Why do I need more than the state minimum auto insurance?

[coterotie]

A while back we had a debate where a poster's sister made a dumb move because her leasing company required decent insurance limits.  So rather than pay for those limits she got rid of the car and rolled a bunch of negative equity in a new car.

http://ficoforums.myfico.com/t5/Auto-Loans/Lease-contract-termination-due-to-insurance-policy/m-p/35...

Here is the story, 6th of this month I was finally able to work a deal to get rid of my BMW and mini-van.  New 2015 Jeep Latitude.  I had already leased the wife a new infinity and this was the final step to getting our car situation resolved.  So this Sunday coming back from Sunday school with my daughter we were sitting at a red light and were rear ended by a girl.  She was texting and since the speed limit is 55, she was doing 55 when she hit us.  My new Jeep totalled.  Her Honda totalled.  GMC in front of me $2,500 in damage.  So a grand total of about 50K in property damages.

Her policy limit is $25K.  So my insurance company (USAA) is covering my damages and will seek to recover the cost from her.  Since her insurance coverage is tapped out, she will be facing a judgement unless she can find about 25 to 30K lying around.  So likely 1/4 of her salary (Alabama limits)  for the foreseeable future will be going to pay for my totalled car.  Fortunately she has enough in medical and bodily injury to cover my costs as well as the lost wages etc. 

So you have to ask yourself how you would like to pay for a car that you never get to drive?

[Anonymous]

I'm sorry to hear and see about your accident.  I'm very happy that you were not hurt badly.  I know it sucks to be in an accident but in terms of your car it could have been worse .  Let's say you sustained $15,000 worth of damage and not totaled.  Your Jeep would be in the shop for a long time and when it came back it would never would be the same.  In this case, because it's new and totaled  USAA  will  tell you to find another new car.  It sucks but believe me the situation could have turned out far worse and not just in terms of people being hurt.  I wish you the best.

[Dj4Money]

  Agreed! 

 
  You need the right amount of insurance. You never want to be under-insured! There is also another lesson; recently a DJ up in Northern California (Sac area) had his truck hit with all his equipment in it from a gig that went into the wee-hours. That same night a drunk driver hit the trailer so hard that it mess up the bed and shoved it back into the cab.

 He (the drunk driver) had the California min insurance policy, needless to say it didn't cover the damage to the truck, let alone most of his equipment was damaged and he was forced to take out a loan to recover for a gig the following weekend.

 I also have a story to tell. I was hit by a car crossing the intersection at fair rate of speed (40+). I had money problems so I had taken on a second job and reduced my coverage down to the California min. Since it's just liability; I didn't have money to repair the car and she had no insurance at all. Fortunately the bank (Wells Fargo) had continued carry a policy on it when they found I had stopped my insurance policy and failed to update them.

 Because of this there was a delay in repairs to my car and it started occurring storage fees. By the time the car was repaired, the body shop (a local Dodge dealer to where the car was hit) demanded I pay those storage fees before releasing the car to me. If I had troubling keeping regular insurance coverage and continued to make my payments on-time, how was I suppose to come up with about $500-$600 in storage fees?

 Well I called up the bank and told them they had threaten me with a lien sales to recover their storage fees. Wells said they would pick up the car but I would have to pay them back whatever they paid + plus two payments in a row.

 So let's review -

 The dealer wanted storage fees I couldn't afford and now the bank wants to be reembursted for the storage feesa, the towing fees and 60 days worth of car payments.

 This is how a perfect payment history all of a sudden turned into a repo'ed car and $2070 charge-off. All this is linked back to not having full coverage who would have paid the towing fee to take the car back to where I lived and then a local shop that I trusted could have done the work without question and not have charged me storage fees, same dude pull out my fender for free when I couldn't open my door after the fender became damaged in a hit and run.

  I totally agree and can't stress enough, if you can't properly afford to pay for your car, then buy a beater until you can.

[StartingOver10]

I have a different conclusion than  "if you can't properly afford to pay for your car, then buy a beater until you can".

