How Car Insurance Claims Work

A car insurance claim is how you get your insurer to pay for damages after an accident or other covered incident. Gather your policy information and thoroughly document the incident before you begin the claims process.

By Mark Fitzpatrick

Edited by Casie McCoskey

Updated: September 4, 2024

Advertising & Editorial Disclosure

A car insurance claim is how you get your insurance company to pay for repairs or medical bills after an accident or other covered incident. You can usually file a claim online or through your insurer's app — the sooner, the better.

Be sure to gather as much evidence as possible, like photos and police reports, to support your claim. Depending on your coverage and the situation, you might file a collision, comprehensive, liability, personal injury protection or uninsured/underinsured motorist claim.

TABLE OF CONTENTS

What Is a Car Insurance Claim?
How to File a Car Insurance Claim
How Insurance Companies Evaluate Car Insurance Claims
How Filing a Claim Affects Premiums
Why Insurers Might Deny Claims
FAQ About Car Insurance Claim

Key Takeaways

Filing a car insurance claim is a multi-step process that involves gathering evidence, reporting the incident to your insurer and working with a claims adjuster to assess the damage and determine a settlement.

While car insurance is designed to help cover costs after an accident, filing a claim can raise your premiums, especially if you're at fault or have a history of accidents.

To avoid having your claim denied, make sure you understand your policy's coverage limits, gather all necessary documentation and report the incident promptly.

What Is a Car Insurance Claim?

A car insurance claim is how you get your insurance company to pay for repairs or medical bills after an accident or other covered incident. It's what you have insurance for — this is when you reap the benefits of paying your premiums and any add-ons.

Depending on your coverage and the situation, you might file one of the following claims:

Claim Type	What It Covers	Deductible?
Liability Insurance	Injuries or property damage you cause to others in an accident	✘
Collision Insurance	Damage to your vehicle caused by colliding with another vehicle or object	✔
Comprehensive Insurance	Damage caused by incidents other than a collision, such as theft, vandalism or natural disasters	✔
Personal Injury Protection (PIP)	Medical expenses and sometimes lost wages for you and your passengers, regardless of fault	Varies per state
Uninsured/Underinsured Motorist Coverage (UM/UIM)	Your expenses if you're in an accident with a driver who doesn't have enough insurance or none at all	Varies per state

After an accident, you might file a claim against the other driver's insurance, or they might file one against yours. Don't worry, though; another person can't file a claim on your insurance without you knowing. Your insurance company will always notify you if a claim is filed against your policy, so you're in the loop.

How to File a Car Insurance Claim

Filing a car insurance claim involves notifying your insurer about the incident and providing the necessary documentation to receive compensation for covered losses. Here's a step-by-step breakdown:

1
Gather information
Collect all relevant details about the incident, including the following:
- Date
- Time
- Location
- Description of events
- Contact information for any witnesses
If you were involved in a car accident, gather contact details, insurance information (e.g., company name, policy number) and license plate numbers from all drivers involved.
2
Document the scene
Take photos and videos of the damage from multiple angles, as well as the surrounding area, traffic signs and any visible injuries. If applicable, obtain a copy of the police report.
3
Contact your insurer and submit your claim
The sooner you notify your insurer, the sooner it can start processing your claim. Provide it with all the information you've gathered, including the police report number, if applicable. Be prepared to answer questions about the incident.
4
Work with the claims adjuster
Your insurance company will assign a car insurance claims adjuster to investigate the incident and assess the damage. They might ask for additional information or documentation, schedule a vehicle inspection or request recorded statements from you and other involved parties.
5
Review the repair estimate
Once the adjuster assesses the damage, they'll provide you with a repair estimate. Review it carefully to ensure it covers all necessary repairs and seems fair based on the extent of the damage. You can also get a second or even third opinion from other repair shops to ensure you get a competitive and fair price for the repairs.
6
Choose a repair shop
You have two main options for car repairs:
- Your insurer's network: This often means a faster claims process and additional benefits like a warranty on repairs.
- An independent shop: Ensure it's reputable, experienced with your car's make and model and uses quality parts. Ask for recommendations and compare prices.
If you want to maintain your car's value, especially if it's newer, check if your insurance includes OEM (Original Equipment Manufacturer) coverage. This means repairs will use parts straight from the carmaker, not cheaper aftermarket options. While OEM parts cost more, they can help keep your car's value up and may be required to preserve your warranty.
7
Get your claims payout
Once you've settled on a repair shop and agreed on the estimate, give them the go-ahead to start repairs. Depending on your insurance policy and the arrangement with the shop, the insurer might pay the shop directly or reimburse you after you've paid. If you're paying upfront, keep all receipts to submit to your insurance company for reimbursement.

The money you get from an insurance claim (the payout) is yours to use for anything you want. It can cover repairs and other expenses or even be saved. But if you don't fix the damage now, your insurer won't cover the same issue again. And if your car is financed or leased, you'll usually be required to use the payout for repairs, often going directly to the repair shop.

What Happens if Your Car Is Totaled

If your car is "totaled," it means the cost to repair it is more than its actual cash value (ACV). The ACV is what your car was worth before the accident, taking into account its age, mileage and condition. Your insurance company will determine whether your vehicle is totaled based on a few factors, including:

Repair costs

The most significant factor is the estimated cost of repairs compared to your car's ACV. If the repairs cost more than a certain percentage (usually 70%–75%) of the ACV, your vehicle is considered a total loss.

State laws

Some states have specific laws that define when a car is totaled, often based on a percentage of the ACV or a total loss formula.

