When two moving vehicles that each weigh at least a ton run into each other, even at low speeds, car damage claims are likely.

Who pays to repair your damaged car depends on who caused the accident.

If Another Driver Caused The Accident

You’ve probably heard that some states – perhaps including yours – have no-fault car accident claim systems.  However, even if your state has a no-fault system that applies to car accident injury claims, who pays car damage claims depends on fault.

That is, the driver who caused the accident – actually his insurance company if he has insurance – pays for the damage caused.

If another driver caused your accident, that driver or his insurance company (paying under the property damage liability coverage) must pay . . .

1.    the cost of repairing your car, or

2.    the value of the car if it was totaled.

3.    the cost to repair or replace any other personal property that was damaged in the accident.

4.    the cost of a rental car.

5.    the cost of towing and storage.

And, depending on the circumstances of your case, maybe this . . .

6.    the amount that your car’s value was diminished as a result of your accident.  More about this below . . .

If You Caused The Accident

If you caused the accident, you may be able to recover essentially the same things – from your insurance company.

A car damage claim that you submit to your insurance company is under your collision coverage.  If you have collision coverage – not everyone does, especially on older vehicles –  your insurance company will pay to repair your vehicle or will pay its actual cash value (ACV) if it was totaled, less a “deductible amount,” usually $100 to $500.

Your insurance company only has to pay for a rental car if you have rental reimbursement insurance coverage.  If you have this coverage, there will be limits on how long they will pay and how much they will pay.

Towing and storage are handled the same way.  Your company will pay these only if you have towing and storage insurance coverage.

Of course, if you don’t have collision coverage and you caused the accident, you are SOL.  You have to pay all of these things yourself!

Reduction In Value Claim

In the ordinary situation, after your vehicle is repaired, it will be worth the same amount it was worth before it was damaged.  (You may even have some new parts where you had used parts before the crash, making your car worth more, theoretically.)

However, if the damage was extensive, and especially if your car is fairly new, there is a good chance that your car will not be worth as much after it is repaired as it was worth before it was damaged.

A claim for the difference is called a diminished value (DV) claim, or a “diminution of value claim” or a “reduction in value claim.”  (These are different names for the same thing.)

This claim is based on the common sense notion that a reasonable buyer won’t pay as much for a vehicle that has had extensive damage repaired as she will for the same vehicle that has not had extensive damage.

Would you?

You are entitled to be paid the amount by which your vehicle’s value has been diminished.  However, except in a small number of states – Georgia, North Carolina and Kansas — you can only make a DV claim against the other driver’s insurance company, not against your own car insurance company.

Other Car Damage Questions

There are many other common car damage questions including these . . .

1.    How many repair estimates do you have to get?

2.    Can you choose the repair shop?

3.    Can the repair shop force you to accept used parts?

4.    What if additional damage is found after the estimate has been done?

5.    How is it decided if your vehicle is a total loss?

6.    How is your vehicle’s actual cash value determined?

7.    What can you do if you can’t agree with the insurance company on the value of your totaled car?

The answers to these questions — and many more — can be found in my ebook, The Car Accident Claims Kit.

The term “car accident settlement” means different things to different people.

To many, it simply means to resolve a car accident claim.  You know, finish it up, get it done . . . whether out-of-court or in court.

However, to a car accident lawyer like me, “car accident settlement” refers to just one of the two possible ways that claims are resolved.  To me, a car accident settlement occurs when your claim is resolved by agreement, not by a judge or jury in a contested trial in court.

The overwhelming majority of claims are resolved by agreement, and this article is about those out-of-court agreements and how to achieve them.

Settlement By Agreement

Although car damage claims are more likely to settle by agreement than injury claims, more than 90% of all car accident claims ultimately settle by agreement.

So this is a topic we should spend some time on.

Agreements are made because both sides  – you and the insurance company Bad Guys – recognize that filing a lawsuit and going to trial takes time, costs money and leads to an uncertain result.  By “uncertain result,” I mean that you never know in advance what a jury (or judge) will decide in your case.  You know what you think they should decide, but you never know if they will.

Not only do most cases settle by agreement, but they settle before a case is even filed in court.  This is certainly true of the routine cases that you should be handling yourself.

However, settlements can still occur after a lawsuit is filed.  In fact, sometimes just filing the case causes the Bad Guys to increase their offer and leads to a settlement.  Another time the Bad Guys are likely to ante up more money is at the other end of the court process, near the time of trial.  Some claims even settle “on the courthouse steps” or even, occasionally, in the middle of trial.

