What is a Third Party Claim?
Simply stated, the other party was at fault for the accident, making this a third party claim. This removes the limitations set forth by your insurance company on this claim. When you are the named insured and are responsible for an accident, you are bound by the terms of the insurance contract. This contract will limit your insurance company’s liability and will define what they will or won’t pay.
The Terms of the Policy
A prime example of this concerns your rental car allowance. You choose rental car coverage when you initially take out your policy. You pick some daily rate of coverage which the insurance company will pay for a maximum of 30 day. This will allow you to rent a vehicle at your nearest car rental agency to “get you around” while your car is being repaired. This is all well and good when you understand that you were responsible for the accident and you need transportation while your car gets fixed. It makes little difference what kind of vehicle your primary car is, you have signed a contract stating how much the insurance will pay for a replacement vehicle. Done deal!
Another example, which is far more subtle, is the elimination of any responsibility for your company to pay any diminution of value of your vehicle caused by an accident. In fact, most people don’t even know what this loss is. Insurance companies won’t talk about it, agents don’t have a clue about it, and the body shops are scared to death that any diminution of value issues will fall back on them. This is perhaps the insurance industry’s most guarded secret. None will admit that Diminished Value even exits! However, it is written into your policy that they won’t pay a cent for it.
There are now several states which are forcing the insurance companies to recognize Diminished Value and pay these legitimate claims to their insured.
The Accident Wasn’t my Fault!
Since the accident wasn’t your fault and you are being “made whole” by the other party, the contractual problem caused by your insurance policy no longer exists. There is no contract between you and the “at fault” driver’s insurance company. You are now free to recover your loss. For more helpful information, download our FREE e-Book: R2A’s Guide to Loss Recovery.
What Losses Can I Now Recover?
When you are a 3rd party (claimant) in an action, there is no contract to preclude you from recovering Diminished Value and Loss of Usage claims. This is particularly of interest when you have a new or nearly new vehicle or high end car.
Concerning Loss of Use, most insurance companies will only pay a maximum of $50 to $65 per day toward your rental car. If you are a claimant driving a BMW, Mercedes, Audi, Porsche…this won’t begin to rent an exact replacement vehicle to which you are entitled. To rent these types of high end vehicles will cost you several hundred dollars per day in some cases. You are owed the rental costs for your exact vehicle for the full period of time yours is in the shop, even if you don’t need a rental car!
Diminished Value just makes plain sense! No one in their right mind would be willing to pay as much for your previously wrecked and repaired vehicle when compared to one which has never been in an accident. You might not realize this loss now; but like death and taxes, sooner or later it will catch up to you!
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