If you can't afford full insurance coverage - than don't buy a car. Use public transportation. If public transporation isn't readily available in your area, then figure out a new budget with full coverage and a less expensive vehicle. Or figure out some other way to get to work. A vehicle is more than just vehicle payments: it is insurance payments, repair(s), regular maintenace, fuel and all those other things that come with the vehicle.

Putting everyone else in danger and risking your financial health for the long term over a short term 'savings' is not worth it.

OP, so glad you are safe. Thank you for posting this thread. Maybe you will be able to convince the people that choose to carry just liability that they need to man up and get full coverage for their own safety as well as other's safety or get rid of their vehicles until they can afford full insurance coverage.

[coterotie]

Yes I am still waiting on the official totalled word, but glad the damage was so extensive.  Of course by having over the insurance limits required in the lease contract, I have automatic no cost gap coverage.  Plus by leasing, should it have been repaired, I would have turned the vehicle in and walked away from the huge hit to the value that as an owner I would have had to eat.  So far USAA is telling me they will not give me replacement value, but rather depreciated value and will not cover my capitalized cost reduction or the lease termination fees.  They will pay me for the groceries that were ruined if I give them a receipt.  For whatever reason, my USAA property adjuster is being a hard-ass while the injury adjusters for Geico and USAA are being very accomodative.

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@Anonymous wrote:

I'm sorry to hear and see about your accident.  I'm very happy that you were not hurt badly.  I know it sucks to be in an accident but in terms of your car it could have been worse .  Let's say you sustained $15,000 worth of damage and not totaled.  Your Jeep would be in the shop for a long time and when it came back it would never would be the same.  In this case, because it's new and totaled  USAA  will  tell you to find another new car.  It sucks but believe me the situation could have turned out far worse and not just in terms of people being hurt.  I wish you the best.

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[Anonymous]

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@coterotie wrote:

Yes I am still waiting on the official totalled word, but glad the damage was so extensive.  Of course by having over the insurance limits required in the lease contract, I have automatic no cost gap coverage.  Plus by leasing, should it have been repaired, I would have turned the vehicle in and walked away from the huge hit to the value that as an owner I would have had to eat.  So far USAA is telling me they will not give me replacement value, but rather depreciated value and will not cover my capitalized cost reduction or the lease termination fees.  They will pay me for the groceries that were ruined if I give them a receipt.  For whatever reason, my USAA property adjuster is being a hard-ass while the injury adjusters for Geico and USAA are being very accomodative.

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@Anonymous wrote:

I'm sorry to hear and see about your accident.  I'm very happy that you were not hurt badly.  I know it sucks to be in an accident but in terms of your car it could have been worse .  Let's say you sustained $15,000 worth of damage and not totaled.  Your Jeep would be in the shop for a long time and when it came back it would never would be the same.  In this case, because it's new and totaled  USAA  will  tell you to find another new car.  It sucks but believe me the situation could have turned out far worse and not just in terms of people being hurt.  I wish you the best.

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That sucks.  I've usually had excellent service from USAA.  Keep fighting the adjuster.  He needs to be fighting the at fault drivers insurance company for everything.

[coterotie]

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@Anonymous wrote:

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@coterotie wrote:

Yes I am still waiting on the official totalled word, but glad the damage was so extensive.  Of course by having over the insurance limits required in the lease contract, I have automatic no cost gap coverage.  Plus by leasing, should it have been repaired, I would have turned the vehicle in and walked away from the huge hit to the value that as an owner I would have had to eat.  So far USAA is telling me they will not give me replacement value, but rather depreciated value and will not cover my capitalized cost reduction or the lease termination fees.  They will pay me for the groceries that were ruined if I give them a receipt.  For whatever reason, my USAA property adjuster is being a hard-ass while the injury adjusters for Geico and USAA are being very accomodative.

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@Anonymous wrote:

I'm sorry to hear and see about your accident.  I'm very happy that you were not hurt badly.  I know it sucks to be in an accident but in terms of your car it could have been worse .  Let's say you sustained $15,000 worth of damage and not totaled.  Your Jeep would be in the shop for a long time and when it came back it would never would be the same.  In this case, because it's new and totaled  USAA  will  tell you to find another new car.  It sucks but believe me the situation could have turned out far worse and not just in terms of people being hurt.  I wish you the best.

