If your car is damaged in a way that is covered by insurance, such as through liability or collision coverage from an accident or comprehensive coverage following a hail storm, you will be reimbursed by the insurance company for loss within the limits set by the policy.
Once your deductible is paid out, the insurance company will cover the difference either by paying the auto repair center directly or by issuing you a check.
If you get a check from the car insurance company, you do not necessarily have to get your car fixed with those funds.
There are several reasons why you may want to consider cashing the check and not repairing your car, although there are also good reasons for fixing your car.
Provided the car insurance company does not set forth any conditions, the decision to repair your vehicle is ultimately yours.
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To Fix or Not to Fix your Car
The first decision you always need to make when your vehicle is damaged is whether or not you want to make a claim with your insurance company.
If you are in an accident that involves another party, you should file a police report and notify your insurance company immediately.
Also, if your car is owned by a bank or leasing company then you must report the damages right away. However, there may be times when you first want to consider the out-of-pocket cost of your deductible versus how much cost the total repairs will be.
If your car is damaged by hail and you have a $500 deductible and the cost of the repairs will be a total of $600, it may not be worth the $100 for you to file a claim with your insurance company, especially if there is a risk of your premiums going up as a result of the claim.
Premiums do not usually increase as a result of a single claim, but you may want to consider the long-term effects of cumulative claims over the savings of minor expenses.
Another reason you may decide not to fix your car is the age and condition of the car at the time the damage took place. If the car is already rusting you may not mind a few cosmetic flaws such as dents from hail.
If you are getting ready to sell your car, you may decide not to fix your car because you may not see a return on the investment.
For example, if your car is going to cost $2,000 to fix but will only increase your sale by $1,500 there is no cost benefit to fixing the car.
If you are uncertain, you should get an estimate for the repair and find out how much you will get for your car both before and after the damages are fixed. This will help you determine the value of fixing your car.
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The Cost of the Car Insurance Deductible
Regardless of whether or not you fix your car, remember that when your car insurance company issues you a check it will be for the difference between your deductible and the estimated amount of the repairs.
If your car is estimated to cost $750 to restore it to its previous condition and you have a $500 deductible, then you will only receive a check for $250.
The deductible does not apply if the damages to your car are covered by someone else’s insurance. In that case, you should receive the full amount that is estimated for the repairs.
Submitting an Auto Insurance Claim
If your car is damaged, you need to quickly determine whether or not you are going to file a claim with your insurance company.
Time is always of the essence when dealing with matters of insurance and if you wait to file a claim beyond the time stated in your policy you risk losing rights to your coverage for that particular incident.
Filing a claim is quite simple, although it may require a police report as well. Call your agent for claim instructions if you do not know the procedure.
Some insurance companies allow you to file a claim by the internet or the phone as well as in person at your agent’s office. It is a good idea to keep your insurance information and claim instructions in your car at all times.
Always go through your own insurance company, even if your car was damaged by someone else.
Most car insurance companies will initiate the claim process with the other insurance company for you, mitigating your stress for no charge.
They will be sure that you receive fair compensation for the damages incurred and also, they will follow up to be sure you received payment or that your car was fixed accordingly.
Filing a Claim With Another Driver’s Insurance Company
According to New Jersey state regulations, drivers in that state have a choice of filing first-party or third-party claims to cover vehicle damage.
The first-party claim is one that requires your car insurance company to make payments up to the value stated in your policy.
A third-party claim requires the insurance company of another driver to cover your vehicle in proportion to the amount of fault assigned to their driver. More often than not third-party claims will not be sufficient to completely replace your vehicle.
Most other states have similar systems in place to collect payment from another driver’s insurance company.
The thing to note is that in states with no-fault insurance laws, it is not possible to go after another driver’s insurance company to pay for:
- Personal injuries
- Pain and suffering
- Emotional distress
No-fault states require each insurance company to cover their own drivers for these types of things. If you are concerned about the potential of personal injury, you may want to purchase extra insurance coverage.
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Whether you ever need to file a claim or not, you always need to have car insurance in the event you are in an accident or possibly some other damage occurs to your vehicle.
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