How Do Auto Insurance Companies Pay Claims?

Auto accidents can happen in a split second, shaking up drivers and passengers alike. The aftermath can also be traumatizing for drivers who aren't familiar with how to file a claim, what happens after the claim gets filed, or how long it will take to resolve.

For most people, transportation is a necessity. When your car is damaged, it's inconvenient and frustrating not to know how long it may take to resolve a claim. While each auto insurance company has a slightly different process for handling claims, the overall steps are largely the same. Therefore, knowing what to expect can alleviate much of your anxiety if you get into an auto accident.

What Is a Car Insurance Claim?

A car insurance claim is a report drivers file with their auto insurance provider after an auto accident. For instance, you may file a property damage claim if you were in a single-car accident and damaged someone’s fence. Alternatively, if your vehicle is damaged by a hailstorm, you might file a comprehensive claim. Car insurance policies only cover the types of losses specified in your unique policy. If your policy does not include comprehensive coverage, you would not be able to file a comprehensive coverage claim for this incident.

If you submit an eligible claim that is approved by your insurance company, you will be responsible to pay any deductible required by the policy before you receive financial compensation from your insurance company to cover any damage or injuries. If you aren’t sure what your policy does or does not cover, or what your policy deductible is, this information will typically be located on the declarations page of your insurance policy. Additionally, an insurance agent or claims adjuster can help you understand what your policy will or will not cover in the event of an accident.

Everyone’s coverage needs are going to look slightly different based on their individual circumstances. Try our 60-second coverage wizard to find the coverage that’s right for you!

First-Party vs. Third-Party Claims: What’s the Difference?

Either you or another person can file a claim with your auto insurer.

A first-party claim is when you file a claim with your auto insurance company for coverage under your own policy.

For example, let's say you hit a deer that damages your car, and you report it to your insurance company. You are making a claim for coverage under your policy.

A third-party claim occurs when someone else files a claim with your auto insurance company for coverage under your policy.

Let's say you collided with another vehicle, and you were taken from the scene by an ambulance due to injuries. You didn't report the accident immediately because you were physically unable, but the other driver reports the accident to your insurance company. This is an example of a third-party claim.

How to File a Claim After You’ve Been in an Accident

There are several things you should do immediately following an accident. The safety of everyone involved are obviously the top priority. Here are your other biggest to-dos at the scene:

Safety first! If emergency personnel are present, take their lead. If they are not, seek medical attention if necessary, and move yourself and your vehicle (if possible) out of harm's way.
Notify the police of the accident. Depending on the severity of the accident, you may choose to call 911 or a non-emergency line. Even if the police don't find it necessary to come to the scene, a police report can provide your insurance company with information that could help them process your claim faster.
Take pictures of the damage to any involved vehicles or objects at the scene, like a guardrail or fence. It’s a good idea to cover all your bases by taking photos from several angles.

Contact Your Insurance Company to Report the Accident

Depending on the extent of any resulting injuries you may have and/or damage to your vehicle, you may or may not be able to drive yourself home. If your vehicle cannot be driven, you can call your insurance company from the scene and they can often assist you in getting your vehicle towed.

After an accident, it's important to notify your insurance company as soon as possible. This will allow them to start the process of getting your vehicle back on the road and cover any other expenses you may face due to the accident.

If you're insured by Clearcover, you're in luck. Our claims process is among the fastest in the car insurance industry. With Clear Claims™, our machine learning instantly validates coverage and determines eligibility for expedited payment.

When you open your claim, through an insurance mobile app, online, or over the phone, your insurance company will go through a series of steps to process the claim. An auto insurance claims representative will gather information to determine who is at-fault or whether drivers share responsibility for fault.

Here are some of the more common things your insurance company might request:

A copy of the police report
Location, time of day, and weather conditions
Contact information for other drivers, injured passengers, and witnesses
Medical reports
Estimates of damage to vehicles (if already obtained)
Photos of damage to automobiles and the scene

It's important to respond to your claims representative’s questions as soon as possible and submit all documents promptly to expedite your claim. The claims representative will guide you through the claims process from this point on.

Document the Damage to Your Vehicle

After you've notified your insurance company of the accident, you'll likely need to take your vehicle to an auto body shop for repairs. Your insurance company may have a preferred list of vendors they work with, but you're usually free to choose your own as well.

Before entrusting your vehicle to a repair shop, document all of the damage yourself. Your photos and documentation will help the claims representative create an estimate of the work that needs to be done, as well as the approximate cost.

Wait for the Insurance Company to Approve or Deny the Claim

Claims representatives evaluate claims based on the facts and how those facts correspond with your insurance coverage. The representative may visit you personally, view the accident scene, or interview you by phone. Some tech-savvy companies like Clearcover can even process some claims through their app and involve little to no interaction with a claims representative.

The process of evaluating your claim is in place to determine whether your claim will be approved or denied.

