When should you report a car accident to insurance

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Revised June 2018

index

• introduction
• what to do if there is an accident
• frequently asked questions
• things to avoid
• important tips
• Your Rights Under the Fair Claims Settlement Practices Rules
• car insurance fraud
• body repair shops
• car spare parts
• quick summary for Spanish readers
• talk to the insurance department

intro

Driving on California highways can be a risky proposition. Whenever you are in a vehicle, there is a risk of being involved in a traffic accident. Whether it’s a minor “fender bump” or a serious injury accident, knowing what to do ahead of time can help you avoid costly mistakes. This guide looks at what to do after an accident and what to expect when you file a claim with your insurance company.

For your convenience, here is an Accident Checklist that you can keep in your vehicle for future reference.

When purchasing insurance,carefully reviewthe application before signing it to determine if the coverages, policy limits, and deductibles are appropriate for your needs. After receiving the policy, review the declaration page. contains important information about covered drivers, identifies insured vehicles, as well as coverage limits, amounts, and deductibles. make sure the information is correct and that the coverage is what you purchased. If changes are needed, send your request to your agent or insurance company in writing and keep a copy. Please use the requested certified mail return receipt to verify receipt of your documents.

Become familiar with your auto insurance policy so you understand it before the need to file a claim arises. Please read the policy carefully to find out what is covered and what is excluded.

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what to do if there is an accident

p. What should I do at the scene of an accident?

a. stop immediately and move only if it is safe to do so.

• Call 911 if there are injuries.
• call the police. In some areas, law enforcement authorities may respond to every accident scene. they may consider factors such as the severity and location of the accident (some law enforcement authorities will not go to the scene if the accident is on private property). however, you should try to notify the police. You should also be aware that most policies require police notification within a specific time period if the accident is a hit-and-run.
• obtain names, addresses, phone numbers and driver’s license numbers of all drivers.
• obtain license plates and vehicle identification numbers. ask to see the driver’s license(s) and vehicle registration(s) to verify that the information is accurate.
• obtain names, addresses, and phone numbers of other passengers and witnesses.
• if you have a camera or cell phone, take photos of the damage and the accident scene (traffic controls, visual obstacles).
• If the owner of a damaged car or damaged property cannot be located, please leave a note with the names and addresses of the driver and owners of the cars involved.
• Notify your agent and/or your insurance company immediately.
• If anyone is injured or the damage to the vehicle exceeds $750.00, you must report the accident to the Department of Motor Vehicles within 10 days. failure to notify the dmv may result in the suspension of your driver’s license.

frequently asked questions

p. What happens after I file the claim with my insurance company?

a. Your insurance company will contact you for detailed information about the loss and may take a written or recorded statement. sometimes an exam under oath can be requested. As part of the investigation, other drivers and witnesses may also be contacted. If you have medical payments or an uninsured motorist claim, you must provide documentation of your loss (injuries, medical expenses, lost wages, etc.).

p. What should I do if the insurance company does not contact me?

a. A claims representative must contact you within a reasonable period of time after you report the loss. however, under certain circumstances, it may take up to 15 days for the insurance company to contact you. If you don’t hear from anyone, call your agent or insurance company for help. If they don’t respond, or you feel there is an unreasonable delay in resolving your claim, contact the insurance department.

p. How does the insurance company assess vehicle damage?

a. A qualified adjuster or appraiser usually inspects the vehicle for damage. The adjuster or appraiser then writes an estimate based on the initial inspection. if further damage is found during the repair process, the shop will contact the insurer for approval of the additional cost of the repairs. note that the insurer may send an adjuster to re-inspect for additional damage. if the damage is relatively minor, the company may ask you to submit competitive repair estimates. Remember, it is your responsibility to sign and authorize the shop to repair your vehicle once you are satisfied with the final quote and repair facility.

p. How much will the company pay on a physical damage claim under a standard auto policy?

