September 19, 2011

What Drivers In No Fault States Should Know About Total Loss Claims

No fault car insurance sounds like a great idea, and in many states has been adopted as the best way to do business. Every state has every rules governing how they deal with everything from basic coverage to total loss claims, with some allowing litigation no matter the circumstance, some using an opt-in system for no fault car insurance, and some using only no fault as the option drivers are given. In a state where no fault car insurance is the method of choice, there are a number of things that drivers should be aware of, especially when it comes to the total loss of a vehicle

First, it is important to understand how no fault insurance works. If a driver is using no fault insurance, then no blame or responsibility is assigned for an accident. Instead of another driver's insurance company paying for damages to both cars if they are at fault, both drivers are responsible for their own vehicles, no matter the circumstance. For an insurance client, this means that their insurance company will be the one paying for their repairs in every accident. Further, a no fault system also comes with the provision that the drivers will not sue each other in court for damages that are not covered by their insurance companies.

In the case of total loss claims, an insurance company will declare the cost to fix the car exceeds the fair market value it could bring if it were sold in good condition. Once an insurance company has made this choice, they will no longer pay to fix a car, even if the damage is relatively minor. In a no fault car insurance situation, an insurance company will pay their insured directly, and seek no compensation from the other party's insurance provider. This can lead to two problems, the first being that the amount paid is too low, and the second being that insurance rates may increase. Increase rates are difficult to fight, as the insurance company has the right to protect its interests, but the cost of the vehicle may be something that can be argued. In some cases, it is possible to take an insurance company to civil court or to before a state insurance commission in order to get a new value for the car assessed.

No fault car insurance streamlines the claims process, as there is no waiting for an admission of fault or for another insurance company to pay for damages - all is done through a client's own insurance company. When it comes to total loss accidents, however, insurance clients must be vigilant to make sure they receive fair compensation.