If your claim is denied, the insurance adjuster will inform you of the reason. Possible reasons for insurance claim denials are:

The policy lapsed before the accident occurred.
False information was submitted, or fraud was involved.
The responsible driver was excluded from the policy.
The responsible driver does not meet the definition of a covered person and/or is excluded from coverage (an unlisted driver, for example).
The claim was less than the amount of your deductible.
Drivers or passengers failed to get timely medical attention.
The loss was not covered under the policy (for example, an object fell and broke the windshield and there was no comprehensive or auto glass coverage).
The driver was fleeing from law enforcement.

If the accident occurred during the effective dates of your policy and the cause is a covered loss under your policy, your claim will typically be approved.

Receive Your Claim Payout

Your insurance company should pay out once your claim is resolved. They may send you a payment directly. However, this is not always the case.

If you have a loan on your car and it is deemed a total loss, the payment will be made to your lender because they technically own the car until you pay it off. If the value of your car is more than the amount you owe, you would likely receive the difference once the loan has been satisfied.

Sometimes, your mechanic or auto body company will receive the payment from the insurance company instead of you. In some cases, your insurance company may make the payment out to you and the body shop or mechanic. The company that is repairing your car may hold the check until the repairs are completed to make sure they get paid for their work. Either way, the different payment methods are meant to ensure customer satisfaction while minimizing fraudulent use of funds from an insurance claim.

How Long Does the Claims Process Take?

For simple, uncomplicated claims, the claims process can be resolved within a few days or weeks. Alternatively, for more complex claims, it could take several months for the claim to be resolved.

Claims can take longer than expected for several different reasons:

The claim is highly complex.
Many individuals were involved in the accident.
There was a delay in filing the claim.
The insurance company didn't receive the requested documents in a timely manner.
There was an unexpected delay in meeting with the insurance adjuster (for example, you’re in an accident just before leaving town and you can’t connect with the adjuster until you return).

Frequently Asked Questions about Car Insurance Claims Payouts

The following section answers the most commonly asked questions about how companies pay claims for auto insurance.

Who gets the claims check if I’m at-fault?

The insurance company will either issue payment to you, a mechanic or body shop, or a lienholder or leaseholder. Depending on the circumstances, the company may issue payment to you and a lienholder, leaseholder, mechanic, or body shop. In that case, both parties must endorse the check.

How does my deductible factor into my claim?

Whenever you are filing an insurance claim, you must first pay any required deductible. A deductible is an amount you must pay out of pocket before your insurance company will pay for the damages to your car. The deductible amount will be listed on the declarations page of your policy.

If my car is leased, will I receive a payout from my insurance company?

If you lease a car, you could get a check that's made out to you and the leaseholder, which can hold up claims payments. In this case, you may have to go to the bank or mail it in to have it endorsed. You may also have to get proof from a dealership that repairs have been made satisfactorily. Local banks may require you to bring the car in to examine the repairs.

At Clearcover, we like to keep things simple. If you lease your vehicle, we will usually issue payment to the owner of the vehicle and the licensed body shop of your choice. Issuing payment this way eliminates the need to involve the lienholder, while still guaranteeing the vehicle is repaired.

What if my car is a total loss?

If your car is deemed a total loss after an accident, the check always goes to the vehicle owner, whether that is you, the lienholder, the leaseholder, or some combination. In most cases, your car will be salvaged. Once any existing auto loan has been satisfied, you can take any funds remaining from the claim payout to use toward the purchase of another vehicle.

Can I use the car insurance claims check to buy a different vehicle?

You may be able to keep your unrepaired car and purchase a new vehicle. However, the insurance company will usually deduct the salvage value of the damaged car from the final payment and give you the rest.

If the repair costs less than estimated and you pocket the rest, you will not be able to file a claim for the same damages again, and to do so would be considered fraud.

Drivers who take part in fraud may be subject to a misdemeanor conviction resulting in fines or probation. If a court determines you have committed a felony, it could result in significant fines or jail time.

Get Coverage You Can Count On From Clearcover

Being involved in an accident is scary, and the last thing you want to worry about is being stuck without transportation. Luckily, claims representatives are prepared to help you and will walk you through the claims process step-by-step.

When you're insured by Clearcover, we make your claims process as smooth as possible. Our machine learning technology allows us to provide some of the fastest payouts in car insurance. Plus, our app is super easy to use and allows you to file and track claims at any time, in just a few taps.

Opening a claim can be as simple as uploading photos of your vehicle in the Clearcover app to obtain a virtual estimate. If your claim is approved, the initial payment is usually sent to you directly.* It’s really that easy. And if you have any questions throughout the process, help is always just a tap away! We’ve always got your back.

Take control of your coverage and see what you can save with Clearcover. Get your free, no-obligation quote today.

*Payment thresholds can vary by state. Individual payouts may vary.