Auto Insurance Claims and Compensable Damages

If your claim is approved, you are compensated for the damages your policy allows you to recover.

Was a police report filed?
  • Auto insurance claims, like any insurance claim, tend to follow an orderly process. The claim is reported, an adjuster reviews your policy and then conducts an investigation and determines the amount of your loss. If your claim is approved, you are compensated for the damages your policy allows you to recover. In the case of car accident injuries, compensable damages vary widely. Depending on the type of car insurance coverage in play there are some basic compensable damages that are present in nearly every claim.

    Repair or Replacement of Your Vehicle

    On the most basic level, auto insurance policies normally provide coverage for the repair or replacement of a damaged vehicle. Whether you were in an accident on the road, your car was damaged in a parking lot or a tree fell on your hood during a storm, the cost of any repair is usually a compensable damage.

    The amount of your deductible and the amount of coverage available depends on your individual policy. If your car is so badly damaged that repairs would cost more than replacement of the vehicle, the damage is deemed a total loss and the insurance company will compensate you for the actual cash value of your car.

    While simple in theory, repair and replacement claims can quickly become adversarial. Insurance companies make money by collecting premiums, not by paying on your claim. So even though repairs may be compensable under your policy, the adjuster will likely require you to get several repair estimates, submit your vehicles to multiple inspections, and generally set up more than a few procedural hoops for you to jump through before you ever see a check.

    Certainly, some insurance companies are easier to deal with than others, but by creating a complex system of requirements, insurance companies are able to deny or minimize claims.

    Medical Expenses

    Medical expenses can include any and all costs relating to your medical care after a car accident. Hospitalization costs, ambulance costs or emergency care expenses immediately after an accident fall under this category. So, too, do prescriptions and physical therapy deemed part of the recovery process. Even specialized devices such as casts, walkers, splints, canes and braces are considered compensable medical expenses -- provided you actually paid for them.

    You can only recover for expenses you have actually incurred. So if you have medical insurance that is paying for your care and rehabilitation, you are not going to be compensated for anything other than your co-pays and whatever your insurance does not cover, in most cases.

    Depending on the law of your jurisdiction, you may or may not recover for future medical expenses. Some states allow recovery in perpetuity, as long as the expenses are documented as being related to the car accident. Other states cut off future medical benefits at arbitrary points. Still other states cap the total amount of future medical damages that can be recovered.

    Replacement Services

    Replacement services are compensable damages. If you are injured in an auto accident and are forced to hire people to do something you would otherwise do yourself, you have required a replacement service.

    For example, if you cannot cut the grass because of your broken leg, the $20 per month that you pay the next-door neighbor to cut the grass is a compensable replacement service. The cost of sending out your laundry to be cleaned, transportation expenses, home maintenance and repair -- if you are forced to hire these out because of an auto accident injury, they are all compensable damages. Much like medical expenses, replacement services can be capped or limited depending on the law of your jurisdiction.

    Lost Wages Are Compensable Damages

    If the injuries you sustain in an auto accident force you to miss work and you lose wages as a result, the amount of lost wages are compensable damages. Certainly, any insurance adjuster will require proof of both the injury and the lost wages, so it is essential to obtain the appropriate documentation from both your medical providers and your employer.

    Pain, Suffering and Punitive Damages

    If your auto negligence claim turns into a lawsuit, you may very well be entitled to compensation for your any pain and suffering caused by the accident. A judge or jury may also award punitive damages, if allowed. Punitive damages are money damages awarded with the sole purpose of punishing the offending driver for his or her negligence. Many jurisdictions have eradicated punitive damages. If your case is simply an insurance claim and not a formal lawsuit, pain, suffering and punitive damages are likely not available, although pain and suffering might be informally considered an aspect of your settlement if the total amount you are given is above and beyond all your economic losses.

    Distribution of Compensable Damages

    Depending upon the insurance company, posture of the claim (suit or no suit) and your desires, claims can usually either be paid out in a lump sum or in installments. A lump sum payout is a one-time payment intended to cover all past, present and future compensable damages. When calculating a lump sum payment amount, the injured party and the party writing the check often differ when it comes to the amount. Punitive damages, pain and suffering are commonly paid out in lump sums.

    Installment payments can take many forms. The most common in auto negligence cases is a pay-for-services arrangement whereby an insurance company is directly billed for your compensable damages. The insurance company then pays the providers of services and/or care directly.

    There are many forms of compensable damages available in auto insurance claims. Exactly which damages are compensable in your case depend on the facts of the case, the policy governing the claim, and the laws of your jurisdiction.

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