Walk through the steps of a successful Hawaii auto accident claim, from filing the claim to negotiating a settlement.

Hawaii is a “no-fault” state, meaning accident victims must first file a claim with their own Personal Injury Protection (PIP) coverage. However, Hawaii provides an exception to the no-fault rule for serious injuries.

Serious injuries cross the no-fault threshold, allowing the injured victim to file a claim against the at-fault driver’s insurance company.

You might decide to handle a minor PIP claim directly with your insurance company. Claims that are serious enough to cross the no-fault threshold are best handled by an attorney.

1. File a Car Accident Insurance Claim

Because Hawaii is a no-fault insurance state, you’ll likely have to deal with two insurance companies. Injury claims are first made under the Personal Injury Protection (PIP) coverage of your own policy, and vehicle damage claims are filed with the at-fault driver’s insurance company.

Serious or disabling injuries qualify to cross the no-fault threshold, meaning you can file a claim against the at-fault driver’s auto liability coverage.

Notify the Insurance Companies

Notify both insurance companies of the accident and your intent to file a claim as soon as possible after the accident. You are only giving the insurers a heads-up about the crash, and letting them know you will be seeking compensation after you’ve recovered from your injuries.

Big-name insurance companies sometimes insure both drivers involved in an accident. Because claims are handled at the policy level, you will need to make separate claims against your policy and the at-fault driver’s policy.

Expect a Reservation of Rights Letter

You may receive a “reservation of rights” letter from one or both insurance companies. The letter will acknowledge your claim and say the company reserves the right to deny the claim.

Don’t be concerned about the reservation of rights letter. Most insurers automatically send a reservation letter out for every new claim, basically to say that payment is not guaranteed.

Look Out for Unfair Dealing

Under Hawaii Unfair Claims Practices laws, insurance companies are bound to conduct a timely investigation into your claim, and pay fair compensation once liability is clear and proof of damages is obtained.

Keep track of the claim numbers assigned to each claim, and the name and contact information if an adjuster is also assigned to each claim. Injury and property damage claims are usually handled separately, even if both claims go to the same insurer.

Hawaii Minimum Auto Insurance Limits

Hawaii drivers are required to carry auto insurance coverage with liability limits of no less than $20,000 per person and $40,000 per accident for bodily injury, and $10,000 for property damage.

Consult an attorney if you’ve suffered serious injuries in a car accident. The attorney will help locate all the funds that may be available to cover your damages.

Policyholders in Hawaii must be offered the opportunity to purchase uninsured motorist (UM) and underinsured motorist (UIM) coverage in an amount equal to their liability limits. If you are badly injured, the at-fault driver’s liability limits may not be enough to cover your damages. Your attorney will put your insurance company on notice of a potential UIM claim.

2. Beware of Recorded Statements

Most attorneys advise against giving a recorded statement to the at-fault party’s insurance company unless you have an attorney present. Adjusters are trained to ask leading questions and manipulate claimants into saying things that can hurt their claim.

You are never obligated to give the at-fault driver’s insurance company a recorded statement.

It gets stickier when your own insurance company asks for a recorded statement. If you file a claim against your own auto policy, you are contractually obligated to cooperate with your insurance company’s investigation. That often includes giving a recorded statement.

Most auto policies have a cooperation clause that looks something like this:

“Insured (you) agrees to notify the insurer (your insurance company) of any accidents and thereafter comply with all information, assistance, and cooperation which the insurer reasonably requests, and agrees that in the event of a claim the insurer and the insured will do nothing that shall prejudice the insurer’s position…”

If you are only asking to get a few medical bills paid under PIP, you may not need a lawyer. If you decide to give a statement on your own, plan ahead and don’t try to answer questions when you’re medicated, tired, or in pain.

Talk to an attorney before giving a statement about high-dollar uninsured or underinsured motorist claims. It’s okay to tell your own insurance company that you are seeking legal advice.

3. Decline Early Offers

It’s not unusual for an adjuster to make an early offer to settle. They’ll make it sound like they are doing you a favor. In most cases, you’re better off declining the early offer. Tell the adjuster you’ll get back to them after you recover from your injuries.

Adjusters make their living by protecting the insurance company’s bottom line, not your best interests. Don’t be fooled by a polite, seemingly sympathetic adjuster. Never share your personal problems with the adjuster, and be careful what you share on social media. It’s all fair game to the adjuster, especially if they think you are getting desperate for money.

Until you have fully recovered, you don’t know how much more medical treatment you’ll need, complications that might develop, and how all that might affect your ability to work. In other words, you won’t know how much your claim is worth until you recover.

