the three values to come up with what your car is worth. Look for cars similar to yours in terms of:

  • Year
  • Make
  • Model
  • Mileage
  • Condition
  • Location

Book values are much less influential on total loss settlements than you might expect. Theoretically, your car is only worth what you could have sold it for just before the accident happened. That depends on much more than a book value. It has to take into account the market demand for your car. It also depends on how your car compares with others of its kind in the area.

Don’t be surprised when your insurance company offers you thousands less than the value your research reveals. It is the adjuster’s job to save the company money whenever possible. The adjuster has a range of values available and naturally starts with the lowest number, so never accept the first offer.

Respond with copies of the listings for the cars you found and tell the adjuster you believe you should be paid based on the average value of your listings. In most cases, the adjuster will come back to you with a number a little lower. If you owe more money on the car than it is worth, stick to your guns as much as possible to minimize the outstanding debt.

If you can’t agree on a value, your insurance policy has a provision where both you and the insurance company can hire independent professionals to place a value on the car. Unfortunately, the cost of hiring someone is usually too much to make it worth the trouble. So, if the new offer is close to your number, it might not be worth your time to keep pushing back.

When it comes to accident damage, the rules are clear because they’re laid out in the terms of your policy. But for car repairs stemming from mechanical damage, it’s a little different. Here, your car insurance policy likely offers limited coverage, if any.

Mechanical Damage (Breakdowns)

You might have coverage for a mechanical breakdown through your car insurance policy under a small Comprehensive coverage add-on called Towing and Labor. Although it won’t pay for parts, the cost of labor to get your car up and running again is covered. This insurance is much like a roadside assistance program [link to: Does Your Car Insurance Cover Breakdown and Towing?]. It can pay for the cost of getting your car battery recharged, having fuel delivered or getting a tire changed. Generally, the repairs have to be directly related to the breakdown. Towing costs are also covered, usually as far as the nearest repair facility.

The Kind of Repairs Makes the Difference

Whether or not car repairs are covered depends on how the damage happened. If it’s an auto accident, Collision is the right coverage. If damage is inflicted on the car from another incident, Comprehensive coverage applies. And if it’s from a breakdown, the repairs may be covered in part under Towing and Labor. Talk to your insurance company about the source of the damage and which type of coverage will apply when you make your claim.