When we try to obtain auto insurance coverage, many times the policy we focus on must be affordable and must meet our insurance needs. For this, we compare quotes from multiple insurance companies until we get, for example, car insurance under 100 dollars. But there are other things that matter in terms of insurance and we must know, such as the insurance claim process and classifications.
In motor insurance, claims can be classified into the following three types:
- Third-party claims or liability claims
- Own damage claims or first-party claims
- Miscellaneous claims
Let’s focus on third-party claims or liability claims and own damage claims or first-party claims.
Third-party claims or liability claims
The third-party claims arise when the accident is caused by the fault of the insured driver. The third-party claims can be of two types.
- Third-party death or bodily injury
- Third-Party property damage
Third-party death or bodily injury
If the person dies or injured due to the fault or negligence of the insured driver, then there is a potential for third-party death or bodily injury claim. The person or persons who can be injured are categorized as follows:
- Persons inside the vehicle other than the driver
The persons inside the vehicle can be family, friends, relatives, or known and unknown persons. There may also be commercial situations like fare-paying passengers, non-fare paying passengers, employees, and contractors. All these people are treated as the third party for the purpose of the claim. However, in some cases, the employees are excluded from the definition of the third party and they are covered under workmen compensation claim.
- Persons outside the vehicle
All the persons who are not inside the car are treated as persons outside the car. The people who are outside the car will include pedestrians, people traveling in other vehicles, people sleeping on the road, or people in their residences and or offices.
Third-party property damage
Any loss or damage caused to the property belonging to the third parties is covered under the third-party section of the policy. The most common of third-party property damage claims are damage caused to other vehicles by the insured vehicle.
Any other properties other than cars is also covered under the motor third party insurance. If the insured is held responsible for the loss under a covered policy then his claim becomes admissible.
Own damage or first-party claims
Any claims arising out of the loss of or damage to the insured vehicle is termed as own damage claim, earlier it was also known as the first-party claim. These claims may arise either due to the fault of the insured driver or due to the fault of a third-party driver or maybe due to other causes also like natural calamities or unknown vehicles. The claims arising out under the own damage claims are classified into two as follows,
- Partial loss claims
- Total loss claims
Partial loss claims
Partial losses are said to occur when the vehicle which meets with an accident is repairable. The repair can restore the vehicle to look similar to as it was before the accident. The repair can be done with replaceable parts or without parts. The insurance company will identify the labor cost for repairing the vehicle and if required the cost of the material and parts for repairing the vehicle.
Based on the estimate and actual cost of repair the settlement is made. The settlement is done for both the spare parts and the labor charges. Where necessary a depreciation is applied and the amount is deducted from the claim. The final claim is net of the deductible.
Total Loss claims
Total loss claims will allow insurers to write off the vehicle and settle the claim to the insured. Total loss claims can be settled by asking the insured to retain the salvage or deducting the estimated cost of the salvage. The value derived from the damaged property is known as salvage.
If the claim is settled by the insurance company and the insured retains the salvage then the settlement is less complicated. In case the insurance company retains the salvage then the insured should surrender the original vehicle ID and also standard documents, which are required by the local registration authority for transfer of the salvage. One of the important aspects of the total loss settlement is the amount of claim, which is payable to the insured.
Usually, the insurance companies restrict the claims payments by a condition which states that in case of total loss the claim settlement is restricted to the sum insured or the market value, whichever is less. In this type of loss also the deductible is applied. The total loss claims are of two types:
- Standard total loss claims
Under this type of total loss, the insurer will assess the cost of repairing the vehicle and will also look into the salvage aspect of the vehicle. After obtaining the accurate data related to the repairing the insurer will check if the cost of repairing the vehicle including parts and other consumables are higher than the value of the vehicle, if it is found that the cost of repair exceeds the value of the vehicle or the sum insured under the policy then the insurance company will go for settlement of the claim on total loss basis. In some cases, if the cost of repairing the vehicle exceeds 75% of the IEV or IDV, then the insurance company may treat the claim as a total loss claim. This condition may be in form of a written condition or may be implied as per the market norms.
- Constructive total loss claims
Whenever a loss occurs and the cost of repairing the damaged vehicle and the cost of salvage is the same or more than the market value or the sum insured of the vehicle, it is treated as a constructive total loss.
Now that you know a little more about insurance claims and qualifications, you can start comparing quotes online to buy the very cheap insurance you are looking for. Get at Young America Insurance company the coverage plans that best meet your insurance needs.