Auto Insurance Franchise Explained | Columns

Why haven’t I recovered my deductible from my car accident?

This seems to be the most common question I have received over the past two weeks. When two or more vehicles are involved in an accident, there is a priority list that concerns most insurance companies. First, has anyone been hurt? I can replace or repair any car. Injuries, on the other hand, are my main concern. Once we are sure that the people involved have received proper medical attention, we then take care of repairing the vehicle.

If the vehicle is covered by collision coverage, we advise our policyholders to file a claim under their policy. We do this to make sure the vehicle is repaired or replaced as quickly as possible. We explain to them that they will have to pay their excess at the repair shop when their vehicle is repaired. At this point we often hear, “But it wasn’t my fault, why do I have to pay my deductible? We explain again that the purpose of setting up the claim under their policy is to speed up the process. If at any point in the process the other insurance company comes forward and accepts responsibility, we can stop our claim and let the other insurance company deal with it. If the vehicle does not have collision coverage, we have no choice but to advise our customers that they should contact other insurance companies for their damage. Understand that insurance companies cannot contact the other company unless we are spending money on our insured’s behalf.

At the same time as we repair your vehicle, we determine who is responsible for the accident. If we determine that you are at fault, we not only repair your vehicle – if you have collision coverage – but we contact other people involved in the accident to repair their vehicles. In this situation, you will not get your deductible back.

If we determine that you were not at fault, then we begin the subrogation process. Subrogation is the process of contacting the other company and asking them to pay for all damages caused by their insured and we, your insurance company, have paid. This is the start of your deductible reimbursement.

Subrogation may result in a direct rejection by the other company, an offer of partial settlement, or a full settlement. In case of direct denial, we can take legal action. Partial settlement offers may be accepted or we may take legal action. Full payment recovers your deductible and our refunds.

Even when the responsibility is clear, the process of paying off your deductible does not happen overnight. We need to settle your claim first, which means all repairs need to be completed and paid for. Then we have to inform the other company of our intention to subrogate. The other company must then have time to investigate the complaint and respond. If we are turned down and decide to prosecute them, this process can also take time. To speed up this process, insurance companies can agree to participate in a business-to-business arbitration. Insurance companies that participate in a business-to-business arbitration agree not to go to court but to abide by the decision of a group of licensed insurance experts as to who is liable. Not all insurance companies participate in business-to-business arbitration.

In March, my insured’s car was backed up while parked. The lady who supported my insured said she had insurance. The police were called and when they arrived the lady could not provide a valid insurance card. Within five days allowed to provide a card, one was presented to the police department. We have advised our policyholders to file a claim, pay their deductible and we will subrogate. Eight months later, the other insurance company denied the claim. It seems that the lady went to buy insurance after the accident. The police, seeing an insurance card valid on the date of the accident, never gave it much thought. What seemed simple turned out not to be. My insured may have exceeded his deductible, but his car was repaired on time. And while we’ll go right after the lady, as my father would say, you can’t spill blood on a turnip.


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Justin D. O'Neill