Owner of a broken part: recalls and car insurance

By Posted : 01/31/2012

mechanic fixing carIf, like some BMW Mini and Kia car owners, your vehicle is recalled, knowing how to navigate the process and the role insurance plays in it can ensure you won't wind up paying more than you should.

In February, 88,911 BMW Mini owners will be notified about recalls of seven models involving faulty water pumps that could potentially cause engine compartment fires. Dealers will replace the water pumps for free.

In March, Kia Motors America is recalling 145,755 vehicles due to defective parts that could result in the failure of air bags to deploy. Dealers will replace the parts for free.

Models affected by the recalls can be found at the Safercar.gov website, which is run by the National Highway Traffic Safety Administration (NHTSA).

Do recall offers expire?

Recall offers to replace faulty parts for free remain in effect for the life of the vehicle. But failing to have your car promptly repaired once you're notified of a recall can have more than safety repercussions.

"If you continued to drive your car for a substantial amount of time after being aware there was a defect, it’s believed that you understood the risks and didn’t take due care. For this reason, your car insurance company may be able to turn down claims for your vehicle if the defect causes you to crash," says Penny Gusner, auto consumer advocate for CarInsurance.com.

Getting reimbursed after a recall notice

But what happens if you paid out-of-pocket to fix a faulty part prior to a recall notice?

If you paid to have the car fixed prior to a recall, the manufacturer typically will reimburse you. It's important to note, however, that only repairs directly involved with the recall are reimbursable, which means expenses for  towing, rental or damage repairs are not included.

"If a customer has incurred expenses to remedy the recall issue prior to the date of Kia’s notice, with appropriate documentation, Kia will reimburse that recall-related expense," says James Hope, manager, product communications, at Kia Motors America.

If you filed a claim for damages due to the recalled component, the car insurance company will likely get reimbursed from the carmaker.

As for damages allegedly caused by a recalled part, the process is that the owner should contact his or her insurance company. Typically, the insurance company will reimburse the owner according to the policy terms and conduct an investigation. If the recalled part is deemed responsible, the insurance company would work directly with the manufacturer, says a representative for the Mini communications unit of BMW.

Hope says that Kia assesses each   car insurance damage claim individually.

"Kia handles customer and/or insurance company’s damage claims due to the recall issue on a case-by-case basis. Our evaluation of such a claim is based upon the results of Kia’s investigation and technical analysis," he says.

One benefit of retaining comprehensive car insurance

The unpleasant surprise of a vehicle malfunction due to faulty parts is another reason why it's good to retain your comprehensive and collision coverage, says David Colmans, executive director of the Georgia Insurance Information Service.

"So many people in this economy are dropping comprehensive and collision coverage, but as long as your car is worth more than $1,000, it's worth it for instances like this," says Colmans. "If you don’t have comprehensive coverage and your car is damaged due to some defective part, and the recall wasn't out yet, you'd have to pay to fix it yourself. Then, after the news of the recall came out, you'd have to go after the manufacturer to get reimbursed. If you have the insurance, you can file a claim and then just let the insurer and car maker battle it out."

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