Salvage value

The insurer might also consider your car's salvage value, which is what they can get for it if they sell it for parts. If the salvage value plus the repair costs exceed the ACV, your car is likely to be totaled.

Note that if your car is financed or leased, the total loss process might differ slightly, as the lender or leasing company may also have a say in the matter.

How Insurance Companies Evaluate Car Insurance Claims

After you file a claim, your insurance company assigns a claims adjuster to investigate. They gather evidence to determine who's at fault and how much the insurer should pay. Adjusters look at a few key pieces of information:

Police report

This official document details the accident, including the officer's observations and any citations issued.

Witness statements

If anyone saw the accident, their statements can help determine what happened.

Photos and videos

Pictures of the damage, the accident scene and any injuries can provide valuable evidence for the adjuster.

Repair estimates

These provide informed documentation to demonstrate how much it will cost to fix your car.

Medical bills (if applicable)

If you or someone else was injured, medical bills document the extent of the injuries and treatment costs.

Remember that when calculating the value of your claim, insurance companies factor in depreciation. This is the decrease in your car's value over time due to wear and tear. So, even if your vehicle was in perfect condition before the accident, the insurance payout might not be enough to cover the cost of buying a brand-new replacement.

How Fault Affects Claims

In most states, the driver at fault in an accident is responsible for paying damages. However, each state has its own rules for determining fault, which affects how car insurance works when you are at fault and who ultimately pays for the damages. These rules are broadly categorized as follows:

Pure comparative negligence: You can recover damages even if you're 99% at fault, but your percentage of fault will reduce your compensation.

Modified comparative negligence: Under these rules, you can only recover damages if you're less than 50% or 51% at fault.

Contributory negligence: You can't recover any damages if you're even 1% at fault.

Compensation will vary depending on your state's guidelines. The adjuster's investigation will determine who's at fault and how much each party is responsible for paying.

How Filing a Claim Can Affect Premiums

Filing a car insurance claim can raise your rates. To your insurer, a claim signals you're a riskier driver. Here's how it usually plays out:

Premiums may increase

After a claim, expect your monthly bill to increase. How much depends on the accident severity, how much the insurer paid out and your past claims history. A fender bender might mean a small bump, while a major accident could cause a hefty hike.

Loss of no-claims discount

Many insurers offer car insurance discounts for claim-free driving. Filing a claim can wipe out these savings, leaving you with higher rates.

Surcharges for at-fault accidents

If the accident was your fault, your rates will likely jump even higher. This surcharge can last for years and varies by state and insurer.

Impact of multiple claims

The more claims you file, the riskier you look to your insurer, and the more you'll pay. Finding coverage could become challenging.

Severity of claims

Incidents you can't control, like theft or hail damage (covered by comprehensive insurance), might not raise your rates as much as at-fault accidents.

Claims-free options

Some insurers offer plans that don't raise rates after your first claim. These could be a good choice if you're worried about rate hikes.

How much your rate goes up after a claim isn't set in stone. It depends on a few things: how bad the accident was, your driving history, how many claims you've made before and your insurer's specific rules. A minor fender bender might not affect your rate as much as a major accident, and a clean driving record could soften the blow. However, more claims usually mean higher rates, and some insurers are stricter than others.

Why Insurers Might Deny Claims

Your car insurance claim isn't always guaranteed to be approved. Insurers may deny claims for various reasons, including:

Policy exclusions

Your policy may specifically exclude certain types of damage or incidents. For example, if your policy doesn't include comprehensive coverage, a claim for theft or vandalism might be denied.

Insufficient evidence

If you can't provide enough evidence to support your claim, such as photos, police reports or witness statements, your insurer might deny it.

Incorrect information

Providing inaccurate or incomplete information when filing your claim can lead to denial. Ensure all details are accurate and complete.

Misrepresentation or fraud

If you intentionally provide false information on your insurance application or during the claims process, your claim will likely be denied.

Unapproved repairs

Double-check everything on your claim. Even small mistakes or missing details could lead to your insurer denying it.

Late reporting

Some insurers have strict time limits for reporting claims. If you fail to report the incident within the specified timeframe, your claim might be rejected.

Lack of coverage

If your policy doesn't cover the incident or you don't have enough coverage, the insurer might deny or only partially cover your claim.

Violation of policy terms

Not following the rules of your policy could get your claim denied. For example, if your policy only covers personal use and you get into an accident while using your car for business, your insurer might not pay out.

Disagreement over fault

If you and the other driver involved in an accident disagree about who's at fault, the insurer might deny your claim until fault is established.

If your claim is denied, don't panic. You can negotiate with the claims adjuster, seek legal help or file a complaint with your state's insurance department.

FAQ About Car Insurance Claims

Got questions about how car insurance claims work? We've got answers.

How do car insurance companies work out claims?

Insurance companies use a process involving claims adjusters who investigate accidents, assess damage and determine fault. They review evidence like police reports, witness statements and repair estimates to decide how much to pay for your claim.

Does your insurance go up after a claim that is not your fault?

Your insurance rates may increase even if an accident isn't your fault. This depends on your state's laws and your insurer's policies. Some companies view any claim as an increased risk, while others might only raise rates after multiple claims.

How are insurance claims determined?

The amount of your payout is determined by several factors: the type of coverage you have, the extent of the damage, the estimated cost of repairs, your deductible and whether or not you were at fault for the accident. The insurance adjuster considers all these factors to determine a fair settlement.

About Mark Fitzpatrick

Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.

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