Generally, there are two reasons why car accident claims must cannot be settled by agreement and must be resolved by a trial.  One is that there is a disagreement over who caused the accident.  The other is that you and the Bad Guys have dramatically different opinions on how much they should pay you as compensation for all you had to go through.

My advice: fight hard for your settlement position but be practical in your decisions about whether to file a case in court.  Make sure the issues you are fighting over are worth the fight.  Don’t spend a dollar’s worth of time and money fighting over a 10 cent issue!

How To Reach A Settlement Agreement

Here’s what you do to try to settle your car accident claim with the Bad Guys.

Initially, you don’t do anything except allow your injuries to heal.  That is, you don’t make an injury claim until you fully recover from your injuries.

When you make a claim, you tell a story – the story of your accident and how your injuries affected you.  You don’t know the whole story until you fully recover and return to your normal, pre-accident lifestyle, so that’s when you make your claim.

Once you recover, you gather all your medical bills, your medical records and documentation of any income you lost.  You send all of these records to the Bad Guys with a letter telling the story of your accident.  This is commonly called a Settlement Letter or a Demand Letter.  It concludes with a “demand” – a statement of how much you want to be paid to compensate you for all you have gone through.

Normally, you hear from the Bad Guys somewhere between one week and one month after you send your letter to them.  They will write or call you and, in essence, try to poke holes in your case.  They will tell you why they don’t think they owe you anything or why they don’t think they should pay as much as you asked for.

Then, after telling you everything that is wrong with your case, they will spin around and (if it is clear that their driver caused the accident) they will make a settlement offer.

Normally, there is then a back-and-forth, offer-and-counter offer process that, with luck, will lead to a car accident settlement.

If you’ve read much of this site, received my free mini-course or read my ebook, The Car Accident Claims Kit, you know I think that 80% to 90% of all claims can be resolved without a lawyer’s help . . .  and without letting the insurance company take advantage of you . . . if you take just a little time to learn the basics of the car accident claims system.

However, sometimes you won’t be able to settle with the insurance company.  Maybe there will be a disagreement over who caused the accident.  Or perhaps the Bad Guys won’t offer an amount that you think is fair for what you have gone through.

If you can’t settle, you have to go to court.

If your case fits within the limits of your state’s small claims court, I think you can handle the court case yourself, without a lawyer.  The more informal, non-technical rules of the small claims court make this possible.

However, if you have to go to regular civil court (not small claims court), you should have a lawyer.  The Bad Guys will have a lawyer defending against your case and looking for a technical reason to have your case thrown out.  In regular civil court (as opposed to a more consumer friendly small claims court), you need a pro on your side to even the fight.

In case you have to take your claim to court — even though you have a lawyer representing you — it’s helpful to know the process that your case will go through.  Here it is . . .

Starting Your Case

The case starts when you file your initial paper, usually called a Complaint.  As the person who filed the case, you are designated as the plaintiff.  Next the papers are “served” on the person you are suing, called the defendant.  Within a relatively short time, usually about 20 or 30 days, the defendant must file his Answer in which he raises his defenses.

What Happens Before You Get To Court?

The next stage of the case is the pretrial discovery period.  During this, the two sides of the case exchange information in various ways.

One thing you can expect is that the defense will ask you to answer Interrogatories.  You must reply to their questions in writing and under oath.  If you have a lawyer, your lawyer will assist you in answering the Interrogatories.  You can also require the defendant to answer Interrogatories, too.

It is also common for each side to request that the other side produce documents so the requesting side can examine them before trial.  Examples of relevant documents are your medical records, your medical bills, and your employment and earnings records if you claim a loss of income.  Here, also, you can require the defendant to produce relevant documents too.

It is also normal for there to be depositions.  A deposition is a sworn question and answer session where the lawyer who scheduled the deposition asks questions of the witness, called the deponent.  You can be sure the defense will take your deposition, and your lawyer may take a deposition of the defendant, especially if there is a disagreement over who caused your accident.

If there are any medical issues in your case – such as the exact nature of your injuries or what caused them – the defense will probably have you examined by a health care professional that they choose.  The defense calls this an Independent Medical Examination, or “IME,” but it is anything but independent.  They will send you to a health care professional to whom they send many plaintiffs for evaluation and, in almost all cases, the health care provider will reach conclusions that are favorable to the insurance company that hired them.  Your lawyer will help you prepare for the Defense Medical Examination and may even attend it with you to observe.

These days, the exchange of information is almost always governed by a Scheduling Order that requires completion by a certain time.  Scheduling Orders also commonly require pre-trial settlement efforts such as mediation.

Going to Trial

After pretrial discovery is complete, if it has not settled, your case goes to trial.  Normally, car accident injury cases are decided by juries, but it is possible that your trial will be decided by a judge without a jury.