a. Generally, the company will pay whichever is less of the following:

• the amount needed to repair the vehicle or
• the actual cash value (ACV) of the vehicle.

read your policy to determine what is covered. Pay special attention to exclusions and limitations. For example, there is generally no or limited coverage for aftermarket stereos, phones, or upgraded tires and wheels, unless it is original equipment installed by the automobile manufacturer (OEM). additional coverage is usually available for such installed equipment for an additional charge.

p. what is the actual cash value (acv)?

a. actual cash value: unless otherwise defined in the policy, actual cash value in california means fair market value. The fair market value of an item is the dollar amount that a prospective buyer and seller are willing to pay and have reasonable knowledge about the asset. they must behave in your best interest and free from undue pressure to transact.

p. What is an appraisal provision?

a. Most standard policies contain an appraisal provision, which can be helpful in the event there is a dispute regarding the amount the insurance company offers in a total loss settlement on your vehicle. read your policy to see if it contains one. under this provision, either of you can demand an appraisal. each party selects a competent appraiser. the evaluators then select a neutral referee. if the appraisers cannot come to a mutually agreed amount, their differences are submitted to the arbitrator. An amount that either of you agrees to is binding. each party pays its own appraiser; the arbitrator’s fee is shared.

p. How is the check or money order prepared?

a. the check can be made payable to the insured and to any pledgee, such as a bank or finance company. If the vehicle is deemed repairable, the business may also list the repair facility as a payee. q. Who is responsible for the balance of a car loan? a. The borrower is responsible for the loan balance, even if the vehicle is stolen or damaged beyond repair. If your claim payment is less than the loan balance, the lender will expect you to pay the difference. coverage commonly known as “gap” insurance can usually be purchased to protect against this situation.

p. Will the insurance company pay for a rental car while mine is being repaired?

a. yes, if you have purchased rental car coverage. check your policy before renting a vehicle. Although policy limits vary, the company pays up to a specified amount per day for a specified number of days. coverage ends when your vehicle is repaired, the loss is paid, or after the specified period, whichever comes first.

If your vehicle is stolen, the policy may automatically cover transportation costs. again, check your policy to be sure. This type of coverage generally begins 48 hours after the theft and ends when your vehicle is recovered, the loss is paid, or after a specified period, whichever comes first.

p. what is a collision damage waiver and will the insurance company pay these charges for the rental vehicle?

a. The terms of the rental agreement make the renter liable for collision damage while in possession of the vehicle. In addition, the rental companies are insured for damage to the vehicle caused by collision. for an additional fee, the rental company will fully or partially waive the customer’s obligation to pay repair costs for damage to the vehicle caused by collision. both the amount of the fee and the language of the waiver vary. coverage for collision damage to the rental car under your personal auto policy depends on the language of the policy. read your policy carefully. ask your agent or company before renting a vehicle. q. what is the salvage value? a. this is the remaining value of your damaged vehicle if your vehicle is determined to be a total loss. it is usually determined through offers from salvage buyers. the company can sell the salvage to the highest bidder. however, you are not required to do so. if you decide to keep the damaged vehicle, the higher salvage offer may be deducted from your settlement. in effect, you are “buying back” your vehicle for its salvage value. If you retain possession of the salvaged vehicle, it is your responsibility to file a certificate of salvage with the Department of Motor Vehicles. q. what is surrogacy? a. Subrogation is the insurance company’s right to recover from a third party the amount of damages it paid to you. For example, if another party is at fault in an accident that damages your car and you have a collision claim, your company will ask the other party to reimburse you for the money they paid on your claim. the policy requires your cooperation with the company’s surrogacy efforts. furthermore, you may not do anything that jeopardizes the company’s right of recovery. for example, you cannot sign an agreement releasing the other party in exchange for payment of your deductible.

