When a car accident occurs, insurance companies use estimate to determine how much compensation the person should receive. These are estimates based on personal information like where you live and your driving history.
Insurance companies may also generate an estimate after reviewing any submitted claims or accidents. They do it to find out what the average cost of a claim might be. However, these estimates aren’t always accurate, so it’s important for you to know about them and how they work.
In short, here’s what your estimate means:
- Your estimate is just that; an estimation of how much damage you could cause if you were in a car accident without any new information about anything that happened before or after the accident (apart from your own driving history).
- In the estimate, your insurance company uses:
(1) Your location and driving history to calculate the accident probability; and then predict how much you will pay for damages.
(2) Estimates of how much damage you could do to others by looking at injury statistics and crash data.
There are many calculations that they do based on your personal information used by insurance companies to calculate estimates.
Some of these calculations include: probability of an accident occurring, amount of damage caused by a crash, severity of injuries (degree), number of people injured (severity), age, gender, occupation and risk factors that contribute to accidents.
It is very important to find out, which factors that affect your policy will increase or decrease the amount you will pay at the end of the year.
Basis of Estimate Calculation
It is important to know that insurance companies use information gathered from both sides. You have requirement to give information regarding your driving behavior and anything that they can find from other people.
Therefore, their estimate can be more accurate. It is important for you to understand what information you should give and the effect it has on your claim.
Even though your insurance company does not notify you in writing about an estimate, it is still an obligation for you to know about them as they influence how much you pay each month after a car accident occurs.
When your insurance company generates an estimate, they take into consideration the severity of your injuries and the likelihood of causing them. The lower the amount you have to pay, the more chance they have of paying more on your policy.
Based on this information, a policy holder will know what will be paid by them after an accident occurs.
In most states, insurance companies are not legally obligated to pay a policy holder 100% of their estimated claim.
But it is still encouraged that they do so as it would help avoid disputes regarding how much damage was caused and how much should be paid since there is nothing in writing from the insurance company.
In other cases, the insurance company requires to pay a policy holder 100% of their estimated claim after paying out a loss adjustor. This can also help avoid disputes regarding how much damage was caused and how much should be paid. It’s because there is nothing in writing from the insurance company.
Determining Factors of your Amount
The type of estimate that your insurance company uses depends on the type of car you drive and the likelihood of causing an accident.
Many factors like the age of your car, past accidents and driving behavior help determine whether you will be given an increased or decreased amount when your insurance company gives you this estimate.
After you report your claim to the insurance company, it is up to them to confirm all of the information you have given. And that any damage has happened before or after an accident occurred.
In some cases, you may already have requirements by law to give your insurance company more information when they issue an estimate.
A car’s age is also an important factor. It is because older cars are less likely to be involved in accidents and cause more minor damages than newer models.
If a person owns an older car and they were involved in an accident, their insurance company may give them a lower estimate than someone who owns a newer model.
A driver that uses their car less will get a lower estimate from the insurance company than someone who drives their car more often.
Drivers with past accidents on their driving history will get a higher estimate. It is because they are more likely to cause serious damage if they were to be in another accident.
If you pay your insurance company every month, your insurance premiums will go up based on the amount that you paid out of pocket each year after an accident occurred. Your estimates usually increase when your premiums go up.
It can be difficult to get a clear picture on exactly how much your insurance company will give you in a personal injury claim. The estimate you receive from your insurance company will have influence of different factors. Such factors include the type of car you drive, how often you drive and the location where you live.
When an insurance company issues an estimate, they will include all of their assumptions; along with any other information that may affect it.
What do you need to get a car insurance cost estimate?
- name, address and phone number
- policy number
- policy type (standard or combination)
- driver’s license number and date of birth
- description of the car and any special features.
Including this information, you can also list the specific details of what happened when you were involved in an accident.
As discussed before, the model year of your car will also play a factor into how much your insurance company estimates it would cost to repair the damage that you caused in an accident.
Why do you need to get a car insurance cost estimate?
In an auto accident, most insurance companies require that a policy holder has to pay 50% of the final settlement amount. If a policy holder only pays $1,000 in medical bills and a lawsuit is not filed, the insurance company will only pay $500.
Insurance companies require that there is a minimum amount to be paid even if they do not have to pay 50% of the claim. It is because they want to protect their money from going into the wrong hands.
That’s why it’s important for policy holders to get car insurance cost estimate as well as how much their car will be paid by their insurance company after an accident happens.
Other benefits of an estimate include showing insurance companies that you are serious about settling the claim based on the information you give them. When you have a car accident, it is very rare for one party to be totally responsible for the accident.
When this happens, a third party may get involved in the lawsuit. And if they win, they will get part or all of the money from your car insurance cost estimate. You cannot do much to avoid this and sometimes it is difficult to tell which party will be considered at fault. So it is advisable that you have an estimate to go by.
Generally speaking, auto insurance is a necessary evil. However, you should purchase it to help insure the safety of yourself and others on the road. Some say car insurance is more of a necessary evil than a necessity. But the penalties tend to outweigh this because most people believe they pay too much for car insurance.
In such, there are companies offering cheap auto insurance. Such auto insurance provide less coverage at cheaper prices with higher deductibles. The question then becomes whether you want to pay less money but have to deal with higher deductibles; or if you’re willing to pay more to have lower deductibles but still not get as good of coverage.
FAQs about car insurance estimate:
- What is the purpose of car insurance estimate?
The purpose of this is to give you information on how much the insurance company will pay you out are involved in a car accident. If they find out that your estimate is too low, they can raise it up. Whereas, if they find out that your estimate was too high, they lower it down to a more reasonable amount.
- How can I get a car insurance estimate?
To get an estimate from an insurance company, you need to contact them and give them all of your information. They will ask for things like your age, gender and the type of your car.
- What is the difference between car insurance estimate and a bill?
The insurance quote given to you by an insurance company is called an estimate. It is also known as a “premium”. And it is usually calculated based on the coverage and limits that you have on your policy. They then provide this information to you at the time of your renewal. Insurance companies provide estimates to their clients. They do because they want to provide the best possible deal, whether you want that or not.
- Why do I need different types of auto insurance?
There are different types of auto coverage because people have different needs when it comes to their car insurance policy.