After an auto accident or insurance claim Part 2

Your car has been in an accident or damaged in some way and you've already initiated the claim and had the estimate written. What next? This next selection of questions in Part 2 of my series covers some of those items.

Will my car be replaced or repaired?

After evaluating the damages to your vehicle, your insurance company has the option of repairing your vehicle, replacing your vehicle, or reimbursing you for the vehicle's actual cash value (ACV). Actual cash value is the amount your vehicle would have sold for on the date of the accident.

A vehicle is considered economically impractical to repair, or a total loss, if the cost to repair the vehicle equals or exceeds the vehicle's ACV on the date of the loss. In many instances an insurance company will total a vehicle if the appraised damages equal 80% of the vehicle's ACV because often, once repairs are begun, additional damages or "hidden damages" are found which would render the vehicle a total loss by definition. (This is sometimes referred to as a "constructive total" loss)

What parts will be replaced on my vehicle?

This is a wide open question and can only be answered by your policy limits. Your policy may state that they can replace OEM parts with "like, kind and quality" parts which could be a used part or an aftermarket part.

Do I have to accept non-OEM parts?

No, the final choice is yours but if the insurer wants to use non-OEM parts and you decide to use more expensive OEM parts, you may have to pay the difference in cost. It all depends what is stated in your policy.

Does my insurance company offer me a direct repair program through a local body shop and how does the process work in dealing with a direct repair shop?

Some auto insurance companies use a Direct Repair Program to provide repairs for their policy holders. In a Direct Repair Program, a collision shop and an auto insurance company complete a contract to provide repairs for the insurance company's claimants.

This is how a Direct Repair Program works: You are involved in an accident and contact your insurance company, or the insurer of the at-fault driver. The auto insurance company then refers you to a network of conveniently located repair facilities that offer a limited lifetime warranty on the repairs to your vehicle. The service might also offer on-site rental car arrangements. The insurance company and the collision shop handle all the details and paperwork, so you do not have to.

The collision shop and the auto insurer determine the specific provisions of a Direct Repair Program. The advantage to the collision specialist is the steady stream of referrals or work. A collision shop might participate in one, or several, insurance companies' Direct Repair Programs.

Although a Direct Repair Program can generate additional paperwork for a body shop, it can also prevent delays. When an additional part is needed for a repair, the shop does not have to stop working on a vehicle to wait for an insurance adjuster to re-evaluate the situation and perhaps write a new estimate. Insurance companies promote the advantages of a Direct Repair Program to their customers as convenience, warranties on repair work, and the freedom from estimates and other paperwork details.

Should I use a Direct Repair Shop?

When you first contact your insurance to set up your estimate and review your policy, ask the insurance company about their Direct Repair Program and what type of warranty they give on repairs done at one of their facilities and, if applicable, will the warranty transfer out of state. Normally the insurance companies will back the warranties of the shops on their "approved" lists.

Do I have to use a Direct Repair Shop recommended by the insurance company?

No. In the end, the choice is yours. The insurance company may tell you that the shop of your choice is not on their "approved" list of shops and that they may not be able to efficiently handle your claim due to your selection of a certain shop, but do not be intimidated by this. It is your right to choose whatever shop you want to repair your vehicle.

If by chance you pick a bad shop, and they mess up your repairs, it is you against the body shop. The insurance company is only liable to pay for the original repair; it will not warranty how those repairs are made, whereas if you had gone to one of the insurance company's direct repair facilities, then they would have to get involved and settle an problems relating to the relevant repairs.

And that wraps up Part 2. Remember, it is your car and always your choice as to where and how it gets repaired.

Sincerely yours,
Jake Maxwell

Jake started his automobile career working for a small town automobile repair shop in the South East. After working there for almost a decade, he decided to try his hand on the flip side of the coin and got a job as an auto appraiser for a large insurance company. Using the experience from both sides, he understands the needs of not only the consumers, but the auto body shops and the insurance companies. It's a love triangle with many complex problems. Visit his blog for the complete series and more resources at Direct Repair Advice and Insurance Questions.