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p. what is the salvage value?

a. This is the remaining value of your damaged vehicle if your vehicle is determined to be a total loss.

p. what is surrogacy?

a. Subrogation is the insurance company’s right to recover from a third party the amount of damages it paid to you. For example, if another party is at fault in an accident that damages your car and you have a collision claim, your company will ask the other party to reimburse you for the money they paid on your claim. the policy requires your cooperation with the company’s surrogacy efforts. furthermore, you may not do anything that jeopardizes the company’s right of recovery. for example, you cannot sign an agreement releasing the other party in exchange for payment of your deductible.

p. Is the insurance company required to help me recover my deductible?

a. yes and no. the insurance company must inform you whether or not it intends to exercise subrogation. If the company seeks subrogation, you are required to include your deductible as part of the process. however, if the company does not seek subrogation, it is required to inform you of that fact so that you may seek your deductible on your own. If your efforts are successful, in whole or in part, most companies will reimburse you according to the recovery. for example, if 100 percent of the paid claim is recovered, you will receive 100 percent of your deductible; if the recovery is 65 percent, you will receive 65 percent of your deductible. any expenses or fees (eg, legal fees incurred by the company in its recovery efforts) will be shared between the company and you, if the recovery is made. however, if you choose not to have the company include your deductible in their efforts, you may seek recovery directly from the other party on your own. but before you do, discuss the matter with your insurance company to avoid jeopardizing your recovery.

p. Is the car covered outside of California?

a. most policies provide coverage in other states, us. uu. territories and possessions, and canada. As is the case in California, many other states and territories have enacted financial responsibility laws that require drivers to carry a specified amount of auto insurance to cover losses resulting from the ownership or operation of a motor vehicle. If the financial responsibility requirements where you travel are higher than your policy limits, your company will meet the higher requirements. Most policies don’t provide coverage in Mexico, so if you plan to drive your car there, it’s wise to purchase that coverage separately. check your out-of-state coverage before you travel.

California Financial Responsibility Law is established from section 16020 of the California Vehicle Code. Among other things, it requires all drivers to be able to pay for damages resulting from the ownership or operation of a motor vehicle.

drivers must show ability to pay damages (financial responsibility) of a minimum of $15,000 for each person injured or killed in an accident, $30,000 for injuries/death of two or more people in an accident, and a minimum of $5,000 for property damage in any accident. If you are cited by a law enforcement officer for a traffic violation or if you are involved in an accident, you may be required to provide written proof of financial responsibility. This can be done by registering the name of your insurance company and the policy number on the vehicle registration card issued by the DMV. this proof of insurance should be kept in the vehicle or in a place where it is always available when driving. For more information, contact the California Department of Motor Vehicles.

p. What should you do if you are served with a lawsuit (summons and complaint) as a result of an accident?

a. Notify your agent and insurance company immediately. keep a copy for yourself and mail or deliver the original documents to your company. do not give statements or discuss the accident with anyone except a verified representative of your company. If the claim arises from a covered loss, your company will provide a legal defense.

p. Is a newly purchased vehicle covered?

a. Most policies provide automatic coverage for a vehicle that replaces a vehicle already on your policy. the coverage is usually the same coverage you had on your previous vehicle. notify your broker-agent as soon as possible of any replacement vehicle. if you want additional coverage, there is usually a requirement that you notify your agent or carrier within a designated time period.

Most policies also provide automatic coverage for a newly purchased vehicle in addition to the vehicles you already have on your policy. there are usually specific conditions that must be met.

Most auto coverage provisions require the insured to notify the insurer within 30 days of purchasing the new vehicle if they want it covered by the existing auto policy. Please note that some policy notice periods may be less than 30 days. some insurance companies’ notice periods are 14 days or less.

If the insured fails to notify the insurer of the newly purchased vehicle within the specified time, the vehicle will be left uninsured. Unless there is a specific notification procedure in the insurance policy, the insured’s verbal notification to their insurance agent may be considered sufficient to activate automatic coverage for a newly purchased vehicle.