4. Settle Your Vehicle Damage Claim

Property damage claims can be settled within a few weeks of the accident, so long as the at-fault driver’s insurance company accepts liability on behalf of their insured.

You can expect the at-fault driver’s insurer to pay repair costs, rental car fees while your vehicle is in the shop, or the book value of your vehicle if it’s a total loss.

Some accident victims use the collision coverage on their own auto policy for vehicle repairs. If you go that route, your insurance company will seek reimbursement from the other driver’s insurance company, including getting your deductible back for you if there’s enough coverage.

No matter how you handle your property damage claim, carefully read any forms or releases you are asked to sign. It’s on you to read and understand documents before signing. Be careful not to unintentionally settle your personal injury claim when signing the property damage release forms.

5. Prepare a Compensation Demand

When you’re ready to settle a no-fault injury claim under your PIP coverage, your demand will be based on the total costs of your medical bills, out-of-pocket expenses, and lost wages. PIP doesn’t pay non-economic damages like pain and suffering.

Your demand packet will include a cover letter and copies of your bills, receipts, and lost income verification.

Demands for Serious Injury Compensation

In Hawaii, only serious injury claims will be paid by the at-fault driver’s insurance company. Your attorney will send a demand letter to the insurance company, explaining your losses and the amount of compensation you want to settle your claim. Your attorney will enclose copies of all your bills, receipts, and wage loss verification in the demand packet.

The other driver’s insurance company won’t pay your claim without proof of their insured driver’s fault. You can provide evidence like witness statements or the police crash report to prove the other driver caused the crash.

Severe injury claims involving disability, disfigurement, or death must be evaluated by an experienced attorney to determine appropriate compensation. Compensation for severe injuries should include the cost of future medical care, loss of future income, rehabilitation services, and a significantly higher amount for pain and suffering.

Hawaii caps non-economic damages, like pain and suffering, at $375,000 for most personal injury cases.

6. Negotiate a Final Settlement

Your PIP settlement should be pretty straightforward, so long as your medical tests and treatment were reasonable. Insurance companies are only required to pay for medically necessary care that aligns with current standards of treatment.

If your medical expenses and time off work are reasonable and make sense, your no-fault claim should settle without the need for negotiations.

Negotiating with the At-Fault Driver’s Insurer

Settling a more serious claim with the other driver’s insurance company will take some time and effort. If you decided to handle your own claim, you can expect the adjuster to reject your initial demand.

The adjuster will say they never pay that much for claims like yours, or they don’t have that much settlement authority. Their counteroffer will be low.

Stay calm, and address each challenge raised by the adjuster. A common adjuster tactic is to challenge the need for certain treatments, or the time you were off from work. Refer to your medical records to support the doctor’s decision (and medical necessity) to order expensive tests, like an MRI or CT scan, to rule out more serious injuries. Similarly, point to the doctor’s notes taking you out of work.

Only negotiate down from your last demand. Never try to negotiate up from the adjuster’s lowball offer.

Good negotiators are patient and persistent. Both sides must give a little to reach a compromised settlement.

When you’ve reached a verbal agreement, send an email or a letter to verify the payout and terms in writing. Make sure you read and understand the final Settlement and Release documents before signing. Once you’ve returned the signed agreement, you can’t make another claim for that accident.

7. Handle Failed Negotiations

Most car accident claims settle out of court. If the adjuster won’t come off a ridiculously low settlement demand, a lawsuit against the at-fault party may be in order. Your attorney will continue to negotiate with the insurance company right up to the trial date, if necessary.

When your own insurance company is dragging out the claims process or making repeated demands for documents already provided, it’s time to consult an attorney.

Most personal injury lawyers offer a free consultation to car accident victims, with no obligation. If you decide to hire an attorney, most will agree to work on a contingency fee basis, meaning they only get paid if they settle your claim or win your case in court.

An experienced personal injury attorney can not only work to resolve your insurance claim, they may also find that you have a separate cause of action against the insurance company.

Bad Faith Cases Against Insurance Companies

Hawaii has strong Insurance Settlement Practices laws requiring insurance companies to handle first-party claims (claims on your own policy) and third-party claims (claims against the other driver’s policy) fairly and in good faith.

Violations of Hawaii’s settlement practices laws may be used as evidence to indicate bad faith in accordance with the guidelines of Best Place, Inc. v. Penn America Ins. Co.

Bad faith cases are extracontractual, meaning if you win a bad faith lawsuit the award money comes out of the insurance company’s pocket, not the policy. Bad faith awards are not limited to the amount of coverage on the insurance policy at issue.