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Car Insurance Claim Traps of 2021: Tips On How to Avoid These Common Traps

Written by Huma

Car insurance Claim Traps can turn out to be a risky business for you if you don’t identify them from the start. Not only you get trapped in rigid insurance policies but also you might be putting your and other lives in danger.

As the name suggests, anyone can go through accidents at any time. 

  1. Auto Insurance is compulsory for every owner of vehicles to protect not only their vehicle but also their well beings. 
  2. Thus, the rates of insurance for these cars depend on numerous factors such as the age of the driver, the driving experience, along with many others. 

So what kind of these car insurance claim traps are to be?

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To answer that, we have enlisted common car insurance claim traps of 2021 along with tips to avoid them.

This list contains information about the claim traps and different situations that you may face. Other than this there are many mistakes that you make which leads to problems in the future. 

Like many people, you may make mistakes when filing insurance claims. Such mistakes are easy to make but can have serious consequences, including a delayed payment or even a claim denial.

Hence, here are some common mistakes made by people as well as steps you can take to avoid them.

1. Failure to Notify Your Insurer Immediately

One common mistake is failing to contact your insurer right away about an accident or loss that is potentially covered by your policy. Don’t delay! 

Call your insurer immediately. This is important for two reasons. 

  1. First, claims are easier to adjust when events have just occurred and the evidence is fresh. Physical evidence and witnesses’ memories fade over time.
  2. Secondly, timely notice is a condition of coverage in most car insurance policies. Most general liability and umbrella policies require you to notify the insurer as soon as practicable in the event of an occurrence, offense, claim, or suit. 
  3. If you fail to report a loss or claim within a reasonable amount of time, your insurer may refuse payment.

If you prefer, you can report a loss or claim to your insurance agent or broker. The latter will forward the information to your insurer on your behalf. 

Therefore, your agent or broker will obtain the claim forms and help you complete them.

2. Poor Documentation

Poor record-keeping on your part may delay your recovery for a claim. Document every communication you have with your insurer regarding your claim. 

  1. Record the time, date, and content of each verbal conversation. Keep all documents in a separate file so you can access them quickly. 
  2. If you mail paper documents to your insurer, retain a copy of each for your file. Be sure to record the date the documents were mailed.
  3.  If you speak with a claims representative or other insurance company employee on the phone, send that person a summary of the conversation in a letter or email.

When an accident or loss occurs, document the scene with a camera if you can do so safely. Take photos of your damaged vehicle. Submit the pictures to your insurer when you file your claim. 

Thus, the photos can help verify your written description of the events and damaged vehicle. 

3. Failure to Cooperate With Your Insurer

You may also delay your claim payment if you are uncooperative with your insurer. 

  1. Your insurer needs your cooperation to settle your claim efficiently and effectively. If you fail to comply with the insurer’s requests for information related to your claim, your actions may give the insurer grounds to deny coverage.
  2. Many insurers attach written instructions to their policies regarding the procedures you must follow if an accident or loss occurs. Hence, keep these instructions with your policy so you can review them before filing a claim.

You should also be familiar with the loss conditions in your policy. These outline the obligations you must fulfill under the insurance contract to obtain payment for a claim or loss. 

Therefore, many policies specifically state that you must cooperate with the insurer in the investigation or settlement of the claim. Liability policies also require you to cooperate in your defense.

4. Not Calling the Police

In some cases, you may violate the terms of your policy if you fail to call the police. Many car insurance policies obligate you to contact the police if a law has been broken. 

  1. The standard Business Auto Policy states that you must call the police if a covered auto or any of its equipment has been stolen.
  2. You should phone the police following an auto accident even if you aren’t required to do so under the policy. 
  3. State law may obligate you to notify the police if anyone has been injured or killed, or if the accident has caused vehicle damage that exceeds a certain dollar amount. 
  4. A police report can benefit you and your insurer because it verifies the facts related to the accident or loss. Thus, the report can help speed up the settlement of your claim.

5.Paying Third-Party Claims Out of Pocket

If an accident occurs in which a third party sustains minor bodily injury or car damage, you may be tempted to compensate that person out of your own pocket rather than file an insurance claim. This is a bad idea for several reasons.

