Does Car Insurance Cover Repairs? What You Need to Know
Find out if your car insurance covers repairs. Get clear insights into what's covered, what isn't, and how to manage your repair claim effectively.
Car insurance serves as a financial safeguard, mitigating the economic impact of unexpected events involving your vehicle. It covers damages and liabilities from accidents, natural occurrences, or other unforeseen circumstances. Understanding available coverage helps policyholders determine which vehicle repairs are financially protected, aiding in managing potential costs.
Understanding Car Insurance Coverages
Several types of car insurance directly relate to covering vehicle repairs, each addressing different scenarios. Collision coverage helps pay for damage to your own vehicle resulting from a collision with another car or object, such as a tree or fence, regardless of who was at fault. This coverage typically helps repair or replace your car up to its actual cash value, after your deductible is paid.
Comprehensive coverage addresses damage to your vehicle from non-collision events. This includes incidents like theft, vandalism, fire, falling objects, natural disasters such as hail or floods, and impacts with animals. For instance, if a tree branch falls on your parked car, comprehensive coverage would apply. Lenders often require both collision and comprehensive coverage if a vehicle is financed or leased.
Property damage liability coverage does not cover repairs to your own vehicle. Instead, it pays for damage you cause to another person’s property, which commonly includes their vehicle, but can also extend to structures like fences or buildings. Most states mandate a minimum amount of this coverage. Uninsured/underinsured motorist property damage (UMPD) coverage can help cover repairs to your vehicle if the at-fault driver has no insurance or insufficient insurance. This coverage is useful if you are involved in a hit-and-run incident where the at-fault driver cannot be identified.
Covered Versus Uncovered Damage
Car insurance policies are designed to cover sudden and accidental damage, but they have specific limitations on what types of damage qualify for repair coverage. Common covered damages include those resulting from collisions, such as impacts with other vehicles or stationary objects. Damage from events beyond your control, like theft, vandalism, fire, or natural disasters such as floods, hail, or hurricanes, are typically covered under comprehensive insurance.
Conversely, standard car insurance policies generally do not cover mechanical breakdowns, routine maintenance, or wear and tear. These types of issues are considered part of vehicle ownership and anticipated expenses. Damage resulting from neglect, such as rust or deterioration due to a lack of proper care, is also excluded. Car insurance protects against unexpected losses, not the costs of keeping a vehicle in good working order or repairing issues that arise from normal aging.
The Repair Claims Process
Initiating a car insurance claim for repairs involves a series of steps to ensure proper assessment and resolution. The first step is to contact your insurance company as soon as possible after an incident, providing details such as the date, time, and location of the event, along with a description of what occurred. You should also provide information for any other parties involved, including their contact details and insurance information, and any police report numbers if applicable. Many insurers offer various methods for reporting a claim, including phone, online portals, or mobile applications.
After reporting the claim, the insurance company will typically assign a claims adjuster to your case. The adjuster’s role is to investigate the incident, assess the damage to your vehicle, and determine the estimated cost of repairs. This assessment may involve a physical inspection of the vehicle, gathering repair estimates from shops, and reviewing any documentation or photos you provide. The adjuster will also evaluate whether the damage is consistent with the reported incident and whether it is covered under your policy.
A deductible is the amount you are responsible for paying out-of-pocket for covered repairs before your insurance coverage begins. For instance, if repairs cost $3,000 and your deductible is $500, you would pay $500, and your insurer would cover the remaining $2,500. Deductibles commonly apply to collision and comprehensive claims, and the amount selected directly impacts your premium; a higher deductible usually means a lower premium. You generally have the freedom to choose your repair shop, though your insurer might provide a list of preferred vendors. Once repairs are completed, the insurance company often pays the repair shop directly, deducting your deductible.
When a Vehicle is Totaled
Sometimes, the damage to a vehicle is so extensive that it is declared a “total loss” rather than being repaired. This occurs when the estimated cost to repair the vehicle exceeds a certain percentage of its actual cash value (ACV), or if the vehicle cannot be safely repaired. This percentage, known as the total loss threshold, can vary by state and insurer, commonly ranging from 70% to 75% of the vehicle’s ACV.
Actual Cash Value (ACV) represents the vehicle’s market value at the time of the loss, considering factors like age, mileage, condition, and depreciation. It is the amount you would expect to receive if you sold the car just before the incident. When a vehicle is declared a total loss, the insurance company typically pays out the ACV, minus any applicable deductible, to the policyholder or lienholder if there is an outstanding loan. This settlement compensates for the loss of the vehicle’s value, not necessarily to cover a brand-new replacement. The insurer usually takes possession of the totaled vehicle, which may then be sold for its salvage value.