HOW DOES IT WORK?
Pennsylvania requires at least $5,000 of property damage coverage on your auto insurance policy for property damage to another driver's vehicle for an accident in which you are at fault. You can elect to maintain a higher amount of coverage.
Property Damage Coverage: Property damage is only available against the other driver's policy and is based upon fault. In other words, you do not have property damage for yourself on your own policy; it is only there to reimburse someone else if you cause damage, much like liability limits for personal injuries. If someone causes you damage, you would make a claim against their property damage coverage, not against your own, as your own is not available to you as a first party benefit. (You can have collision coverage and make a claim against that coverage, which is discussed below.) The claim can be made for the fair market value of the vehicle up to the maximum of the coverage chosen by the insured driver.
Collision and Comprehensive Coverage: These optional coverages offer you additional protection against different damage. Collision coverage applies to damage caused by an auto accident, minus your deductible. Comprehensive coverage applies to damage caused by other incidents such as theft or falling branches, minus a deductible.
MAKING THE CLAIM If your car has been damaged in an auto accident caused by another driver, the easiest approach is to make the claim directly against their auto policy if the insurance company is accepting 100% liability. Then it is just a matter of negotiating the fair market value of the vehicle.
If, on the other hand, there is a disagreement over liability, sometimes it is best to make the claim against your own policy, IF you have collision coverage. Then your company pays you for the damge, minus your deductible. What then happens is that your insurance company makes a claim against the policy of the other driver which is resolved by way of an intercompany arbitration, where it is decided what percentage of negligence on the part of each driver caused the accident. If you were 0% liabile then you would get the deductible returned to you at that time. If it is found that you were partly at fault, your insurance company does have the right to refund your deductible at a prorated amount.
The "made whole" doctrine "requires that an insured recover the full amount of his losses before his insurer may demand reimbursement for any payments previously made to the insured under an insurance policy." Harnick, 2009 U.S. Dist. LEXIS 43126 at *9. Jones v. Nationwide , 2010 PA Super 90 (2008) http://www.pacourts.us/OpPosting/Superior/out/a05017_10.pdf
Property damage is usually resolved without litigation, even where there are personal injuries for which a claim is later made by way of a lawsuit. Additional damages such as rental car expenses and towing/storage costs are covered immediately if the other driver has this coverage or under your own policy.
MEASURING PROPERTY DAMAGE In PA, the general rule is that the insurance carrier or the defendant need only pay the cost of repair or the cost of replacement value on the vehicle, whichever is less. It is general wisdom that when the repair cost exceeds 80% of the value of the car, it will be totaled. The most common method to value the car is the "blue book" and other online resources below:
Sometimes you can keep the totaled vehicle by agreement with the adjuster. They may want to pay less, which represents the fair salvage value of the car. However, you may want the car because you know someone who can repair it for use.Some states require a certificate to show that a vehicle has been previously totaled.
People are often confronted with the situation that they still owe more on the car loan than what is being paid out as the fair market value of the car. The best way to insure against this is to purchase gap coverage when you buy the car. Gap coverage would pay the difference between the outstanding balance on the loan and the fair market value at the time of accident.
Once the damage on a vehicle has been assessed and a market value has been established, the PIP carrier will want to settle quickly to cut their costs for storage of the vehicle.
CAR IS TOTALED: The standard policy will be a set amount of money per day for "up to 30 days of use." Once a settlement has been reached for property damage, the rule of thumb is to allow use of a rental car for 3 to 4 days after settlement. This is a bit flexible and may depend on the individual adjuster and circumstances. However, the fact that a policy states that a rental car will be covered for up to 30 days does not mean that the full 30 days will always be allowed.
CAR IS REPAIRED: The defendant is responsible for reasonable rental while Plaintiff has the damaged vehicle repaired. Sometimes, you can negotiate payment for rental up front with the adjuster. Sometimes, they will attempt to limit the time period. If you cannot get full coverage, you may have to cover the cost yourself and claim as damages later the amount you had to put out for rental. If you have your own rental provision in your first party coverage, it may be better to use that and then let your carrier go to the defendant for subrogation.