You’re driving along with the flow of traffic on LBJ Freeway in Dallas and it suddenly stops. You breathe a sigh of relief because you stopped in time and didn’t hit the person in front of you. To your dismay the next sound you hear is the screeching of tires behind you followed by the bang of the impact as you’re rear ended and pushed into the car you avoided hitting.
For most fender benders, you simply exchange insurance information. The insurance card the person provides you with however, is with one of those companies advertising liability-only coverage starting at $29.95 a month. Two questions run through your mind:
- Are you protected?
- Will they really pay?
This happens every day and the results can be less than satisfactory. What do you do if the person who hits you is at fault and has insurance with one of the non-standard companies? The advice I’ve heard given most often is to process the claim with the other person’s insurance company, they were at fault after all. While that is the case, you have two options:
- File the claim with their insurance.
- File the claim with your insurance.
Here are five red flags to watch for that will guide you on which option is the best one for you:
- Excluded drivers
- Minimal coverage
- Delays with your claim
- Unwillingness to pay for a rental car
- An unrealistic settlement offer
Excluded Drivers: No major insurance company will exclude drivers in your home from your car policy. The reason being is eventually that person will drive the car. Should an accident happen when that person drives the car, it’s not covered. While that may save some money on the cost of insurance, it leaves the policy holder financially vulnerable to making payments on a damaged or totaled car and liable for someone else’s repairs. It’s just not worth it.
One practice some of the non-standard carriers have is excluding drivers to keep the premium low. They then refuse to cover the repairs for the damage inflicted by the excluded driver. If this happens, the appropriate next step is to file a claim with your insurance company.
Minimal Coverage: Texas law requires a minimal level of insurance coverage. That level is 30/60/25. In this case:
- The first two numbers (whatever they are) are for medical coverage.
- The last number is for property damage.
- For a more detailed explanation, read http://bit.ly/14uAckA.
How much did you pay for your car? When you consider the purchase price of a Honda Accord, Toyota Camry or Ford Taurus, let alone a BMW, Mercedes Benz or Lexus, minimal coverage:
- It may not pay for all the repairs needed to your vehicle.
- It may not cover all of your medical costs if you’re badly hurt.
In these cases, file the claim with your company and tap into the uninsured / under insured coverage.
Delays with Your Claim: Most claims can be adjusted within a couple of days. There are extreme events such as last year’s hail storm, where the volume of claims outstrips the capacity of most insurance companies. If this is not the case and you’re claim starts to drag a week or two, think about filing it with your company. They don’t have a vested interest in letting your claim drag out, in fact, it’s just the opposite. They have the ability to push for closure more quickly than the average individual does.
No Rental Car: Let’s face it; being without a car can be a major impact on your life whether you’re a commuter driving to and from the office, a parent driving kids to school and sports practice, or someone who drives from one appointment to the next appointment each day. The last thing you want is to be refused a rental car from a non-standard carrier. If this happens, go your company and file the claim.
Unrealistic Settlement Offer: What is your car worth if it were totaled? What does it cost to truly replace a crunched fender and paint it properly? Most people don’t know. If the offer seems out of line, talk with your body shop. They want to do a good job, replace damaged areas with good parts and finish it with a great paint job. If the offer doesn’t match up with what the body shop feels it should, pull the claim from their company and file with yours.
In each of these cases, I’ve advised to file the claim with your insurance company and let them handle the battle for you. There are two things you should be aware of before you do that:
- In the short term, this could mean you’ll be out of pocket for your deductible. That should come back to you once they’ve settled with the other company, but be aware that will happen.
- It also helps to have uninsured / under insured motorist coverage, as well as rental car coverage on your policy.
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