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things to avoid

• Do not argue with other drivers and passengers.
• save your story for the police and your insurance company.
• do not sign statements regarding fault or promise to pay damages to the other parties.
• If the other party offers to pay your deductible, don’t sign anything.
• You must show your driver’s license, vehicle registration card, evidence of financial responsibility, and current address to the other driver or persons involved, or to a peace officer.

important tips

1. read your policy. don’t wait until after an accident.
2. If you don’t understand your policy, ask your agent and/or company for clarification.
3. If you have an accident, call the police. if there are injuries, call the paramedics.
4. Gather as much information as possible at the scene of the accident to provide to your agent and/or insurance company.
5. Immediately notify your agent and/or insurance company of an accident.
6. cooperate with insurance adjusters/investigators to assist them in their efforts.
7. If you don’t understand something about the claims procedure, ask your agent and/or insurance company representative to explain it to you.
8. Notify your agent or company in writing of any change in ownership of your vehicle.

Your Rights Under the Fair Claims Settlement Practices Rules

In general, insurance companies are required to do the following:

• inform you of all the benefits, coverage, time limits, or other provisions of your insurance policy.
• acknowledge the claim, initiate an investigation, provide forms and instructions, and provide reasonable assistance promptly, but in no event later than 15 days after receiving notice of the claim. (Notice of claim is any written or oral communication to the insurance company that reasonably informs the insurer that you wish to file a claim.)
• respond to communications received from you immediately, but in no case later than 15 days.
• accept or deny the claim immediately, but in no event later than 40 days after receipt of proof of claim. proof of claim is documentation in your possession that provides any proof of claim and supports the magnitude or amount of loss, such as repair estimates or police report indicating your vehicle was stolen, etc.
• Unless the insurer has provided you with the name of a specific towing company before you use a towing facility, the insurer must pay reasonable towing charges.
• offer a fair deal. If you suffered a total loss, the settlement must include tax, license, and transfer fees. the deal must reflect the value of a comparable vehicle of the same type and quality. If you retain the salvage, the salvage settlement deductions must be fair, measurable, and discernible.
• once the claim is accepted, the insurer must pay the claim immediately, but in no case later than 30 days from the date on which settlement was reached.
• advise you on whether or not they will pursue surrogacy. If the insurance company seeks subrogation, you must include your deductible unless you have already recovered your deductible.

The foregoing represents a brief paraphrased overview of some of the fair claims settlement practice standards.

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car insurance fraud

Historically, auto insurance fraud in California has taken many forms. The most common fraud schemes involve car ownership and car accidents.

Auto Ownership – This type of fraud typically involves rogue and/or insured auto body and repair shops that may employ a variety of illegal or questionable techniques, including:

• reporting vehicle parts as damaged or missing when they were not actually damaged or missing before the shop received the vehicle. • cause the final cost to exceed the original damage estimate.
• billing for unauthorized repairs.
• charging for genuine parts when replacement parts or used parts from a junkyard were used.
• punch dents or use bondo when loading new auto parts.
• falsely reporting stolen vehicles or vehicle vandalism to collect insurance money.

It is always important for the consumer to carefully review all documents from auto body and repair shops to guard against potential fraud. Additionally, consumers should beware of any auto body or auto repair shop that makes referrals to medical or legal offices. this practice can be an indicator of “limitation”. Capping (a felony in California) is the illegal referral of clients to law offices for a fee.

car accidents: Car fraud often involves organized car accident networks. Simulated car accidents, which are not accidents at all, follow several basic schemes including:

• stop suddenly for no apparent reason
• willfully disobeying the right of way
• yielding the right of way to cause an accident
• the claims report lists passengers who were not in the vehicle at the time of the accident
• witnesses who were not at the scene of the accident are listed
• claimed injuries are excessive compared to vehicle damage
• the driver has a temporary registration of the vehicle
• previous damage to the other vehicle
• unsolicited contact by an attorney

If you’ve been in a car accident, beware of any unsolicited referrals to a body shop, law firm, or medical office. Organized Crash Rings and Blockers actively solicit others in the community to participate in creating crashes. Often these accidents only exist on paper (known as paper accidents) and no innocent parties are involved. Paper accidents have become popular with fraud perpetrators because they are less dangerous from a bodily injury standpoint and less likely to involve the police.

