There’s been an accident-now what?
What to expect from your insurance company: The physical damage claims process
By Paul R. Berne
You have had an accident. Now you are expecting an avalanche of paperwork, phone calls and questions from regulators. Your bus has received damage and at this point you do not know what to expect from your insurance company, the damage appraiser or the repair facility.
Perhaps you have had a claim in the past that went smoothly, or you encountered snags that you are now better prepared to address. In either case, here are several important points to consider that will help you better deal with this unwanted but necessary process and make it easier to bear.
Knowledge is power
Step one begins before the incident even occurs. Specifically, you must know which coverages you have and make sure your coverage limits are adequate. Be clear on the differences between collision coverage, specified perils and comprehensive coverage. There are unique factors for when and how each category might apply.
We advise operators to review their bus insurance policy carefully and become more familiar with the language. Study the declarations page and accompanying vehicle list on the policy to make sure the coverages you want and need are in place and that the applicable deductibles are clearly described. Working closely with your broker prior to policy inception will help clarify any issues and make the process less confusing if you have a claim.
Value vehicles correctly
Some bus insurers base their physical damage claim payments on the values of vehicles as described in the vehicle list that accompanies the policy. This makes it very important to value all the vehicles in the company correctly. It also is very important to be aware of any co-insurance penalties claims in which an undervalued vehicle is involved.
Again, discuss this with your broker so that you understand the process and can be confident you have purchased the coverages you need. You must be clear on the difference between “actual cash value,” “stated value” and “replacement value.” Also, remember to update the insured values of your vehicles on a regular basis.
Report all incidents immediately
Prompt claim resolution begins with timely claim reporting. At Lancer Insurance our basic recommendation is for operators to report the claim immediately, no matter how large or small it may appear.
The claim handling process can become far more complex and time consuming with any delay in claim reporting.
This is especially true for a small claim an operator has decided on his own is probably under the deductible, only to find out otherwise once the vehicle goes into the shop and repairs are underway.
Late reporting to the insurance company typically slows the process and makes the determination of the amount of loss even more complex. In some instances late reporting creates problems in determining if coverage is even possible in the event the late notice violates certain criteria.
After more than 32 years in the commercial vehicle claims business I have learned above all else that there is no way initially to know which claims will remain low-exposure events. Policyholders are best served by reporting all accidents and incidents to their insurer.
While this is especially true for claims carrying the potential for bodily injury that can worsen over time, it also applies to physical damage/collision claims. Claims professionals who are experts in handling bus claims know how to correctly respond, and will take immediate steps to help operators get the repairs completed, or the total loss claim paid promptly.
Insurance companies have varying methods for evaluating damage claims to vehicles. Some might use appraisers on every claim. Others might set thresholds for when to call out the appraisers, while others might accept body shop estimates and photographs. The claims examiner handling the loss should advise the operator on what to expect at the very beginning of the process. Never hesitate to ask questions about who to talk to, how long the process might take, what documentation to provide, as well as the process for determining the amount of loss and when you can expect to receive a settlement.
You should expect regular updates and be persistent in pursuing them. This is a core expectation of any insurance company, but it holds true especially with physical damage/collision losses as the need to get the vehicle back in operation or accept a total loss payment is essential to the business.
The question occasionally surfaces during the claim process whether it is more feasible to repair vehicle components than to replace them. There is no simple answer to this question, and the situation can vary greatly depending on the type of part involved, vehicle type, degree of damage and availability of replacement parts. When in doubt, ask your claims examiner for specifics as to how the appraiser made this particular evaluation. You can also ask to speak directly to the appraiser. This situation during a claim can often be the point at which you will discover the major difference between a knowledgeable insurance company experienced with the types of vehicles you operate, as opposed to a company that insures cars, trucks, boats and other property very unlike buses and coaches.
Determining a total loss
The question might also arise as to why the vehicle has been determined a total loss when it appears repairable. The basic explanation is what anyone would expect. The insurer will usually deem a crashed vehicle a total loss when the projected cost of the repairs and the salvage value exceed the actual cash value (ACV).
However, this can vary state by state. For example, in some states the determination is based on repairs as a percentage of the vehicle’s value. There are times when subsequently reduced repair costs allow the insurer to declare the vehicle repairable. There are laws and regulations in place that determine what an operator can and cannot do with the vehicle once it is determined to be a total loss.
These are just some of the issues that you might confront during a physical damage/collision claim. Frequent and clear communication is paramount to a smooth and efficient claims process that is legal and in accordance with all relevant regulations. Become insistent that your insurance company, its appraiser and the repair facility are each knowledgeable and responsive in their respective areas and able to answer all of your questions. BR
Paul R. Berne serves with Lancer Insurance, Long Beach, NY as Senior Vice President, Claims, and brings more than 32 years of experience in the management and administration of property/casualty claims. Prior to joining Lancer, Paul was Vice President of Claims with Progressive Casualty Insurance Company and serves as Executive Director of the Tri Community CERT (Community Emergency Response Team) in his hometown in Ohio.