Understanding Auto Accident Payment Recovery

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.

Understanding Auto Accident Payment RecoveryKnown in the industry as subrogation, auto accident payment recovery can help you get your deductible back after an accident. You can do a lot to help your insurance company in its efforts to get that money back, and it all starts with understanding how subrogation works.

When Your Car Insurance Deductible Isn’t Yours

In some states, for just a few dollars, you can protect your car insurance deductible through a rider called “Waiver of Deductible”. This should not be confused with Collision Deductible Wavier (CDW), a different coverage with an unfortunately similar name. With CDW, coverage is triggered only if an uninsured or hit-and-run driver is responsible for your car’s damage. Waiver of Deductible works differently, applying in cases where the owner of the other car can be identified.

Waiver of Deductible gives you the ability to collect the full amount of your vehicle damage through your own insurance company. This gives you the advantage of working with a company you know and trust – one that has a customer service obligation to you – instead of making a third-party claim for property damage through the other insurance company.

Without Waiver of Deductible, your deductible would be subtracted from the claim settlement with your insurance company and you wouldn’t see that money back until the company received reimbursement from the at-fault person or his insurance company.

Going through Your Own Car Insurance

With Waiver of Deductible, your insurance company will pay your full claim instead of withholding the deductible. They can do this because they are secure in the knowledge that the at-fault party will pay them back through payment recovery.

Generally, this type of coverage works best in states with clear-cut rules about fault. In Massachusetts, for example, the state sets up “at-fault” codes that describe the most common causes of accidents, called Standards of Fault. A rear-end collision is almost always the fault of the car that strikes the one in front of it. Likewise, someone in the process of backing up is almost always to blame for an accident. These standards make it easy for insurance companies to have confidence in their liability decisions, which in turn makes it easier to waive your deductible after an accident you didn’t cause.

Michigan accomplishes the equivalent of Waiver of Deductible by offering “Broad Form” collision coverage. Here, the policy states, “deductibles shall be waived if the operator of the vehicle is not substantially at fault in the accident from which the damage arose.”

Helping Your Company Help You

Waiver of Deductible coverage is only available in a few states. Most people don’t have access to this coverage, and helping your company recover damages helps you recover your deductible. You can help by paying attention to details about the other driver’s insurance immediately after the accident and cooperating fully with the accident investigation.

If you can get the other driver’s insurance information, take pictures of the accident scene and gather contact information for witnesses, your insurance company will have a much easier time when it comes to collecting their payment from the other insurance company. And the faster they can recover payment, the faster they can return your deductible to you.

Common Misconceptions about Waiver of Deductible

A common mistake made by insurance adjusters is to refuse to waive your deductible when the other driver is identified, but doesn’t have car insurance, or if the driver of the other car cannot be identified. But the Massachusetts policy language doesn’t read that way. Adjusters often quote the fourth section of the endorsement, saying they will waive the deductible only if you are “entitled to recover in court against an identified person.”

But this section of the endorsement applies only when other conditions are not met. Those conditions state the owner of the other car must be identified, not the driver. The endorsement does not require you be legally entitled to damages from someone else and says nothing about requiring the other driver to have car insurance.

Likewise, Michigan doesn’t differentiate between insured or uninsured at-fault drivers. If you aren’t at fault for the accident, the insurance company must waive the deductible. This is an important point to remember when dealing with this coverage. If your adjuster refuses to waive the deductible, make sure you get a fully explained reason in writing, with copies of documents supporting the argument. The adjuster should be able to provide you with policy language that clearly explains why the deductible could not be waived in your case. If you still don’t agree, get in touch with your state’s insurance department to get help enforcing your rights under the policy.

When Fault is in Doubt

All too often, insurance companies can’t agree on who is at fault. When this happens, most companies use a process called arbitration. Most of the time, a dispute arises over conflicting versions of the accident reported by the drivers and witnesses.

In arbitration, participating companies must agree not to sue each other for damages. Instead, each company compiles its accident investigation details and supporting documents. Each adjuster lays out a logical argument for why the other driver is at fault, citing applicable state laws and pointing to evidence supporting the argument.

Once both sides submit their arguments and evidence, a panel of experienced claims adjusters reviews the arguments. A panel can be just one person, but the adjuster can ask for a three-person panel in a complicated case. The panel will discuss the case together and come up with a decision about who is right or wrong, or whether they’re both a little wrong. The arbitrator’s decision about liability is final and binding. A large number of subrogation disagreements are settled this way.

When the At-Fault Driver Has No Insurance

Many times, the insurance company has no other insurance company when seeking auto accident payment recovery. They have to pursue the at-fault driver directly, which is pretty much like getting blood from a stone. This can be especially frustrating for people in states that don’t allow Waiver of Deductible or the CDW version covering your deductible when the other driver is uninsured. In this case, you simply have to do your best to help the adjuster gather evidence on the case and wait for subrogation to go through. This can take a long time and adjusters will sometimes decide the amount of money they are trying to recover is not worth the cost of pursuing recovery in court. That can leave your deductible in the lurch, depending on the laws in your state, so you might have to go after the at-fault person yourself in small claims court. If that happens, you’ll be glad you did all that foot work in making sure the adjuster could prove his case.