Q.
I was in a car accident a few weeks ago, and the other driver's insurance company said they can't fix my car or pay for a rental car until they finish investigating who caused the accident. I was told to get the car repaired and rent a car through my insurance company's collision coverage while they investigate, but since I'm driving an older car, I got the cheapest insurance and ended up not getting any collision coverage or rental coverage. I'm wondering what kind of insurance is appropriate for me, who is in a financially tight situation, to protect myself from future accidents.
A.
Collision coverage is designed to pay for the cost of repairing or replacing your car, even if you are at fault for an auto accident. Therefore, it is important to assess the value of your car to determine how much it is worth for collision coverage, because the insurance company will give you the market value of your car in cases where the cost of repairs exceeds the cash value of your car.
For example, let’s say you own a 1996 Honda Civic that has an actual cash value of $2,000.00, but it sustains serious damage that costs $5,000.00 to repair. Under collision coverage, your insurance company will pay you not the $5,000 in repair costs, but the $2,000 cash value that you can use to purchase a comparable car on the market.
As a result, collision insurance is the most expensive type of insurance, so when your car is old, worn, and has low cash value, it is usually not a financial investment to purchase it. The only real benefit to having collision coverage in your situation is that your insurance company will repair your car immediately, and you will not have to wait for a decision on whether to accept liability for the accident. Your insurance company will then seek reimbursement from the insurance company of the other driver at fault for the amount they initially paid to repair your car.
Unfortunately, you did not purchase rental coverage from your insurance company, which pays for a rental car while your car is being repaired or if it becomes completely unusable. Specifically, rental coverage has a daily limit of $20, $30, or more per month. If you had purchased rental coverage, your insurance company would have provided you with a rental car right away and then sought reimbursement for the rental car from the other driver's insurance company. However, since you did not have rental coverage, you would have to wait until the other driver accepted responsibility and paid for your rental car.
Car insurance comes in a variety of packages to suit your finances and needs. So instead of simply asking your insurance agent for the lowest price for car insurance, sit down with them and consider the coverage and costs. You may be able to get more coverage than you think for a small additional cost.
Q.
I was in a car accident a few weeks ago, and the other driver's insurance company said they can't fix my car or pay for a rental car until they finish investigating who caused the accident. I was told to get the car repaired and rent a car through my insurance company's collision coverage while they investigate, but since I'm driving an older car, I got the cheapest insurance and ended up not getting any collision coverage or rental coverage. I'm wondering what kind of insurance is appropriate for me, who is in a financially tight situation, to protect myself from future accidents.
A.
Collision coverage is designed to pay for the cost of repairing or replacing your car, even if you are at fault for an auto accident. Therefore, it is important to assess the value of your car to determine how much it is worth for collision coverage, because the insurance company will give you the market value of your car in cases where the cost of repairs exceeds the cash value of your car. For example, let’s say you own a 1996 Honda Civic that has an actual cash value of $2,000.00, but it sustains serious damage that costs $5,000.00 to repair. Under collision coverage, your insurance company will pay you not the $5,000 in repair costs, but the $2,000 cash value that you can use to purchase a comparable car on the market. As a result, collision insurance is the most expensive type of insurance, so when your car is old, worn, and has low cash value, it is usually not a financial investment to purchase it. The only real benefit to having collision coverage in your situation is that your insurance company will repair your car immediately, and you will not have to wait for a decision on whether to accept liability for the accident. Your insurance company will then seek reimbursement from the insurance company of the other driver at fault for the amount they initially paid to repair your car. Unfortunately, you did not purchase rental coverage from your insurance company, which pays for a rental car while your car is being repaired or if it becomes completely unusable. Specifically, rental coverage has a daily limit of $20, $30, or more per month. If you had purchased rental coverage, your insurance company would have provided you with a rental car right away and then sought reimbursement for the rental car from the other driver's insurance company. However, since you did not have rental coverage, you would have to wait until the other driver accepted responsibility and paid for your rental car. Car insurance comes in a variety of packages to suit your finances and needs. So instead of simply asking your insurance agent for the lowest price for car insurance, sit down with them and consider the coverage and costs. You may be able to get more coverage than you think for a small additional cost.