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That sucks.  I've usually had excellent service from USAA.  Keep fighting the adjuster.  He needs to be fighting the at fault drivers insurance company for everything.

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Yes, the reason I got USAA was their service when we were hit by someone with USAA.  Everything they did was first class and generous so I bought insurance with them when we had a chance to switch.

[flan]

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@coterotie wrote:

Yes I am still waiting on the official totalled word, but glad the damage was so extensive.  Of course by having over the insurance limits required in the lease contract, I have automatic no cost gap coverage.  Plus by leasing, should it have been repaired, I would have turned the vehicle in and walked away from the huge hit to the value that as an owner I would have had to eat.  So far USAA is telling me they will not give me replacement value, but rather depreciated value and will not cover my capitalized cost reduction or the lease termination fees.  They will pay me for the groceries that were ruined if I give them a receipt.  For whatever reason, my USAA property adjuster is being a hard-ass while the injury adjusters for Geico and USAA are being very accomodative.

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What's your policy cover?  If it doesn't cover the replacement cost, don't expect the insurance company to give you the replacment value out of the goodness of their heart.  You can, of course, sue the at fault driver, but you're last in line to collect from her, and unless she's got a bunch of assets, you're probably out of luck.  Sounds like there are two underinsured parties in this accident...

[coterotie]

I don't think I am underinsured, the problem is establishing the value of my car.  Tell me the value using KBB, black book, NADA etc. of an untitled 2015 Jeep with 300 miles.  The only value obtainable is new car price.  So that is what I am expecting.  Can't even get the bill of sale, because I can't bring the car to the license office for inspection.  I am not expecting USAA to do anything other than what is stated in the policy, value of the vehicle.  They are also supposed to give a 20% bonus on the value if the car is totalled due to the acts of someone else.  Unfortunately this may not apply since the other party was underinsured or something like that.  But go ahead and google used 2015 jeeps.  None that I can find.

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@flan wrote:

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@coterotie wrote:

Yes I am still waiting on the official totalled word, but glad the damage was so extensive.  Of course by having over the insurance limits required in the lease contract, I have automatic no cost gap coverage.  Plus by leasing, should it have been repaired, I would have turned the vehicle in and walked away from the huge hit to the value that as an owner I would have had to eat.  So far USAA is telling me they will not give me replacement value, but rather depreciated value and will not cover my capitalized cost reduction or the lease termination fees.  They will pay me for the groceries that were ruined if I give them a receipt.  For whatever reason, my USAA property adjuster is being a hard-ass while the injury adjusters for Geico and USAA are being very accomodative.

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What's your policy cover?  If it doesn't cover the replacement cost, don't expect the insurance company to give you the replacment value out of the goodness of their heart.  You can, of course, sue the at fault driver, but you're last in line to collect from her, and unless she's got a bunch of assets, you're probably out of luck.  Sounds like there are two underinsured parties in this accident...

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[flan]

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@coterotie wrote:

I don't think I am underinsured, the problem is establishing the value of my car.  Tell me the value using KBB, black book, NADA etc. of an untitled 2015 Jeep with 300 miles.  The only value obtainable is new car price.  So that is what I am expecting.  Can't even get the bill of sale, because I can't bring the car to the license office for inspection.  I am not expecting USAA to do anything other than what is stated in the policy, value of the vehicle.  They are also supposed to give a 20% bonus on the value if the car is totalled due to the acts of someone else.  Unfortunately this may not apply since the other party was underinsured or something like that.  But go ahead and google used 2015 jeeps.  None that I can find.

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You have a used car.  If you owned it outright, and it hadn't been hit by some moron, you could sell it for a few thousand dollars less than you paid for it.  That's it's fair market value.  The fact that you'd never actually be able to find one for sale doesn't change that.   Fair market value is typically what insurance policies are written for, unless there's a state requirement for replacment value, or you've bought additional coverage (either as part of your main policy, or a seperate one, often called "GAP) to do so. If you can't afford to eat that loss, you're underinsured.