  1. First, injuries that seem minor at the time of the accident may become serious. Likewise, some injuries may not be evident right away. A person whose vehicle you damaged in an auto collision may develop whiplash several days after the accident.
  2. Secondly, you are barred under your liability and auto policies from voluntarily making any payment, assuming any obligation, or incur any expense without your insurer’s consent. If you make a payment to someone who later files a claim or suit against you, your insurer may deny coverage for the claim on the grounds that you violated a policy condition.

Thus, think twice before you make out-of-pocket payments for injuries to people who have been affected by the accident. 

As noted previously, seemingly small injuries can become large ones. They can also generate lawsuits against you.

6. Not Questioning Your Insurer’s Calculations

Most auto physical damage claims are settled based on the insurer’s calculation of the value of the damaged vehicle. Damaged autos are normally valued based on their actual cash value (ACV). 

No matter how your damaged vehicle is valued, you should obtain realistic estimates of the cost to repair or replace it. 

  1. Don’t assume that your insurer’s estimate of these costs is accurate. Repair and replacement costs vary widely from place to place. 
  2. If the value of your car is difficult to assess, consider hiring a public adjuster to assist you. 
  3. An experienced public adjuster will calculate your repair or replacement costs for you and guide you through the claims process.

 This person will negotiate with the insurer’s adjuster on your behalf to obtain a favorable settlement.

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7. Admitting you Were at Fault

When an accident occurs in which someone else is injured or their car is damaged, don’t admit liability. 

There are several reasons for this. 

  1. For one thing, the cause of the accident may be different from what you think. The accident may have involved factors that weren’t apparent when the incident occurred.
  2. Secondly, the injured party might file a claim against you. Your acceptance of responsibility could impair your liability insurer’s ability to defend you against the claim.
  3. Thirdly, liability policies prohibit policyholders from assuming any obligation without the insurer’s consent. 

Therefore, an admission of fault might constitute a breach of the insurance contract, which could be grounds for the insurer to deny coverage for the claim.

8. Failing to Follow Up With the Adjuster

Once you’ve filed a claim, you can sit back, relax, and wait for payment from your insurer, right? 

The answer is no! Don’t lose track of your claim. If several weeks go by and you haven’t heard from the adjuster, follow up with an email or phone call. Thus, ask for a progress report.

9. Failing to Read Your Policy

There are many people who do not enjoy reading insurance contracts. Yet, reading your policy is essential as you need to understand what it does and doesn’t cover. 

  1. Read your policy as soon as you receive it from your insurer. If you have trouble understanding the wording, ask your agent or broker for assistance. 
  2. Review your policy again before you file a claim. Be sure you understand the duties you are obligated to fulfill to obtain payment for a loss.
  3. These are the mistakes that people make while making claims on their insurance policy. 

We have also explained tips that will help you to solve these mistakes. Below is a list of some car insurance claim traps and different scenarios in which you can face these traps.

If you follow the tips that we have given along with the scenarios, it is likely that you will avoid traps;

1. Rear-End Crash

The Rear End crash type of accidents are caused mostly when the drivers lack concentration in their driving, this can be easily avoided if the driver is focused only on driving rather than some other disturbances like using a mobile phone, changing songs while driving, speaking to someone without checking out the vehicles forward or backward, etc.

  1. CDC Statistics has proved that more than 1160 people are getting injured and more than eight people are killed every day due to the distractions that occurred when driving.
  2. NHTSA (National Highway Traffic Safety Administration) has shared a pivotal point in 2015 that to avoid this type of crash, the top-most auto manufacturer has come up with an automatic braking technology. 

Thus, this will help the driver to focus on the road and driving without being distracted from any other activities.

2. Windshield Damages

Windshield cracks and chips claims are also considered to be the most common problem in the list, and many drivers think that this damage cannot be avoided, but you can do it with simple steps.

We agree that you can’t make any pebbles or rocks to be idle on the road or ground, but you can take specific steps to avoid these damage to take place. 

