Whose Car Insurance Should Pay?

March 9, 2014

Accidents – fender-benders or worse – are unfortunate occurrences that nevertheless still need to be dealt with. When accidents do occur, the costs involved in vehicle repair, replacement, injuries and lost wages may be covered by your auto insurance policy. But who should come up with the deductible?

The answer depends on who is at-fault.  Drivers found to be at-fault in an accident are responsible for the total cost of damages, which may be covered by collision coverage on their insurance policy. They will also pay for the cost of the deductible.

The party not at-fault, if they make a first-party claim under their own insurance policy, will have to pay the deductible. Their insurance company may subrogate--go after the at-fault person’s insurance company--to recoup the monies they pay out on your claim. They may also get back the cost of your deductible. The exception is if you have broad-form collision, in which case you will not have to pay for the deductible when you are not at-fault in an accident.

If the party not at-fault doesn’t want to go this route, they can make a claim against the other party’s insurance company and not have to pay the deductible.

Car crash accident

Car crash accident

Enlarge Photo

How is at-fault determined?

Even in states that with no-fault insurance regulations, accident fault determines who pays for vehicle damages in an accident. No-fault insurance laws only apply to expenses for injuries, physical rehab, and wages lost due to an accident.

Each state determines fault differently. Some states require the at-fault driver to pay for vehicle damages based upon a percentage of fault. Other states take an all-or-nothing approach to fault. In that event, the at-fault driver pays the full cost of vehicle damages.

What if someone else is driving your vehicle?

Coverage in this case depends on permission. If you give permission to that person to drive your vehicle, your insurance policy will most likely cover damages in an accident. As to who pays the deductible, that’s something to be worked out between you as the vehicle owner and the person you allowed to operate the vehicle.

It is ultimately your responsibility to pay the deductible, whether or not you get it back from the driver.

Quick decision – who to call

If you know you are not at fault in the accident, file a claim with the other driver’s insurance company instead of calling and making a claim on your own policy. But fault is sometimes hard to determine.

The best course of action is to get all the particulars of the other driver’s insurance policy, names, addresses of driver, passengers, any witnesses to the accident. Give your insurance information to the other driver as well. Call the police and have an accident report filed. In some states, even if the damage is minor, failure to notify the police of an accident could get you in trouble. What’s in the police report may have a bearing on the extent to which either driver is held to be at-fault.

MORE: See Car Insurance: Guide To Understanding Rates and Car Insurance Guide: What To Cover, What To Save


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