Understanding Auto Insurance Claims: Which Laws Apply?

Automobile insurance is a legal contract between you and your insurance company. It is a type of personal insurance that provides financial protection in the event of an accident or damage to your vehicle. The laws governing automobile insurance vary by state, and it is important to understand the specific regulations in your state. For example, in Texas, drivers are required to show proof of their ability to pay for any accidents they may cause, usually through the purchase of auto liability insurance. In South Carolina, the law mandates the purchase of liability and uninsured motorist coverage to drive legally within the state. Understanding your state's laws and your insurance policy is crucial to ensuring you have the appropriate coverage and are meeting the legal requirements for operating a motor vehicle.

Minimum insurance requirements

The minimum insurance requirements for automobile insurance vary depending on the state and the insurance company. In the state of New York, the minimum insurance requirements are as follows:

• No-Fault (Personal Injury Protection) - This coverage pays for medical expenses, lost earnings, and other reasonable and necessary expenses for the driver or passengers injured in an accident, up to a limit of $50,000 per person.
• Liability - This coverage protects against harm caused by the insured vehicle to other people and their property.
• Uninsured Motorists - This coverage protects against injuries caused by an uninsured vehicle or a hit-and-run accident.

In California, the minimum liability coverage requirements are $15,000 for the death or injury of any one person, $30,000 for the death or injury of more than one person in any one accident, and $5,000 for damage to the property of others.

Texas has a Consumer Bill of Rights for auto insurance, which includes the right to buy minimum liability, personal injury protection, and uninsured motorist insurance if the driver has been denied coverage by two insurance companies. The minimum liability coverage in Texas is $30,000 for injuries per person, up to a total of $60,000 per accident, and $25,000 for property damage.

It is important to note that the minimum insurance requirements may not be sufficient in all cases, and it is recommended to consider additional coverage options to ensure adequate protection.

Insurance company's liability

Automobile insurance is a legal document and a contract between you and your insurance company. It is important to understand your auto policy, as it explains your coverages and exclusions.

Liability car insurance is a type of coverage that provides financial protection if you are found legally responsible for an accident that results in injury, death, or property damage. It is required by law in most states, and even in states like California, where drivers must show financial responsibility, most people fulfil this requirement by buying auto liability insurance.

Liability car insurance consists of two types of coverage: bodily injury liability and property damage liability. Bodily injury liability helps cover the medical expenses of those involved in the accident, including the at-fault driver, so they are not liable for others' emergency and ongoing medical expenses, loss of income, or funeral costs. It also covers the policyholder's legal fees when the accident results in a lawsuit. Property damage liability helps cover the costs of repairing or replacing the vehicles of other drivers involved in the accident. It also covers the damage done to other forms of property by the policyholder's vehicle, such as fencing, mailboxes, or buildings.

Liability car insurance has dollar limits on each of its components, depending on the level of coverage you choose when you buy the policy. For example, a state might require all drivers to have liability insurance that covers $25,000 for injuries to one person, $50,000 for injuries to multiple people, $50,000 for the death of one person, and $10,000 for property damage.

Failing to obtain liability coverage could result in your license being suspended, fines, or jail time for repeat offences. Therefore, it is important to understand your auto policy and ensure you have the appropriate coverage.

Consumer rights

The following are some of the consumer rights that apply to automobile insurance:

Right to Information

Consumers have the right to receive information about their rights and responsibilities from their insurance company. This includes information about their policy, such as coverages, exclusions, and financial responsibilities. Consumers also have the right to request information from the Department of Insurance about insurance companies, including their license status, financial condition, complaint history, and rates.

Right to Fair and Honest Treatment

Consumers should be treated fairly and honestly by their insurance company, especially when making a claim. Insurance companies are prohibited from making false, misleading, or deceptive statements to consumers. Consumers also have the right to reject any settlement offer and request additional information or negotiations.

Right to Choose Coverage and Insurance Company

Consumers can choose the coverage that best suits their needs and are not required to purchase more insurance than necessary. They also have the right to shop around and choose their insurance company, and cannot be denied insurance for discriminatory reasons, such as gender, race, religion, or national origin.

Right to Privacy

Consumers have the right to prevent their insurance company and other entities from disclosing their personal financial information to unrelated companies. This includes income, social security number, credit history, and premium payment history. Consumers must be notified and given the option to opt out if their information will be shared.

Right to Prompt Claim Processing and Payment

When a consumer files a claim, the insurance company must process and pay it promptly. If the company fails to meet deadlines, the consumer may be entitled to additional interest and attorney's fees. The company must also provide a written explanation if a claim is denied.

Right to Appeal or Complain

If consumers are unhappy with their insurance company's decision or treatment, they have the right to appeal or file a complaint. This includes the right to sue the insurance company in court if they believe their rights have been violated. Consumers can also request changes to insurance rules and regulations.

Right to Cancel or Change Policy

Consumers can cancel their policy at any time and receive a refund for any remaining premium. They also have the right to change their coverages and policy limits, even if the policy is not up for renewal. However, they should be aware of potential penalties for early cancellation and ensure they have a new policy in place before cancelling their old one.

Claim handling

Once the claim is filed, the insurance company assigns an adjuster to investigate the claim. The adjuster will gather information, including medical reports, witness statements, vehicle damage assessments, and coverage details. They will also determine fault, which plays a crucial role in how the claim is handled. If the insured is not at fault, their insurance company will typically seek reimbursement from the at-fault driver's insurance company. In cases of shared fault, payments may be apportioned based on the percentage of fault allocated to each driver.

During the claim process, the adjuster will provide an estimate of the cost of repairs, and the insurance company will determine the final payment amount. It is important to note that claim handling may vary depending on the state and insurance company involved.

Insurance fraud

Automobile insurance fraud occurs when someone knowingly lies to obtain a benefit they are not otherwise entitled to receive. It can involve someone giving false and/or misleading information or documentation. Automobile insurance fraud is a felony in California and can result in a prison sentence of up to 5 years, probation, and a fine of $50,000.

There are several common types of automobile insurance fraud:

• Crash and Buy: Purchasing an insurance policy after a collision and lying about when the accident occurred to obtain coverage.
• Paper Collision: Parties create the illusion of a legitimate accident using pre-damaged vehicles or by intentionally inflicting damage on a vehicle. Law enforcement is usually not called to the scene.
• Organized Ring: A collision orchestrated by organized criminal activity involving attorneys, doctors, other medical professionals, office administrators, and/or cappers.
• Faked Property Damages: Damages to the vehicle are exaggerated, non-existent, pre-existing, or the vehicle is damaged at a later point in time.
• Inflated Damages: Damages are inflated or exaggerated, non-existent, or pre-existing, with excessive billing for vehicle body parts or repair work.
• Premium Fraud: Failing to disclose all material information when obtaining an insurance policy.

Frequently asked questions