How do insurance claims work in auto accidents?

After an accident, file a police report. Your auto insurer will decide if you are at fault. Did you know accident claims pay out on average between $14,000 and $28,000?

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 16, 2021

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Here's what you need to know...

  • When an insurance claim is made, liability investigations determine who is at fault
  • Various types of evidence are used to determine fault
  • Confirmation of coverage is necessary for a claim to proceed

Motor vehicle accidents occur frequently, and many people have already found themselves involved in insurance claims related to these accidents. Unfortunately, many others will also find themselves dealing with insurance claims.

Being insured with a company that is known for handling claims quickly and equitably and having an understanding of how claims work will make the experience as painless as possible.

Accidents can result in damage to one vehicle, to multiple vehicles, to property other than vehicles, and even to people.

When accidents occur, the insurance carrier will typically be represented by members of the claims adjuster staff. The claims personnel involved in handling the claim will conduct an investigation that will address liability, coverage, and damages.

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Investigating Liability

Sometimes, liability investigations are simple. For example, if a driver rear-ends another vehicle, the party that runs into the back of the other car is almost always considered to be the liable party.

However, if multiple vehicles are involved, determining which party is at fault may be more involved, and accidents involving injury or death require more investigation as well.

There are many tools the claims department can use to investigate accidents. Police reports are often a source of addresses and phone numbers. Sometimes officers will indicate one party as the at-fault party.

It’s important to remember the officer’s determination does not end an investigation because the officer is often basing his remarks on what he has been told by the parties involved and not on a full, complete investigation.

Investigations may also include taking recorded statements from those involved as well as any witnesses. Some people are reluctant to provide statements.

Without the involved parties’ version of what occurred, an investigation can become more difficult and drawn out.

You should also know that if you retain an attorney, the insurance company must communicate with you through that attorney. You will get your information from your attorney, not directly from the insurance company.

Photographs of the scene and the property involved may be taken and a diagram drawn. In claims involving great bodily injury or death, an accident reconstruction team may be called in to document further exactly what occurred.

Ideally, multiple investigations will yield the same results. However, this does not always happen. In a case of disputed liability and in the absence of any evidence to support the other party’s version, most insurance companies will find for their client.

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Investigating Coverage

With the investigation complete, coverage can be addressed. Policies are written with different coverages depending on coverages mandated by law as well as by optional coverages chosen by the policyholder.

If you’re responsible for damages and injury to other parties, the insurer will make sure that your policy is in good standing, confirm that you have liability insurance, and determine the limits of your coverage.

Likewise, if you are in an accident and the other person is at fault, their company will make sure that coverage is available for your damages.

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Investigating Damages

Once liability has been determined and coverage confirmed, the damages will need to be calculated. Damages to vehicles can be handled using several different methods that include:

  • Estimates
  • Appraisals
  • Direct Repair Shops

Appraising Damages

Sometimes, if vehicle damages are minimal, the company intending to pay for the damages will request that the owner obtains two or three estimates.

Payment can be made based on the lower of the estimates provided the estimates reflect the same repairs, and there is not a huge difference in the pricing.

It is also not uncommon for estimates to be sent to an estimate review vendor. This vendor will obtain an agreed price with one of the body shops.

The damaged party can use any body shop as long as the body shop agrees to complete the work for the agreed price as determined by the estimate review company.

Appraisers are also used to determine vehicular damages. Appraisers have an extensive knowledge of vehicle repairs,  use special software in conjunction, and a vehicle inspection to write an estimate.

They are also able to write supplemental estimates should additional damage be found after the vehicle is torn down.

Total Loss

If a vehicle is a total loss, appraisers can determine the actual cash value of the vehicle, which will include additions for upgrades to the vehicle as well as deductions for prior damage or wear and tear that is greater than would be expected for a particular vehicle.

Some insurance carriers have direct repair shops. These body shops have an agreement with various insurance carriers. On-site personnel write estimates at the shop and coordinate with insurance carriers concerning repairs to be done and the cost of the repairs.

The advantage to direct repair shops is these facilities result in one-stop for the vehicle owner since both the body shop and the insurance company are present on site.

Some repair businesses even have a car rental agency on-site to expedite the pickup and dropoff of substitution transportation.

Property Damage

If damage occurs to physical property such as buildings, estimates may be requested. If the damage is severe, some insurers will send out a Property Specialist or Large Loss Adjuster to determine the damages and assist in coordinating the repairs.

Bodily Injury

Finally, if a bodily injury investigation is warranted, an adjuster will evaluate medical records, lost wages, expert reports, impairments, future earning capacity and a host of other items that can affect the value of a bodily injury claim before attempting to resolve the claim with the injured party.

Resolving an insurance claim is a process. Liability must be determined, so the party responsible for the damages is the party paying for the damages.

Coverage must be verified, so the parties are paid what they are owed. Finally, damages must be determined, so claims are fully resolved.

As a vehicle owner or occupant, you’ll want to be sure your claim gets resolved if you’re in an accident.

Carefully comparing the claims handling reputations of insurers and having an understanding of the claims process will put you in a better position to make sure your claims will be resolved and you’ll be back on the road as soon as possible.

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