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Should I lie and say I was driving?

Posted on October 15   By Des Toups

I let my girlfriend take my car to pick us up lunch. She ran into the curb and messed up my front right rim, tire, alignment and probably more. My collision deductible is $500. Should I tell my insurance company that she was driving or I was?

Compare car insurance quotes now.

Don’t lie. It won’t save you any money.

When you lend your car to anyone, you are lending your insurance coverage as well. Anything that happens while that permissive driver is behind the wheel ultimately is your problem. The claim goes against your own claims history no matter who was driving.

The bigger issue is the claim itself. Your deductible covers the first $500 in damage and you apparently intend to file a claim for the amount over that. You might reconsider whether to file a claim at all.

Depending on your insurance company and your state, you could face increased premiums for even a small claim. Some companies will forgive the first accident claim, or do so for longtime customers.

Thresholds vary quite a bit. For example, we can compare auto insurance quotes for a 30-year-old single male insuring a 2012 Mazda CX-9 in Reno, Nevada, for comprehensive, collision and 50/100/50 liability.

With a clean record, we found quotes from two insurers that were quite close: $1,806 (Company A) and $1,819 a year (Company B).

But adding a single $500 claim, Company A raised its rates to $2,660 a year. Company B didn’t raise its rates at all.

Suppose this was your second claim in the recent past – something most insurers would begin to pay attention to. We added a second claim for just $750. Company A rose to $3,446. Company B didn’t budge.

But if we made that earlier claim more than just a fender-bender, with total damage of $10,000, Company B takes notice, raising its quote to $2,382.

Claims history                                   A             B

Clean record                                      $1,806   $1,819

$500 claim                                           $2,660   $1,819

$500 claim and $750 claim             $3,446   $1,819

$500 claim and $10,000 claim       $3,446   $2,382

Every company will have its own practices regarding claims. You can ask the company for a copy of its surcharge schedule so you can see them spelled out.

Over the long haul, you will pay less for insurance if you reserve it for the big things, and not small claims.

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Do I fix the truck or spend the money?

Posted on October 10   By Des Toups

A commercial vehicle ran into my truck while it was parked. I had three estimates done on the truck, and the company’s insurance company is sending me a check for the damage. Do I have to use the money toward the repair? Will the check be made out directly to me?

If the check is coming from a third party – the at-fault driver’s insurance company – it should be made out to you alone, and you are free to repair your truck or not.

Even if the check is from your own insurance company, the choice to repair your car is yours alone as long as you own your vehicle outright.

Having a loan complicates your decision.

If you still have a loan on your vehicle, you have agreed to maintain the bank’s collateral as part of your agreement. Your lender is your co-owner and will be listed as a loss payee on your insurance. It’s very likely that any claim you make against your own insurance would be settled with a check payable to both you and a body shop (if the vehicle needs repair) or to you and your lender (if the vehicle is a total loss).

A third-party settlement check – like the one coming your way – will probably be made out to you alone. Your lender may never even find out that the car was damaged. But it might.

If you had a leased vehicle, you would definitely want to make the repairs no matter whose insurance company is paying for them.

Lastly, if you make a claim against your own coverage and don’t make the repairs, you may find that the existing damage is deducted from any future claim you might make. The company won’t cover the same damage twice. It may even require that you drop your physical damages coverages of comprehensive and collision because the car is already damaged.

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The 7-year insurance lapse: What now?

Posted on October 06   By Des Toups

I have not owned a vehicle in seven years, so I have not had car insurance since. I am currently in the market to buy a car in the next two weeks. Is this going to cause higher rates? And, what is the best way to go about getting insurance when ready?

A history of continuous insurance is critical to finding and keeping the most affordable insurance premiums. Some companies won’t want to cover you if you are not currently insured. Others will charge you more, and some won’t penalize you at all. That's why we think it's so important to compare car insurance quotes.

A lot depends on why you didn’t have insurance.

For example, we compared rates for a 30-year-old male renter in ZIP code 98125, in the Seattle area, with clean driving record and buying full coverage for a 2014 Kia Soul.

When we noted that the driver had a policy currently in force, three insurance companies returned a quote, which ranged from $$758 to $1,074 for a six-month term.

Then we changed that to “not currently insured -- no vehicle to insure,” those quotes from the same three companies ranged from $1,170 to $1,855.

When we selected "previous policy expired or lapsed” the cheapest carrier dropped out altogether, though the two remaining quotes didn't change.

A huge penalty is not always the case. California won't let insurers use continuous coverage as a rating factor. Other states may require that insurers provide exemptions for military serving overseas or people who have been hospitalized or suffered a job loss.

Your underlying driving record and claims history will make a difference. If you stopped driving because of a DUI, that DUI is still on your record and will affect your rates.

The good news is that even if you do wind up paying higher rates because of the long lapse in insurance, you should see lower rates after your first renewal period, and certainly by your second.

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My son got drunk and wrecked my car. Now what?

Posted on September 24   By Des Toups

My 29-year-old son got drunk and wrecked my car. He has no driver’s license. Now my insurance company wants to add him to my policy. Why?

Insurance is a business, and when your carrier did the math to calculate your rates it did not account for this wild card.

Your car insurance company typically assumes that all licensed drivers under your roof have access to your car and charges you accordingly. It didn’t account for your son; maybe he doesn’t live with you, or the fact that he doesn’t have a license kept him off their radar.

But clearly your son has access to your car, and he has just demonstrated the kind of risk he poses to the insurance company. Your car insurance bill is going to go up.

There are a couple of things you might try to limit how much it rises.

First, ask your car insurance agent or company about excluding your son. Right now you are covering anyone who drives your car with permission. A “named driver exclusion” endorsement on your policy would specifically eliminate your son from coverage – he would not be covered by your insurance under any circumstances even if he were driving the car with your permission. (But he -- and by extension, you, if he is driving your car -- remains liable for all damage he causes.)

Second, shop around for a new carrier and compare quotes from as many as you can. The insurance company that was cheapest for a low-risk driver with no claims may not be when an expensive claim is added to the mix. That black mark is part of your own claims history now, whether you switch insurance companies or not.

A new insurance carrier may ask about the son as well when your quote goes to underwriting, the stage when your records are verified, especially if he is living under your roof.

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