How Car Accidents Affect Your Insurance

Owning a car means paying for auto insurance. But how much do you know about what your insurance will do for you if you're in an accident? Understanding what your car insurance covers (and what it doesn't), how to file a claim and what happens after you've been in an accident can be absolutely vital.

How Your Insurance Can Help You in the Event of an Accident

If you're in an auto accident, your car insurance company can do a lot to take care of you, especially if you're not at fault. Of course, they'll settle your claim and make sure your car is repaired. But they can also help you get a rental car while your vehicle is in the shop, and they can protect you against potential lawsuits.

Rental Cars

Whether you get a rental car when you've been in an accident depends on who was at fault and whether you have rental car coverage.

If the other driver was at fault, you should be able to file a claim directly with their insurance company, which should pay for a rental car immediately. If you were at fault, or if fault is indeterminate and under discussion, you can still get a rental car if your insurance coverage includes rental car reimbursement coverage.

Expect a rental car similar to your own car, with a cap on how much the policy will cover per day (you'll get a preferred rate when insurance is paying the bill). You should be able to have the rental car for the entire time needed to repair the damages to your car, but be prepared to return it promptly when the repairs are done.

Potential Lawsuits

If someone files a lawsuit against you in the aftermath of an auto accident, in most cases, your auto insurance company is required to provide an attorney to defend you as part of your liability policy. This obligation is called "duty to defend" in your insurance policy.

Your insurance company typically must hire an attorney on your behalf, even if the accident was your fault, as long it was a result of negligence or carelessness. If you caused the accident intentionally, the insurance company no longer has a duty to defend you. If the car accident involved a DUI on your part, your insurance company may refuse to defend you.

You must report the accident to the insurance company promptly (typically within 5 to 10 days) to trigger that duty to defend. If the first time the insurance company learns about the accident is when they receive notice of the lawsuit, they may not be obligated to provide you with an attorney.

If you want to sue another driver, your insurance company has no obligation to provide an attorney, and you'll have to seek a personal injury attorney on your own.

How to Read Your Policy and Determine Your Coverage

Reading your auto insurance policy may seem daunting, but you need to know what coverage it provides. Auto insurance policies all include the same basic sections:

• The declarations page. This should be the very first page of your policy. It lists all the drivers who are insured under your policy, what vehicles are covered and how long the coverage lasts. It also states your premium and liability limits, your coverage limits, your deductibles and any discounts you're eligible for (such as a good driver discount).

• The policy form or coverage form. This document explains what your policy covers, and it lists all exclusions, conditions, covenants and riders that affect your policy.

• Your insurance ID card. Your insurance card lists your name, address, vehicle information (including VIN), the coverage period and the name and contact information for your insurance company. This is the document you need to hand to another driver or the police after an accident as proof of insurance.

Vocabulary and Policy Terms

Some vocabulary in your insurance policy may be unfamiliar. Here's a brief glossary to help you make sense of what you're reading.

• Claim: A request for payment from a car insurance company to cover costs (including repairs and medical treatment) incurred in an accident or other damaging incident

• Collision coverage: Insurance coverage that pays to repair a vehicle when it's damaged in an accident

• Comprehensive coverage: Insurance coverage that pays for damages to a vehicle that aren't caused by an accident (such as damage from animals, fire, theft and falling objects)

• Covered incident: An accident or other incident that insurance will pay for

• Deductible: The copayment or share you must pay when you have a collision (for instance, if you have an accident that runs up $10,000 in repairs and your deductible is $500, your insurance company will pay $9,500)

• Exclusion: Something the insurance company won't pay for (common exclusions include intentional damage to your vehicle or damage caused by certain natural disasters)

• Liability insurance: Mandatory auto insurance that covers injuries to people hurt in a car accident

• Premium: The amount you pay for your insurance yearly, often broken into monthly payments

• Quote: An estimate of your insurance premiums
  

• Uninsured motorist coverage: Insurance that pays for damages if you're in an accident with a driver who doesn't have insurance

Timeline for Filing an Accident Claim

Different states and insurance companies vary in their requirements and deadlines for filing accident claims. Most companies ask you to file a claim promptly or within a reasonable period of time. If it decides you haven't been prompt, a company might refuse to provide you with an attorney.

Some states have laws in place regarding when you must file an accident claim. For example, New York requires claims to be filed within 30 days of the date of the accident.

Once you file your claim, your insurance company will get to work. It will get you a rental car if you're eligible for one and start to get your repairs done.

What You Will Need to File a Claim

You need some basic information to file an insurance claim after a car accident. You'll need all the information on your car insurance card. You also need the same information for the other driver, including their contact information, insurance policy number, driver's license number and car registration information (including license plate and VIN). Taking a photo of their driver's license and insurance card should provide you with most of this information. Make sure you also get the name and contact information for any passengers in both cars.

You also need to be prepared to describe what happened. You should know the precise location and time of the accident, the weather conditions, the road conditions and the speed you were driving. If the police arrive, ask for a police report and get the name and badge numbers of all officers. You should also get names and contact information for any witnesses to the accident.

What to Expect When You File a Claim

When you file a claim, your insurance company will ask if you need any medical treatment and make arrangements for you to get the help you need. A claims adjuster will be assigned to you to help you through the process. You'll have to get an estimate of repair costs from an insurance company-approved repair shop. You'll drop your car off at the body shop for repairs, and, if covered, the insurance company will provide you with a rental car.

How Having an Accident Will Affect Your Insurance Going Forward

Whether an accident affects your car insurance going forward depends largely on whether you're at fault. If the other driver is at fault, there's a good chance you won't see any changes to your policy or your rates.

If you're at fault, you can usually expect your premiums to go up. The amount it goes up depends on your overall driving record; if you've had a lot of accidents, your rates will go up more. It may also depend on how serious the accident was. If the accident was a result of you driving under the influence, you may lose your insurance.