Automobile Insurance FAQs

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Q. I was involved in an automobile accident, and the other party was at fault. My company does not want to subrogate (recover), the amounts due on my deductible or loss of use. What can I do?

A. If the company does not plan to pursue subrogation, you can usually file a claim in Small Claims Court to recover the amounts owed, or you may try to retrieve your deductible by calling the company of the at-fault party. You may make a claim against the at-fault party's insurance policy.

Q. I was in an accident caused by a state owned vehicle. How can I resolve my claim?

A. You should contact the

Department of Finance
Division of Risk Management
(334)242-5616
P. O. Box 303250
Montgomery, AL 36130-3250,

which handles the insurance claims for all state agencies.

Q. My producer quoted me one price for my automobile insurance, but when I received the policy, the premiums were higher. What can I do?

Cancellation of Automobile Liability Insurance
Section 27-23-21. Grounds for policy cancellation

A. You have three options:

• You may pay the increase.
• You may request cancellation, but the company is entitled to earned premium.
• Do not pay, and the company will cancel your policy for nonpayment of premium.

You should first find out why there was a discrepancy in the quote. Sometimes information will be revealed to the company on your Motor Vehicle Record (MVR) that will require the originally quoted premiums to be changed by the company.

The producer should be able to give you a satisfactory explanation for the increase in your premium. If you feel that your premium was intentionally quoted low in order to obtain your business, you should file a Request for Assistance with the Department.

Q. How much notice does a company have to give for cancellation of an auto policy?

A. A company must give 10 days notice for nonpayment of premium. For any other reason, 20 days.

Q. My car is financed through a bank. I could not afford to pay comprehensive and collision coverage. The bank secured coverage on my vehicle without my knowledge. Can the bank do this?

A. Yes, a lender has the right to require a borrower to protect the lender's interest in the collateral. A collateralized loan agreement typically includes a provision requiring the borrower to keep the collateral insured, and allowing the lending institution to secure coverage and charge for it; if the borrower fails to obtain the required insurance. These charges are subject to interest, and the premiums are often much higher than if you purchased insurance yourself.

Q. The company wants to repair my car with non-factory parts. Can they do this?

A. Yes, as long as the repairs restore the vehicle to its value which existed before the loss. The parts used do not necessarily have to be original equipment manufacturer (OEM) parts, but should be of like kind and quality as the parts being replaced. Ask your company about what guarantees they will give you on these parts.

Q. I was in an automobile accident. The other party was at fault. What should I do?

A. You have two options: You may file a claim with the at-fault party's insurance company if they are insured, or if you have collision insurance on your vehicle, you can have your own insurance company pay for the damages, and they will usually subrogate against the at-fault party to recover their loss.

Q. My car has been totaled. The company has made payment, but the amount paid will not cover what I still owe the financial institution. What should I do?

A. Insurance companies are obligated to pay in accordance with their policy provisions, which is usually the actual cash value of the vehicle at the time of the loss. This amount does not always cover the loan balance because you may owe more than the vehicle is actually worth. The borrower of the loan is responsible for paying the difference to the financial institution.

Q. I was involved in an automobile accident, and my car was totaled. My company is not offering me a fair settlement on my claim. What can I do?

A. Check the "blue book" for the actual cash value (ACV) of your car, check out the classified advertisements in local newspapers, and check with the car dealerships in your area. Look for the prices of cars similar to yours, and submit them to your company. If the prices are higher than the company's offer and if they still fail to offer you more money, you may invoke the appraisal clause in your policy, request mediation, or consult an attorney to see if legal action may be taken.

Q. I was involved in a car accident, and was not at fault. The officer gave a ticket to the other individual. I have contacted the other party's insurance company, and they refuse to honor my claim because their insured has not given them notice of the accident. Doesn't the company have an obligation to pay my claim, even if their insured does not report the accident?

A. The company is obligated to pay claims for which the insured is legally liable, because of an accident. The fact that the insured did not report the accident appears to be irrelevant, as long as sufficient documentation substantiating the claim can be provided to the company.

Q. When is a vehicle considered a total loss?

A. There is a law that indicates that when the damage to the vehicle is greater than 75% of value it can be considered a total loss.  Code of Alabama 32-8-87(d)