When working with an insurance company to settle your claim, you'll be inundated with a lot of legalese and industry terms. It's important to know the definition of these terms, because misunderstanding their meaning may lead to you settling for less than you deserve. Here's what you need to know about two common industry terms you may hear in your motorcycle accident case.
Actual Cash Value
If the damage to your motorcycle is bad enough, sometimes the insurance company will declare the vehicle to be a total loss. Typically, this occurs when the cost of repairing the vehicle exceeds its market value. Insurance companies want to paying out as little as possible on accident claims, so they will typically take the cheaper route, write off the vehicle, and offer a settlement amount that encompasses how much it will cost to replace the motorcycle.
Actual cash value is the official term for the amount of money the vehicle was worth at the time of the accident. The insurance adjuster comes up with this number based on the motorcycle's make, model, age, and the condition it was in prior to the accident. The adjuster will also usually research what similar motorcycles are selling for and offer you an amount in that range.
It's important to ask a lot of questions about how the adjuster arrived at the actual cash value. As noted previously, insurance companies try to pay as little as possible. Therefore, the adjuster may evaluate your vehicle's value on the low side. Be certain the person takes any customizations and special features your vehicle had into consideration.
Another term you hear a lot is comparative and/or contributory negligence. You should immediately become concerned when the adjuster starts throwing these terms around, because it may mean the person is about to cut off a chunk of your settlement amount.
Comparative and contributory negligence are terms used to assign liability for the accident to multiple parties and determine how much money a person has to pay (or will receive) based on the percentage of liability assigned to him or her.
Comparative negligence laws reduce plaintiffs' awards by the amount of liability assigned to them. For instance, if the insurance provider found you were 30 percent liable for the motorcycle accident, you would be offered a settlement amount minus 30 percent (e.g. $7,000 rather than $10,000 you're actually owed).
Contributory negligence laws determine whether you can collect anything at all. If you are found to have contributed to the accident over a certain percentage (usually 50 percent but can be as little as 1 percent), you will be barred from collecting any compensation for your damages.
As noted before, if the adjuster starts throwing either of these terms around, it may mean he or she may be trying to attach liability for the accident to you. It's important to fight these liability claims if you want to receive all you're owed.
For explanations of other terms you may hear while settling your case or help with litigating a motorcycle accident, contact an attorney.