This is how the trial proceeds . . .

After the jury is selected (if there is one), the case starts with Opening Statements where the lawyers tell the jury (or judge if there is no jury) what the evidence will be and how it will show the merit of their case.  Opening Statements are often analogized to a roadmap of the case.  The plaintiff gives the first Opening Statement and then the defendant’s lawyer can give an Opening Statement.

Next, the evidence is presented.  The plaintiff presents her evidence first, mainly by calling witnesses.  When each witness is called, the lawyer calling the witness asks questions first.  This is called “direct examination.”  Then the other lawyer(s) can ask “cross examination” questions.  There can be “re-direct examination” by the first lawyer, “re-cross examination” by the other lawyer and so on, until the lawyers run out of relevant questions.

Exhibits, such as a diagram of the accident scene or photos of the damaged vehicles, can also be introduced into evidence.

After the plaintiff finishes presenting her case, the defendant can present his evidence, if he has any.

After the evidence is completed, the lawyers make Closing Arguments to the jury.  They tell the jury what they think the evidence has proven and what the jury should decide.  The lawyer for the plaintiff – your lawyer – goes first, followed by the defense lawyer.  Then, the plaintiff’s lawyer has the right to make the last Closing Argument.

Next, the judge tells the jury what law applies to the case.  These are called jury instructions.  It is the jury’s job to follow the law that the judge tells them, and to determine the facts of the case and apply them to the law to reach a decision.

The jury considers the case in private jury deliberations.  In most states, but not all, the jury’s decision must be unanimous.

When the jury announces its decision, the trial is over.

Basically, there are two kinds of car accident claims, claims for damage to your vehicle and personal injury claims.  This article is about car accident personal injury claims.

Fault or No-Fault?

The first thing you have to learn is whether the state where you were injured has a no-fault or a fault system for car accident injury claims.

As of the time I am writing this, these 12 states have no-fault systems . . .

Florida
Hawaii
Kansas
Kentucky*
Massachusetts
Michigan
Minnesota
New Jersey*
New York
North Dakota
Pennsylvania*
Utah

(The states with an asterisk (*) beside them are “choice states,” which means that you could have either fault (called “tort”) insurance coverage or no-fault coverage, depending on what you chose when you purchased your insurance.)

How Does No-Fault Work?

Under a no-fault system, your insurance company pays for your economic losses, but only for your economic losses.  They do not pay you for pain and suffering.  And you can only make a claim against the at-fault driver for damages including pain and suffering if your claim meets a certain test, called a threshold.

How Does a Fault System Work?

In the other states, the driver at fault – the driver who caused the accident – pays for the injuries he caused.  Actually, his insurance company pays in most cases.

The at-fault driver or his insurance company must pay for (1) your financial losses and (2) your “non-financial losses.”

Financial losses include medical bills and lost income that you incurred as a result of the accident, as well as any other financial losses.  (Examples of “other” financial losses include the cost of traveling to and from medical appointments and the cost of hiring someone to perform services you couldn’t do while you were injured, such as cleaning your house or mowing your lawn.)

To be able to recover for your financial losses, you must document them and prove that they are a result of your car accident and not something else.  Normally, the cause of your injuries is obvious from the facts – but sometimes, such as when there is a “gap” in your treatment, the Bad Guys will challenge the losses after the interruption in treatment and claim that they were not caused by your car accident.  Therefore, you should get your physician to state her medical opinion that the cause of the later treatment was the car accident, if that is the case.

Non-financial losses, which usually go by the shorthand name “pain and suffering,” include such things as physical pain, mental anguish, disfigurement, inconvenience and loss of consortium.  This last item, loss of consortium, recognizes the common sense notion that when one member of a “marital team” is injured, there may be effects on the other team member.

Determining the amount of money that has to be paid to compensate you for your pain and suffering is the tricky part of an injury claim.

There are no universally recognized rules.  There is no agreed formula, no pain and suffering chart where you plug in the nature of the pain and the duration of it to determine the amount that must be paid.

Many of the large insurance companies use a computer system called Colossus, or something like it, to calculate the amount that they will pay for pain and suffering and for claims, in general.  Of course, no computer system can fairly determine the extent of pain and suffering in a particular case because it does not consider the individual involved including, among other things, her tolerance for pain.

Although no one admits it, another common method for determining the value of a claim is to multiply the “special damages” (financial losses such as medical bills and lost wages) times some number to arrive at the total claim value.  In routine cases, multiples range from 1 ½ to 3, or occasionally to as much as 5.

