What Everyone Should Know About Their Car Insurance Company

How much do you know about your vehicle insurance company and the policy you are purchasing from them? Did you shop around, or did you just stick with the same old company that mom and dad used? You may want to call your representative with some questions after you read my story. (To be fair-not that I need to-I won't mention the name of my company in this article.)

When I married my husband, he had insurance through the same company his parents went through. He had been with them for a long time, so he got a "preferred customer" discount. So, when we merged our lives, we merged our insurance. I got my car insured under his plan, and we got a "multi-vehicle discount." We thought we were doing great-lots of discounts--saving lots of money. We had a "home owner's discount," a "safe driver discount," and a "valued customer discount." Plus, we loved our agents! They were the best people ever, always willing to help. Always asking, "What can we do to make your life easier?" They were real. So, even at times when we weren't necessarily enthused with our company itself, our agents were wonderful so we stayed. We really thought that if anything ever happened, there would be no stress, it would all be okay.

Then, on December 21, 2006, my husband left for work; he's in construction. It was about 6:00am, and about two minutes after he left, he called me from his cell phone and asked me to come pick him up. I didn't ask any questions, I just left. Once I picked him up, I found out what had happened. He was fine, but a deer had run out in front of him. He swerved to miss the deer, hit a cement culvert pipe in someone's driveway, and ended up in the woods. When he hit the culvert pipe, both passenger side wheels were busted to pieces. Not just the tires, I mean the rims were smashed. There were dents in the truck, but we weren't worried about that. Remember I said he's in construction? Well, there were dents on the truck already from him working out of his truck, so we weren't worried about the body. We had the truck towed back home, and we called our agents.

After it all got taken care of, the insurance representative evaluated our truck, and we begged and pleaded with the company, here's what happened:

Our insurance company decided that due to the damage on the vehicle (which included the two broken rims and tires, two broken axles, damage to the transmission, and more...) they would consider it a total loss. We learned that once the cost to repair a vehicle exceeds 75% of the market value of the vehicle, they consider it a total loss. They said the loan company would assign our truck a salvaged title and they paid what they said our vehicle was worth.

To find out the 'market value' of our vehicle, the insurance company started with a value of another truck they said was in our area (we live in Virginia; the comparable truck they used was in Pennsylvania). Starting with a value of $12,000, they took off values for anything wrong with our vehicle before the accident. They decreased the value for dents in the truck, worn carpets and upholstery inside the cab, and even engine problems that we do not believe were there before the accident (unfortunately we cannot prove the condition of our truck before the accident). After 'evaluating' our truck, the insurance company claimed the 'market value' of our truck was $6,000. That is half the value of the 'comparable vehicle' they started with. They paid our loan company that amount.

There's icing on the cake, too: we actually owed $11,000. We still have to pay $5,000 for a truck that we do not have. When my husband purchased the truck, he bought it in another state, and at the time, they were not legally responsible for offering GAP insurance. If so, we would have bought the GAP insurance, and that insurance would have paid any negative equity leftover after an accident like this. We looked into purchasing the truck from the insurance company and fixing it ourselves, but after talking with the repair shop, we found that it would be more expensive to fix it than to simply pay off the negative equity of $5,000 we still owe to our loan company.

And there are candles on that cake: We have until June 2007 to pay off the balance to our loan company, or they will report it to the credit agencies as a charge off, which makes it look like we just stopped paying on the loan. We have four months to pay off $5,000. I honestly don't think it's going to happen. The loan company said that we are to keep paying them and when the balance is paid in full, they will make another report to the credit bureaus that the debt has been paid. Lucky us.

The moral to the story? Learn from our mistakes. Find out if your insurance company is going to pay 'market value' or 'loan value' if you have an accident like we did. Also, shop around to see if you really are getting the best rates. I started shopping around, and found that another company can offer us the same policy for half the monthly payment I was making before. When our company took the truck off of our policy, we thought the policy price would be cut in half. No. The price of our policy increased and they claimed it was because we don't have the "multi-vehicle discount" anymore. Plus, our policy is sure to increase once they evaluate it again and adjust for the accident on our record now, even though it was the deer's fault. If you don't have GAP insurance, or if you're purchasing a new vehicle, find out about getting GAP insurance just to cover all the bases.

I hope that our situation will at least help one other person out there. If so, it will not have happened in vain. It's always easier to learn from someone else's mistakes. That's what you need to know about your vehicle insurance company.

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