How Auto Insurance Coverage Can Affect Claim Settlements

You cannot make a claim if you don’t have the car insurance coverage for the loss you suffered or it is insufficient to pay for all the damages or injuries. So, it is very important to know what your policy provisions are and ensure they meet your protection needs. It is always disappointing when a claim is turned down or you aren’t paid enough. Initially, you may feel you are handled badly by the adjuster or carrier. This may be true but high expectations from an inadequate policy can be the main reason behind your problems.

It is essential to know what your auto insurance covers in order to avoid disappointments when you need it. Claims can be complicated even when everything is in order. So, imagine how complicated it can get when it isn’t clear if the policy covers your losses or not.

Misconceptions are serious obstacles to arranging the coverage you need too. For example, full coverage provides liability, collision and comprehensive but it doesn’t mean everything is covered. You still need to have the corresponding additional coverage for certain losses.

Below, several frequently asked questions and common misconceptions are shared to show how misconceptions can lead to lack of vehicle insurance coverage, which can leave you helpless, unsatisfied and financially in a bad position after a claim. There are also tips on what coverage meets your expectations in below cases.

How Much to Expect from a Car Accident Settlement?

There are motorists who have a liability only policy and they believe that is all they need and their vehicles will be repaired or fully paid if they get totaled. When you have expectations like that you will certainly be disappointed to find out that you will receive no compensation for your own losses because a liability car insurance pays for third party losses only. You need to have collision and comprehensive in order to claim for damages to your automobile. Then, it will be fully repaired or you will get a check for its actual cash value if it is totalled. Physical damages coverage comes with deductibles.

Is Minimum Liability Auto Insurance Coverage Enough?

Many people may think that the state minimum limits release them of any further responsibilities. This is never true. These policies are enforced to provide a minimum level of financial guarantee to unsuspecting citizens from car accidents. It is not the maximum level of liability a driver responsible for.

Certainly, there is nothing stopping an injured party to sue the responsible driver when the insurance pay-outs are short of compensating all their losses. So, you have a risk of paying the rest of the damages out of pocket when you cause serious injuries to third parties and not have sufficient liability coverage.

As long as you can afford it, increasing state required basic liability vehicle insurance coverage limits to comfortable levels would be a wise decision. You should remember that you can have larger coverage and still pay an affordable premium if you shop around for the value policy. If you can manage to find a competitive automobile insurer you would be able to squeeze in more.

Does my Policy Pay for Car Rentals while Mine Is Repaired?

Many people are under the impression that they will get a courtesy car or a rental will be paid by the insurers when their own vehicles are down due to a covered damage. Many motorists do rent without checking this point. In some cases, they may have it but not enough and they end up paying the difference.

Not every policy includes Rental Reimbursement Coverage. Motorists are required to check if this is offered before going ahead with the plans. Some cheap full coverage auto insurance policies may exclude similar extras so that the premium is affordable.

Even if you have coverage, it is likely to be for a limited time and up to a certain amount. Normally, it is about $30 a day for 30 days. So, you are not free to spend as much as you like. If you do, you pay the difference. This coverage costs about $30 – $50 and you should include it if you would need a rental arrangement in case of accidental damages to your own vehicle.

Does My Insurance Pay Off Loan If My Car Is Totaled?

There is confusion among motorists as to what they will receive when the vehicles are totaled. Many believe that they will receive the amount they declared in the quote form. This is not the case. Companies will only pay the actual cash value of a similar vehicle.

Insurance is for compensating losses, nothing more or less. If you have lost a 6-year-old mid-range family saloon you will be paid to buy a similar car in the open market. You will in no way get a brand-new car.

That is why you will probably need GAP insurance when you are taking a loan to buy an automobile. It is there to cover the difference between the actual cash value of the vehicle and the outstanding loan on it. Then, you will not still be paying the loan even though you lost the automobile.

Is the Deductible Only Amount I Need to Pay Out of Pocket?

Loss adjusters will only approve the damages relating to current vehicle insurance claim to be repaired. If you and the garage agreed to unrelated repairs on the vehicle, you will need to pay for them. If it is hit on the right side and there seems to be an isolated old dent on the left, it is unlikely that they will pay for this repair. However, you can get it done on your own since the vehicle is in the body shop already. You should ask for a quote and haggle for a better price if you need to.

Can Insurers Insist on their Recommended Body Shops?

There is a common belief that it is up to carriers to either accept your body repair shop or force you to go to the firms they usually deal with. Auto insurers cannot prohibit policyholders from choosing a repair shop they prefer. They prefer their own network of repairers and they will make the claim process easier for you if you choose this route. It is not because they want to force you to go to these shops but they have already agreed with them what is acceptable and what is not.

If you choose your own body repair mechanic, they will ask a few more details. First of all, they will want at least two competing quotes for the works. Secondly, they may want to inspect the damages before giving a go ahead. All these take a bit longer and therefore you may not be satisfied with the response time.

As you can see from above examples, you can have problems with your claims if you don’t have the vehicle insurance coverage needed or it is insufficient to fully compensate your losses. The solution is to make sure you know your needs and buy a policy that meets them. It is best to think of a worst-case scenario and consider if you are prepared for it.

Most people can pay a few dollars extra for a month for a better policy but they cannot handle a large loss on their own because they don’t have enough savings to pay for them. Even if you think that a good car insurance coverage is too expensive, you shouldn’t give up easily without shopping around for the lowest quote you can get. Also, consider other methods of lowering your premium while still keeping the coverage like increasing deductibles.