Knowing what insurance covers, and why, can save you serious heartache
There’s a basic rule of car insurance: It’s there to cover you, even in instances when it almost seems illogical. For instance, unlike most homeowners policies, you’re likely covered if your car is totaled by a flood if you carry comprehensive coverage. However, we advise checking with your insurance provider and reviewing how you are covered—or not covered.
In general, having done some homework for this story, we strongly recommend both comprehensive and collision coverage. While most states demand at least liability insurance, that’s not enough to prevent serious financial consequences if a worst-case-scenario should befall you.
If you have a used or older car that’s not worth much, you may think that minimum liability coverage is all you want. This is logical as far as the value of your vehicle is concerned, but it doesn’t apply to injury you might cause to another driver, damage to their car, or other instances when you must have insurance to prevent a devastating accident from ruining you financially.
Remember: It’s not just about the value of your car. It’s about the value of any sort of damage your car might cause in any possible scenario.
To advise us on this story we consulted with Chuck Muenzen, Vice President, Underwriting and Product Development at California Casualty, which provides special coverage and rates to NEA members. He helped review 6 common scenarios where your car insurance may come into play.
Natural or human-caused catastrophes
Insurance covers the unforeseeable. That’s pretty much the easiest thumbnail we can provide about when your car insurance covers you, and when it doesn’t.
So if a tree falls on your car you’re covered. You’re even covered if you cut down that tree and it fell on your car by accident. That’s not to say your rates won’t go up (that can happen regardless), but you will be covered. Ditto in the event of an earthquake, flood, fire and most other natural or human-caused catastrophes.
But you’re not likely to be covered if you parked your car under a tree for an entire year and every day it dripped sap onto the roof, destroying the paint. That’s foreseeable damage, and it occurred over a long period of time. That’s the other rule of thumb that’s easy to comprehend: Did this happen in an eye blink, or did it take a long time and I did nothing to prevent it?
That’s thinking like your claims adjuster, and it’s a helpful way to think about your car insurance.
A lot of drivers assume that if their windshield gets cracked by a stone bouncing off the highway that they just have to live with it. But in most cases, windshields are designed to first “star,” or create a divot, not crack when struck by a small object. That weakness will eventually result in a crack, however, and you should get it fixed immediately. Fixing a star is much less expensive than fixing a crack, so many companies will waive the deductible for a windshield repair if it doesn’t result in replacing the entire windshield (most shops use a type of glue that fills the divot and dries completely clear and can be done in just a few minutes).
Collision with an animal
While it isn’t the case 100% of the time, a collision with a wild animal, such as a deer crossing the road, is often covered in a way that mitigates the cost to the driver.
Why? It’s complicated, but first know that the goal, of course, should be to avoid hitting the deer. But if that’s impossible, if you cannot brake in time, don’t swerve. Most safety experts consider swerving, especially in traffic, to be far more likely to cause more damage, not less, to both you and other pedestrians or drivers. That’s one reason why safety experts say to brake hard and drive straight, especially when you judge the impact to be unavoidable.
From an insurance perspective, the deer leaping in front of your car
is considered an act of nature that can’t be foreseen or avoided. And, according to Muenzen, it’s very likely that your comprehensive, not collision, coverage will kick in. That’s important (and another reason to have comprehensive coverage), because typically comprehensive policies feature lower deductibles so you’ll have a lower out-of-pocket expenditure.
Driving someone else’s car
This can get sticky in a hurry. What policy do THEY have? This is yet another reason to review your policy with your insurance provider, because if you borrow a friend’s pickup to haul a load of lumber for a home-improvement project and get in an accident—and your friend is under-insured—your own insurance will have to cover the difference.
Does your policy include covering you when you borrow or rent? You need to know the answer to this question.
Finally, if you loan your car to another driver who isn’t under your policy, the general rule of thumb is that the car is insured. However, if the borrower has had a DUI or for other reasons has a compromised record, you could be held responsible for negligence. Again, you’re likely still covered, but know that your rates may go up and there’s potential liability involved. That can mean real trouble, since it could expose your personal assets to garnishment.
No, you may not want to review the driving record of a friend before loaning your car, but if you do have any doubts it’s much better to err on the side of caution.
My car was stolen
Yes, this happens all the time. You may have a hidden key in the glove box or under the driver’s mat or leave the key in the ignition in the unlocked garage. In all of these circumstances the thief hasn’t been given permission to take your car and insurance companies chalk it up to theft.
However, if it happens again and again, your rates may go up, or your coverage may be non-renewed.
By the way, the NEA’s policy is one of the only car insurance plans that waives your deductible if your parked car is vandalized or hit when parked at your school. It also covers both theft of your car AND OF MANY OF ITS CONTENTS. Most insurers do not replace the contents of your car if it’s broken into—that falls to your homeowners or renters insurance, where the deductible is typically far higher.
So you think you’re a really good mechanic?
It’s tempting, especially if you like to tinker, to do your own work on the minor stuff. Maybe you even like to change your own brake pads, not just the oil and filter. But any mechanical work you do on your car that results in an accident could put you in trouble in the eyes of your insurer.
If you changed your pads and did the labor incorrectly, causing the car to crash into a tree, you’ll likely be covered, but since you did the labor yourself your insurer will likely increase your rates. As for what happens if your own mechanic screws up a job—it depends. If you’re driving off the shop’s lot and the car won’t stop, you’ll likely be covered, but your company will “subrogate” against the shop for reimbursement and your rates shouldn’t be affected.
When should I call my insurance company?
Say you had a fender bender in a parking lot. Is it worth involving the insurance company if the damage is cosmetic and the repairs will barely crest over the cost of your deductible? It’s best to call your company and be straight with them on the circumstances of an event. Usually if the cost to the insurance company is under a certain threshold, it won’t affect your rates, and they can help you deal with the other party and arrange for repairs. They can also provide you with legal defense if the other party later claims to have been injured, something you won’t have if you try to handle everything yourself.
Let your insurance company help you when you need it—that’s what they are there for!