  1. Most of the cracks and chips are developed from the Snow renewal equipment, rocks thrown due to air by trucks and other debris from the ground.
  2. You can make sure that you are maintaining the distance between these trucks so that your wallet and windshield will remain safe from the damage. 
  3. For example when you are passing by a road with much debris, and other kinds of stuff make sure you keep a distance when the trucks turn in an unpaved road.

Therefore, in the case of ice and snow, you can keep a distance between any trucks for avoiding the hit as well as make sure you maintain an extra mile in the case of place with plows.

3. Parked Vehicle Damages

This is one of the common problems every driver’s face, you park your car, and people easily hit your car and fly like an airplane without evening turning back.

  1. Research in 2019 has found that 15% of drivers have experienced hitting a parked car and 1.7 million drivers have been admitted to run after they hit a parked car.
  2. To avoid people hitting your car make sure you leave your car in any garage or in the place where there are no turns. 
  3. Do not park your vehicles too close to other vehicles when you are out from home, make sure you are avoiding parking of your vehicle in turns, tight corners, driveways, etc.

4. Backup Accident

NHTSA has identified in research that there are about 500,000 back over and backup accidents are happening every year, among them, 15,000 accidents lead people to injuries, and 210 accidents lead to death and other life-threatening problems.

  1. The backup accidents can be easily avoided, but still, they are occurring in high numbers, but at present in 2018 the NHTSA has put a rule that all new cars need to be developed with a backup camera.

Therefore, be careful to get a camera-equipped vehicle if you are in the plan of getting a new car, in the case of existing cars you can get a backup camera kit which would cost in the range of 250 AED to 1500 AED, and this cost varies based on the features you need.

5. Single Car Crash

According to the National Transportation System Center of John A. Volpe, one out of five accidents are caused due to the reason of leaving your car in the road, and there are more than 8,000 deaths happening per year, these damages can also be controlled easily and can be avoided.

  1. Most of the Single Car crashes are caused due to drowsy driving, what if the drivers fall asleep when they are driving on the road? 
  2. Undoubtedly the car will result in damage to an accident. Similarly, Usage of drugs, alcohol, and tiredness while driving are some of the causes of single-car crashes.

A survey result of research in 2015 has explained that 40% of the drivers fall asleep, the young drivers’ numbers are higher when compared to the older persons. 

Thus, to avoid this car insurance claim traps, there are many innovations developed to keep your car idle in the right lane, but still, you need to be more careful that you are not falling asleep during your drive for avoiding this problem.

7. Hail Damage

If you are located in an area that is prone to higher hail storms then you need to park your car under cover so that your car doesn’t get more damage, you can allocate extra space for your garage and safeguard with new safety apparatus for keeping yours from lousy weather hits.

8. Break-ins and theft

Every area will differ, and there is a high chance for your car to have a car break-in in some cases. 

You can avoid these issues if you stop keeping any valuable items in your car parking. Therefore, also make sure you park the car in a safe and secure place to prevent the car break and theft.

9. Personal Injuries

Neck, back, and other related injuries are typical during a car accident, and even a fender bender will result in severe whiplash, neck, back, and other injuries. 

  1. These get more severe when you are driving at a higher speed, the best way to avoid this type of problems is to obey the traffic rules like wearing your seatbelt, following the right signal board, etc.
  2. There are many newer technologies incorporated at present which helps in saving you from these types of injuries.

10. Intersection Crashes

Confusing and busy Intersections will lead you to crashes, but this may happen at any time. 

You cannot assure that other drivers will follow the traffic rules as you do so it is essential when you are approaching an intersection.

Hence, when you stop at the red signal make sure other drivers are not speeding up through the yellow light, in this case, you need to hit the brakes immediately to safeguard you from hitting the car.

Final Thoughts

In order to establish the safe driving zone in the city authorities like The Federal Highway Administration is working with states, cities, insurance companies and other concerned people about creating awareness on car insurance claim traps. 

Thus, drivers can make up with the right decision to reach their destination safely.

If you follow these tips, you can avoid getting into trouble from the very start. Make sure you are careful throughout the process so that you can stay ahead of these car insurance claim traps.


    Originally published Jan 20, 2021 12:31:00 PM, updated May 18, 2021

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