Another valuation method – and one that makes a lot of sense to me – is the so-called per-diem method.  This method assigns a value to each day (that’s what per diem means) or each week or month – some period of time – and then adds those values up.  For example, under this method, a certain amount could be assigned to each month of pain and suffering and the total for pain and suffering would be added to the financial losses to arrive at the total settlement.

What is Add-On No Fault?

Just to confuse you a little . . .

There are 11 states that have fault systems for compensating injury victims, but also have “add-on” no-fault.  In the following states, you can make a fault injury claim against the driver who caused the accident and you can make a no-fault claim against your insurance company under your no-fault coverage, usually called Personal Injury Protection (PIP) . . .

Arkansas
Delaware
D.C.
Maryland
New Hampshire
Oregon
South Dakota
Texas
Virginia
Washington
Wisconsin

Can I settle my claim myself or do I need a lawyer?

In my opinion, about 80% to 90% of car accident claims can be safely settled without a lawyer’s help (and without paying legal fees).

A routine claim is one where . . .

>    fault is clear

>    you were not injured or, if you were injured, your injuries healed fully and relatively soon (within a few months) and

>    the amount of your financial losses is not too large, say $10,000 or less.

If this is your situation, I think you can definitely settle your own claim if you want to.

But don’t be foolish.  If you have a serious claim involving permanent or long term injuries and large amounts of money, don’t mess around.  This is no job for a rookie.  Hire a lawyer.

Do I have to accept what the insurance company offer for my injury claim?

No.  You have choices.  You can negotiate with the insurance company, exchanging offers and counter offers until the insurance company stops raising its offer.  Their first offer to you is almost never their best offer . . . so push them to see how high they will go.

If you’re still not satisfied, you can file a lawsuit.

All states have small claims courts that are ideal for resolving smallish car accident claims.  In small claims court, there are no technical procedures or rules of evidence that can trip you up.  You don’t need a lawyer.

Larger cases, however, must go to regular civil court and that’s not a place for a do-it-yourselfer.

What if the insurance company says I caused the accident even though I didn’t?

Technically, a car accident fault claim is a negligence claim.  Negligence means carelessness.  Therefore, you are claiming that someone else carelessly did something — such as failed to pay attention to their driving, ran a stop sign, made an unsafe left turn, etc.

In 4 states – Maryland, Alabama, Virginia and North Carolina – there is a defense called contributory negligence.  That means that you did something that contributed to causing the accident, and in those states contributory negligence is a complete defense.  That’s right, in these states, any contributory negligence, however slight, completely defeats your claim.

So, in one of these 4 states, when an insurance company says that you caused the accident, they are saying they have a defense and don’t have to pay you anything.  You should get a lawyer if there is going to be a fight over fault, especially if it’s going to be in court.

In the other states, there are various forms of something called comparative negligence.  This means that if you did something that contributed to causing the accident, your negligence is compared to the other driver’s and your recovery is reduced by the percentage of your fault.  For example, if you were 25% responsible for causing the accident, you can only recover 75% of your losses.

So, in a state that has comparative negligence, when an insurance company says that you were a cause of the accident, they are saying they don’t think they have to pay you for all of your damages.  You can continue to negotiate with them without a lawyer, explaining why they are wrong and why they owe you full value.

In most routine cases that you should be handling yourself, fault will be clear and won’t be an issue.

Is it safe to settle with the other driver at the scene of an accident?

No.  In fact, it could turn out to be very foolish.

If the other driver caused the accident, you want his insurance company involved in case it turns out that the damage to your vehicle is more than you thought or that you actually were injured even though you didn’t know it at the accident scene.  Sometimes, injuries caused by an accident don’t cause symptoms for a few days or even a few weeks.

If your car damage is more than you thought or if you turn out to be injured, the other driver will not be able to pay for all of your damages.  That’s why you want his insurance company involved, so they can pay you what you are owed.

If you caused the accident, you want your insurance company involved in case the other driver’s claims get larger later, as I just explained they can.  Your insurance company might try to avoid defending and paying a claim if you did not advise them of your accident promptly.

This is why you have liability insurance, to protect you if you cause an accident.  Inform your insurance company and use the insurance you paid for.

What if the driver who clobbered me didn’t have insurance?

The driver who caused the accident is responsible for the damages she caused, even if she does not have insurance.  However, if she has no insurance and is not financially responsible, you may not be able to recover anything from her.  You can’t get what she hasn’t got!

However, if you have uninsured motorists (“UM”) coverage on your insurance policy – and you should! –  you can make a claim under that coverage.  If you have UM coverage, your insurance company defends and pays the claim, just as if it were the other driver’s insurance company.

That’s right, they treat you as an adversary.  Don’t think that they’ll roll over and pay your claim just because they are your insurance company.  They won’t.