Auto Insurance – Hot Topics and Frequently Asked Questions

The auto insurance industry may sometimes seem like a dark enchanted forest which you’re forced to walk into and slowly learn your way around. Many people have had experiences, both good and bad, regarding coverage, fault determination and the rules applied in each accident scenario.

I have recently done an AMA (Ask Me Anything) on and thought I’d address the most common questions from readers like yourself!

  •  What happens when I lend my car?

The golden rule is when you lend your car you also lend your insurance. Think twice, when the driver is in an accident the claim falls under your insurance policy. Should the driver, driving your car, be at fault for the accident, the fault would stay with your vehicle on your policy and will potentially impact your policy premium. Some insurance companies may be able to transfer the shutterstock_26687731fault to the driver’s insurance policy (as long as the driver is insured and has a vehicle), however many insurance companies do not do this. When a car is in an accident, that car’s insurance company must react by filing a claim.

  • How is fault determined in an accident?

Fault is usually determined with the fault determination rules available in your state or province. In Ontario, Canada for example, fault is determined with Fault Determination Rules (FDR) of Ontario.

These rules describe who is at fault in each accident scenario. For example, when a car is rear ended, the one doing the rear ending is always 100% at fault. There are sometimes exceptions, for example if there was an emergency situation which caused the first car to suddenly brake and this caused the second car to rear end the first car. In this unusual case the fault may be split between the car involved.

  •  Who determines the fault in an accident?

Many people think the police determine the fault in an accident, however it is the insurance company, more specifically your insurance adjuster. The police often give out tickets/charges in the accident, which further help the insurance adjuster make the final fault decision. The adjuster normally goes by the fault determination rules available in your state or province and these rules are usually set in stone.

Read More: Auto Insurance: Advice From An Auto Claims Adjuster. 

  • What kind of information should I obtain if I am in an accident?

It’s important to obtain the other driver’s insurance information including the insurance company name and policy number. Your adjuster will need this information to contact the other insurance company. The reason the two insurance companies will need to speak is to exchange/share information, obtain any missing details and agree on liability, which means agreeing on who is at fault for the accident. Taking photos from the scene can also be very useful to the adjuster, as they can review each car’s position after the collision.

  • Why or how can my claim be denied?

There are many reasons your auto insurance claim may be denied, and no it is not because the insurance company is a big, bad bully. The most common reasons for a denial include: criminal charges such as drinking and driving, collision due to lack of maintenance on the car such as ignoring oil changes, fraudulent activity such as posing as someone else or being dishonest and many more reasons. Of course the claim is first investigated prior to confirming a denial.

Read More What I learned from a mischievous friend and how a scammer’s mind will attract failure. 

  • If my car is a total loss (non-repairable) due to an accident, how does the insurance company come up with the settlement value?

Some people are just better off using the subway!

Usually the insurance company would order a valuation report from a third party company. The valuation report would include current market comparable cars with the same year, make and model, similar mileage and within the state or province. The third party company would aim to provide a most current market value for your car based on the comparables reviewed. The goal is to provide a current market value for your current car. If your insurance police has a cost replacement endorsement then you would be compensated with the current year’s value for your vehicle.

These are just some of the questions many ask regarding the auto insurance world. It can be confusing and some states and provinces may differ on rules and legislation, however you can always submit your questions to to be included in future posts!

Have other questions to ask? Comment below and I will reply!

Category: Back To Basics - FAQsInsurance


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Article by: Anna Suzdenkova

Employed in the financial sector for over 7 years. Held various roles including financial advisor, auto claims adjuster and manager of customer service. Attained an accounting degree with Honours. Mutual fund licensed. Passionate about helping people. Forever an optimist, positivity is the key to a happy life. Enjoys helping people decipher the banking world and use it to their advantage!