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body repair shops

Under California Insurance Code §758.5, an insurance company cannot require that a car be repaired at a specific repair shop. however, an insurance company may recommend that a car be repaired at a specific repair shop under the following conditions established by law:

• The consumer specifically requests an insurance company recommendation for a repair shop.
• the consumer has been informed in writing of the right to select a repair shop of his choice.
• If the consumer agrees to use the recommended repair shop, the insurance company must restore the damaged vehicle to its pre-accident or loss condition at no additional cost other than as stated in the policy or as permitted by law.
• If the business makes an oral recommendation to a repair shop and the consumer accepts it, then the business must follow up on the oral recommendation with the prescribed written notice within the five calendar days specified by law.

If the vehicle is repaired at a shop chosen by the consumer, then the insurance company must pay reasonable costs to repair the vehicle in accordance with accepted commercial standards for good, professional automotive repair.

• The insurance company is prohibited from limiting or discounting reasonable repair costs based on the charges that would have occurred if the vehicle had been repaired at the company’s recommended repair facility.
• In addition, the insurance company must support repairs from the recommended shop if the vehicle is not repaired properly.

auto spare parts

In some cases, a car repair may include replacing damaged parts with aftermarket parts. Aftermarket parts are parts that are not made by the original manufacturer. Aftermarket parts may be of equal or better quality than Original Equipment Manufacturer (OEM) parts. Although non-original equipment manufactured replacement parts may be used to repair your vehicle, such parts must be comparable to original equipment manufactured (OEM) parts in terms of type, quality, safety, fit and performance. consumers should take note of the following:

• An auto repair shop must provide a written repair estimate of the cost of the repairs prior to initiating vehicle repairs. once the work is completed, the shop must provide a written repair invoice. State law requires that the type of auto parts used in the repairs be identified on the repair bill. Consumers should carefully review their bill to ensure that the body shop has identified each replaced auto part as used, reconditioned, rebuilt, aftermarket, or an original equipment manufacturer (OEM) part.

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important tips

a quick overview for our Spanish readers. so you had an accident, what’s next?

1. read your policy. don’t wait until you have an accident.
2. If you don’t understand your policy, ask your agent or insurance company for clarification.
3. If you have an accident, call the police. if there are injuries, call the paramedics.
4. Gather as much information as possible at the scene of the accident, to give to your agent and/or your insurance company.
5. immediately notify your agent and/or your insurance company if you have an accident.
6. cooperate with insurance company adjusters and investigators.
7. If you don’t understand something about the claims procedure, such as the amount of the settlement offer, ask your agent and/or your insurance company to explain it to you.
8. Notify your agent or insurance company in writing of any change in ownership of your vehicle.

talk to the insurance department

We are the state agency that regulates the insurance industry. we also work to protect the rights of insurance consumers.

contact the california department of insurance (cdi):″

• if you feel an insurance agent, broker, or company has treated you unfairly.
• if you have questions or concerns about health insurance.
• if you want to order cdi brochures.
• if you want to file a request for assistance against your agent, broker or insurance company.
• if you are having difficulty opening a claim with your insurance company.
• to verify the license of an insurance agent, broker, or company.

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call:

Consumer Hotline 1-800-927-4357

tdd 1-800-482-4833

write:

california department of insurance

300 south spring st., south tower, los angeles, ca 90013

Visit us in person:

300 south spring st., south tower, ninth floor, los angeles, ca 90013

8:00 am to 5:00 pm, Monday through Friday, except holidays

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