This is Clark Schoeder from Cerberus Subrogation Professionals, LLC ( www.cerberussubro.com ). We are a company that helps commercial trucking companies, owner/operators, and commercial auto insurance companies recover money that is owed to them by other insurance companies. We are writing a series of articles about trucking insurance issues. Last week, we discussed what you can do to protect yourself and your company when you are involved in an accident. What to Do When You Are In an Accident

This week, we are going to discuss “What does the insurance company owe you when you are in an accident?” The answer to that question depends on whether you are filing a 1st party or a 3rd party insurance claim. Let me explain the differences.

1st Party Claims

A 1st party insurance claim is a claim that you file with YOUR insurance company under your “collision” or “comprehensive” coverage. These coverages are a contract between you and your insurance company that states that the insurance company will pay to fix your vehicle regardless of which party caused the accident. Under this contract, the insurance company does not owe all of the damages that you suffered; they only owe certain damages that are stated in the policy.

Your Insurance will pay for:

1.) Your repairs or your ACV (actual cash value), which ever is cheaper. The ACV is the price that you can buy a replacement vehicle of similar make, model, and condition in the current market.

2.) Your towing fees

3.) Any storage fees your vehicle accrues at the storage facility

4.) Any out of pocket expenses you paid for temporary repairs

Your insurance company WILL NOT pay for:

1.) Your personal items that were lost or destroyed in the accident. This includes your CB, cell phone, computer, television, DVD player, clothes, appliances, etc.

2.) Your lost wages/downtime while you are waiting for your truck to be repaired

3.) Your company’s lost revenue while you are waiting for your truck to be repaired

4.) A hotel room while you wait for your vehicle to be repaired

5.) A plane ticket to get you home if your vehicle cannot be repaired

Advantages of filing a 1st party claim

1.) Your vehicle will most likely be repaired faster than a 3rd party claim due to the fact that a 3rd party claim will involve more investigation

2.) The faster repairs will get you back to work faster

3.) You can get your vehicle repaired in the event that the other party’s insurance denies liability

Disadvantages of filing a 1st party claim

1.) You need to have collision coverage in order to file this type of claim. If you do not have collision coverage or your coverage has lapsed, you cannot pursue this option to get your vehicle repaired. Example: If you have collision coverage on your tractor but not your trailer, you will not be able to file a claim to get your trailer fixed or replaced. Those damages will go unpaid.

2.) Your insurance company will not pay your damages in full. They will add up all of the covered damages and then subtract your deductible. That is the amount that they will pay you. For example, if you have $20,000.00 in damages and a $1,000.00 deductible, you will only receive $19,000.00.

3.) You don’t get to recover all of the money that is owed to you. You won’t get any of the money owed to you for your personal items, your lost wages, or out of pocket expenses that are not related to repairs.

4.) Your loss run will increase causing your insurance premiums to go up

5.) Your insurance company will take over the subrogation/recovery process but the insurance company cannot recover damages that they did not pay for. That means that the insurance company will not pursue recovery for your personal items, lost revenue, or downtime.

3rd Party Claims

A 3rd party insurance claim is a claim that you file against the at-fault party’s insurance company. This type of claim depends on which party is legally at-fault for the accident. If the other party was not at-fault for the loss, their insurance company will not pay for your repairs. The payment of these types of claims is determined by the principle of “indemnity.” “Indemnity” is a legal concept that basically means that the innocent victim in an accident should be returned to the same condition they were in before the accident. This means that you should be no worse off because you were involved in an accident.

Under the principle of indemnity, the at-fault party’s insurance company owes you

1.) All of your repairs or your ACV, which ever is cheaper

2.) All of your towing bills

3.) All of your storage fees

4.) All of your out-of-pocket expenses resulting from the accident

5.) All of your lost wages resulting from being unable to work

6.) All revenue lost by your company resulting from you being unable to work

7.) All of your personal items that were destroyed in the accident

8.) Any additional expenses/costs stemming from the accident

Advantages of filing a 3rd party claim

1.) You can recover your personal items

2.) You can recover your lost wages

3.) You can recover your company’s lost revenues

4.) You can recover all of your out of pocket expenses stemming from the accident

5.) You can avoid adding an accident to your loss run helping you keep your insurance premiums low

6.) You don’t have to pay your deductible out of pocket

Disadvantages of filing a 3rd party claim

  1. Due to the investigation involved, 3rd party claims typically take more time to resolve than a 1st party claim
  2. 3rd party claims require a bit more knowledge of the insurance industry and the claims process to get the full results
  3. Insurance companies will often try to tell claimants that they are not entitled to certain damages and then use various stall tactics to force the claimant to accept a reduced settlement. (These types of unfair practices are what inspired me to start Cerberus Subrogation Professionals, LLC and we have developed several strategies to deal with these problems and get you your money.

Conclusion

After reading this article, I hope that you take away the following points.

1.) Unless you can easily afford to replace your vehicles, you should be buying collision coverage for all of your tractors and trailers. It is a good safety net in case you cannot get the adverse party to accept liability and pay for your damages.

2.) Even though you have collision coverage, it is in your best interest to pursue a 3rd party claim first because you can recover more of your damages. Only resort to filing a 1st party claim when you have no other choice.

3.) 3rd Party Insurance Companies are going to tell you that you are not entitled to certain damages. That is not true. Cerberus Subrogation Professionals, LLC recovers the damages listed above all the time. The insurance company is trying to get you to take a reduced settlement. Do not fall for it.

4.) If you cannot get the insurance company to pay you everything you and your company are owed, Cerberus Subrogation Professionals, LLC can help. Our business is recovering money from insurance companies that do not want to pay. One of the ways we do this is through a process called arbitration. That topic will be covered in depth in our next article. To see how the Cerberus Advantage can improve your company’s profitability, click on our website link below or google Cerberus Subrogation Professionals, LLC.

Check back for our next article “What is Subrogation and how does it affect your profitability?” and please email our articles to all of your friends, family, and colleagues in the trucking industry.

Clark Schoeder is the President and CEO of Cerberus Subrogation Professionals, LLC. Cerberus Subrogation Professionals, LLC is subrogation firm that specializes in the commercial trucking sector. They have helped their clients recover millions of dollars in insurance claims and have developed several innovative strategies specifically designed for commercial auto subrogation and arbitration. Those strategies have achieved unparalleled results. If you are interested in applying the Cerberus Advantage to your subrogation and recovery processes, visit their website www.cerberussubro.com .