When you buy a new or used car, and financing is added in, you generally owe more than the car is worth. This is called being upside down. That is just a fact of life. The sad fact is if you have an accident and your car is a total loss you likely are not going to receive enough money from the insurance company to pay the car off.
Many banks and credit unions offer what is known as GAP insurance which pays the difference between what you owe and what insurance pays you for the car. If it’s offered by your lender GET IT! (It`s cheap, and it’s not much fun walking and still owing the bank a couple of grand) the insurance company only have to pay the market or replacement value of your totaled car Which brings us to.
Closer inspection of some items
Remember those papers you hastily scribbled your signature on when you got auto insurance. They may have a few things that bear closer examination. Some of the auto insurance companies that advertise car insurance with no down payment in the paper you signed:
That in case of a total loss they only have to pay you loan value (the lowest price) for your vehicle instead of fair market value. Some of the Fly-by-night insurance offices will even sell you a policy that is less than the state you live in minimum insurance requirements. Claiming it to be add-on insurance and that you were aware of the fact when you bought the policy.
Didn’t you wonder why their rates were so much cheaper?
Do yourself a big favor and stick to the well-known companies like Goodtogoinsurnace.org for example. Ever wonder why the insurance company totaled your vehicle and it didn’t look all that damaged to you. It probably wasn’t a total as far as the numbers go, but it’s all about the insurance getting out as cheap as they can.
It technically wasn’t a total, but because the salvage value is so high (especially on trucks), they will total it, pay you off and come out cheaper than if they fixed it. Let’s blurt you get into an accident, and your truck which has a book value of $27,000 has an estimated repair cost of $16,000 (most insurance companies declare a vehicle a total loss at 65% of replacement value)
Instead of fixing the vehicle the insurance company will pay you the value of the truck after deductions for high mileage, paint, etc. they will probably write you a check for about $25,500. They will then sell the truck through the salvage pool auction to an auto re-builder for about $15,000 for a loss of only $10,500 instead of the $16,000 they were originally looking at.
At the best part is no customer complaints about repairs that were done
Remember these insurance companies do not want to pay out one more penny than they have to. Maybe that’s the reason they get sued so often.
This is one of their favorites
The person that hit you didn’t have rent car on their policy so we won’t be able to furnish you a rental car while yours is being repaired.
WRONG! That has nothing to do with you getting a rental car.
A man who had an accident was told by the insurance company they would not be able to rent him a replacement pickup truck for him while it was being repaired as their client’s coverage only allowed for rent on a car, not a truck. He said that was not a problem but he would like to have a larger auto so he would be able to put hay in the backseat and trunk so he could feed his cattle. Somehow, they were able to find the money to rent a truck.
THE BIG LIE
Many insurance companies want you to take your car to one of their preferred shops which offer a Lifetime Warranty. Their story is if you take your vehicle to another shop you won’t get a LIFETIME Warranty and they can’t guarantee the work. Wait, What? A lifetime warranties? What does that mean? Do you think to keep the same car for 20-30 years? The fact is after a vehicle sustains significant damage and is repaired most owners trade it off within a year or two. So much for the lifetime warranty.
Preferred means one of two things
One the shop does the work at a highly discounted rate (often using cheaper inferior parts made in China) for the insurance company so they can continue to be referred to as a “Preferred ” shop or too many insurance companies in recent years have purchased body shop chains and run them as a separate company which becomes a “Preferred” shop.
Either way, I’m pretty sure this is an illegal conflict of interest, but with a few billion in the bank or in the case of State Farm who own banks what’s a little bending of the rules. Though they don’t seem to be doing this anymore, good to go insurance once had their immediate claims service where they would come to the wreck site and write you a check on the spot.
Since adjusters don’t have X-Ray vision, I seriously doubt they could come to an accident and accurately estimate the damage to your car. Problem with it is it’s rarely enough to repair your car, and once you deposited or cashed the check, they were in the clear.
If this ever happens to you whether at an accident scene or another location if an adjuster writes you a check, take your vehicle to the repair shop of your choice and give them the check. They will work with the insurance company to cover any unseen damages, and it saves you from getting screwed.
If All Else Fails
You call several times a day and hear empty promise after empty promise. No one calls back, and your life is in limbo. Nothing is getting done you think maybe you should get a lawyer. Don’t waste your time. Insurance companies have a huge team of lawyers and deal with lawsuits every day and don’t care if you sue them.
My advice (which by the way is going to tick several lawyers off) is this. If you find yourself up against the wall on this, tell the insurance company if something isn’t done you’re going to have to contact the State Insurance Board/Commission.
The last thing any insurance company wants is heat from the insurance commission and are usually ready to make a settlement. The only drawback to this is you must be ready to follow through with it and contact the Insurance Board.