Personal Injury

When to Make an Automobile Insurance Claim

Reviewed by David Goguen, J.D., University of San Francisco School of Law
You're obligated to report a car accident to your insurance company, but when should you start the claims process, and whose coverage should you file under?

If you’ve been involved in a car accident, it's important to understand how car insurance comes into play, when to make a claim, and whose coverage to file under -- your own or the other driver's. Understanding your options can help you make informed choices after a car accident. Read on to learn more.

Reporting the Accident Vs. Filing a Claim

Perhaps the first thing to understand is that there’s a difference between reporting the accident to your car insurance company, and making a claim under your coverage.

Every car insurance policy requires the policyholder to notify the insurance company of any "occurrence" or "event" that might trigger coverage (and lead to a claim being filed). In other words, if there's any possibility that you or someone else could ask for payment from the insurance company over an incident, you have to notify the insurance company of that incident. Most policies contain language that says the accident must be reported “within a reasonable time,” which could mean within a day or two.

As opposed to reporting the accident, filing a claim means asking the insurance company to provide coverage to you based on the terms of your policy. Depending on your coverage, that could mean paying for your car repairs, and/or paying your medical bills. It could also mean that the other driver files a third-party claim with your insurer, asking the company to cover his or her own losses stemming from the accident.

When we talk about making a claim versus reporting the accident to the insurer, the two can admittedly start to blend together. That’s because once you report the incident, the insurance company will probably assign an adjuster to investigate what happened, whether or not you end up making an actual claim. That means the insurer will try to obtain the police report, will contact the other driver’s insurance company, and will try to get witness statements regarding the accident.

Filing a Claim Does Not Mean All the Facts Are In

It's important to note that filing an insurance claim is usually only the first step in the settlement process. At the time you file, you may still be receiving medical treatment for your injuries, and the extent of those injuries might not be fully understood -- for example, how much additional medical care will you require? How much will that treatment cost? Will your ability to return to work be affected? All of these questions can be unanswered at the start of the claim process. The same goes for questions of fault for the underlying accident.

Remember also that filing an insurance claim is not the same as filing a lawsuit. Taking a car accident claim to court via a personal injury lawsuit is a much more formal process, and all civil lawsuits are subject to a statutory filing deadline set by a law called a statute of limitations. Get the details about the statute of limitations in accident cases.

First-Party Versus Third Party Car insurance Claims

A third-party car insurance claim is one that you file with someone else’s insurance company. In the context of a car accident, that usually means the insurance company of the driver who was at fault for the crash. In contrast, a first-party car insurance claim is one that the insurance company receives from its own policyholder. An example of a typical first-party claim is one filed under the terms of your own personal injury protection (PIP) coverage, to get payment for medical bills stemming from car accident injuries.

But here again, fault determinations don't have to be concluded in order for a first-party claim to be made. For example, let's say the insurance companies haven't concluded their investigation(s) into the accident, so it's still unclear who was at fault, but you make a vehicle damage claim under your own collision coverage anyway. If the other driver turns out to be at fault, your own insurance company will probably get back whatever it paid out for your vehicle damage via negotiations with the at-fault driver's insurer, and they may even get back any deductible you had to pay too. (The lesson here is that you can always make a first-party claim under your collision coverage, regardless of who was at fault for the accident.)

If You Don’t Report the Accident to Your Insurance Company

After a minor car accident, you may be hesitant to make a claim at all, thinking your premium will go up. But if you don’t file a claim -- or at least report the accident to your insurer -- there could be consequences.

Perhaps most importantly, if you don't report the accident to the insurer, and a month or so later you (or the other driver) try to make a claim based on the same incident, you can count on the insurer trying to deny coverage. Remember, an insurance policy is a contract, and if you don't do what the contract requires you to do, then you've violated or "breached" the contract, which could allow the insurance company to wiggle out of paying or defending a claim.

For example, let's say you were in an accident. Both cars appear to have very little damage, and neither you nor the other driver feels any pain or discomfort. So, you agree not to bring your insurance companies into the matter.

But what if, a few weeks later, the other driver calls you and says he has thousands of dollars in vehicle damage, plus he's having serious neck pain? Or, what if your car incurred a lot more damage than you initially thought, or you start having significant pain yourself? Since you didn't notify the insurance company of the accident, they could refuse to pay the other driver's damages (and yours, too), leaving you personally on the financial hook.

Learn more about dealing with insurance companies after an accident.

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