Mommy Beware: What Your Car Insurer Won't Tell You
In the last two weeks my life has literally been turned upside down. I was in a no fault car accident during a winter storm and my car was completely totaled. Initially, I walked away from the car accident thanking God the slam into the wooden pole hadn't ended my life and believing that my car insurance (Farmers Insurance) had me completely covered because the accident was due to an unsalted street (which the City of Pittsburgh quickly addressed as soon as the ambulance and police officers left the scene of the accident). Well boy was I in for a shocker. There were quite a few things that I, and even my husband who is a certified insurance salesman, was unaware of. So, in an attempt to make sure no one else suffers the way I have over the last three weeks here are some insurance words of wisdom I wish someone would have shared with me prior to my accident.
1. You NEED GAP Insurance. Oh GAP Insurance, if I would have had you I would not be writing this post right now. So, GAP insurance basically covers the difference between what your car is worth and what you still owe on it. In other words, if your car loan is upside down and your car is totaled you better have GAP. If your vehicle is determined a 'total loss' the insurance company is only going to pay out the Kelley Blue Book value of the car to your financier. So, if you have accrued $1000 in interest it is up to you to pay for that. So while, the financier completely has their principal loan paid off, you are still responsible for the interest. In addition, they are not obligated to put you into a new vehicle and can make it very difficult for your to continue in your current loan. The consumer generally is forced to apply for a new loan and begin the process, and their loan agreement, over. This can be very difficult for those of us with less than perfect credit. Some companies, like All State, also offer New Car Replacement coverage to buyers that purchase brand new or recent year vehicles. This insurance will provide you with a new car should your vehicle be declared a 'total loss.' Click here to learn more.
2. Rental car coverage only covers you partially if you are in a total loss accident. This is another big one. When my husband I purchased our car insurance we thought we'd made sure we had rental car coverage because my hubby uses the vehicle for a living. Well, I was wrong on this account as well. Normally, car insurers cover their clients at $50 per day for up to 30 days if they are in an accident and the vehicle needs to be repaired. Well the policy at Farmers is that they only cover drivers up to a week after a settlement is offered in the event of a total loss accident. The settlement offer date has nothing to do with the day the money is actually dispersed to you or your financier. It doesn't matter whether you've found and purchased a new vehicle or not, all that matters is they have made you a verbal offer of settlement. Tricky little beast.
3. You NEED Supplemental Insurance coverage. From the countless hours you will spend on the phone with the insurance company to the day or two of work you may have to miss after a bad car accident some extra cash can come in handy after an accident. (And trust me it doesn't feel good to dip into your savings for that extra cash) In our case, the rental car we used in the days after the accident was a gas guzzler. Our usual $40 a week in gas shot up to about $60. Twenty buck is a log money to a family of 5. Companies like AFLAC offer supplemental insurance for accidents that result in injury or lost wages.
Mommys, make sure you read the fine print of your insurance policies before you have an accident. I wish I had. If you have any tips please leave them in the comments below. I find that women are often the last to know about these issues and we need to help each other out. Happy Driving!