Insurance Agent didn't advise Collision; Now accident; Now what?

[J-rap]

This is for my daughter, who just bought her first car a few months ago after years of saving and months of research.  She handled the insurance part of it herself with a major auto insurance chain.  You don't meet with them in person, you talk with them over the phone and they ask you questions and recommend a policy. 

 

She was in a car accident yesterday -- her fault.  (Thank goodness no injuries.)  Her car was pretty severely damaged (had to be towed to the impound lot).  She called her insurance company, and it turns out she has no collision insurance.  What?  How could they advise a policy that didn't have that?

 

She didn't understand car insurance, just took the advice of the telephone agent.  She drives her car daily, to school and work and back;  it is only about five years old.  I feel terrible for not being part of that whole process with her.  She lives several hours away and I just assumed the agent was advising her appropriately.

 

My daughter is of course distraught!  I guess the bottom line is that it's her (and our) fault, but isn't it surprising that the insurance agent would not have naturally encouraged her to get collision insurance?  It is baffling.  Do you think there is any recourse?

 

She was trying to turn onto an intersection;  other cars who had a better view signaled to her that it was safe to turn.  She trusted them (cars were waiting impatiently behind her), but in the end it wasn't safe.  A car was coming.

 

Lessons learned:

#1.  Make sure your children have collision insurance.

#2.  Don't trust other drivers to tell you if a move is clear and safe.  Wait and see for yourself.

[Spryte]

So sorry! Glad she is ok, though.

 

I don't know of any recourse, just wanted to say that I'm glad your DD is ok.

[J-rap]

So sorry! Glad she is ok, though.

 

I don't know of any recourse, just wanted to say that I'm glad your DD is ok.

 

Thank you.  Yes, that is by far the most important!  Thank goodness!

 

[gardenmom5]

sorry for your daughter.

 

when cars reach a certain age - it is often more economically feasible to drop collision because you're paying more in premiums than the car is worth.  it's surprising for a 5yo car, but that is the rational behind no collision.   also would be the case if she had a limited budget for car insurance.  collision is not state required coverage.

[Annie G]

So sorry about the accident- glad she wasn't hurt!

 

The questions they asked probably centered around whether she had a loan on the car and how much she could afford to spend on insurance.  They might have sold her a bare bones policy because lots of folks can only afford those.  Too bad they didn't take time to explain the different options. But honestly, my kids wouldn't have been able to compare policy options on the phone. They're visual and would need to see it on paper.  Part of that might be that they never seem to be doing just one thing at a time, and divided attention would probably result in them making the wrong choice.  

[J-rap]

sorry for your daughter.

 

when cars reach a certain age - it is often more economically feasible to drop collision because you're paying more in premiums than the car is worth.  it's surprising for a 5yo car, but that is the rational behind no collision.   also would be the case if she had a limited budget for car insurance.  collision is not state required coverage.

 

Thank you, and yes, I do understand that it's not state required.  sigh.  She did pay over $8,000 for the car though, so it seems like it would have been recommended in her case.

 

[Tmhearn]

Collision insurance is often not purchased for an older car - especially if the car doesn't have a loan. I hope she isn't out too much money for her car.

[unsinkable]

I'm glad she is OK.

 

I'm so sorry she no longer has a car and for the confusion over insurance. That is horrible way to "learn" about insurance.

[Melissa in Australia]

:grouphug: hugs to you and your daughter.

 

 

 My son rolled his car last week. fortunately no one was hurt but his car was destroyed. He is now carless

 

 

 We don't have collision on any of our cars. All the cars are over 10 years old.

 

[lynn]

I am glad she is okay.    Like others said collison is optional, insurance is confusing, so much info to take in for someone who has never handled it on their own.  I still don't understand it all.  I just know that premiums on ds 15 year old car cost double my 2 year old car. 

[J-rap]

:grouphug: hugs to you and your daughter.

 

 

 My son rolled his car last week. fortunately no one was hurt but his car was destroyed. He is now carless

 

 

 We don't have collision on any of our cars. All the cars are over 10 years old.

 

So sorry about your son!  I am so glad he was okay, too.

 

[mamaraby]

I'm so glad to hear that she's ok. At the very least, she had liability, though, and that's certainly better than owing for everyone's damage including her own. It's still disappointing to save up and pay so much for her car and then end up with it not driveable. No, there isn't going to be any recourse in this instance, unless you're in a co parative negligence state and the other driver is determined to be some percentage at fault.

 

I would suggest next time finding an independent agent. That way she can go in to speak with someone in person and the agent can quote her a policy from multiple insurance companies and help her find the best value for the coverage she needs. The agent would then be her point of contact for any questions or concerns. Much better, imo, than dealing directly with the insurance company.

 

Still a tough lesson to learn, though.

[Carrie12345]

I think it's very difficult to fully understand insurance issues over the phone, and even more difficult for a 3rd party to sort out how the conversation actually went down.

 

I'm so glad your daughter is okay, and I'm sorry she's learning this way. 

 

I can't imagine there's any recourse in a he didn't say/she says he didn't say situation.  IIRC, my insurance paperwork required signing off on not having collision for my now 11yo van, and we had to send proof of outright ownership when the loan was paid off.  I'm *guessing* she was required to take similar steps without digesting what they meant.

[hjffkj]

That sucks. Who knows how the insurance company handled it. They may have suggested it and she declined it hearing that it was optional and not fully understanding it but that's entirely on her. they're in the business to make money and they may have not informed her because she couldn't afford it. Rather than losing a potential customer they sold her what she could afford. Not entirely honest but I believe all consumers should thoroughly research big purchases before buying. She's lucky she learned this now. I've known adults to never learn this and get screwed continually by salesmen.

[Danestress]

Sometimes it doesn't make sense to have collision on a car that is lower in value especially when a driver is in a higher priced insurance group (which young drivers generally are). When you factor in a deductible, it's just a risk analysis. A collusion policy for a young person with a low deductible is expensive. For many people, if they are going to have a higher deductible anyway, they just place bets on it being a better deal to drop collision. A lot of this is a matter of how risk tolerant a person is, what he or she can afford to pay for insurance, and what he or she can afford to pay out of pocket for an accident. My dad always said that you should not insure for things you can afford. So he never had dental insurance, collision on our cars, etc. He always went with medical insurance with high deductibles and lower premiums because he could afford most medical events, but wanted to be insured against major medical issues.

[J-rap]

I'm sure you're all correct.  Thank you for taking the time to respond -- it helps.  Tough lesson to learn for sure.  She will certainly see an agent in person next time and go through all the options.  Whenever that is.

[zoobie]

That's terrible. Your poor DD! :(

 

Do you have a good insurance agent you can call for advice? See what is required by your state to inform the consumer when one declines collision insurance. It can't hurt to check. Agents do make mistakes and there are unscrupulous ones who just want your money. If the agent didn't follow the law, she might have a case against his/her E&O policy.

[gardenmom5]

 

Thank you, and yes, I do understand that it's not state required.  sigh.  She did pay over $8,000 for the car though, so it seems like it would have been recommended in her case.

 

 

It's not what *she* paid, but what an insurance co would be willing pay out before declaring the car totaled.  (not the same thing.)

[Lolly]

I am glad she is okay.    Like others said collison is optional, insurance is confusing, so much info to take in for someone who has never handled it on their own.  I still don't understand it all.  I just know that premiums on ds 15 year old car cost double my 2 year old car. 

 

We have the same experience for an older truck we own. Our insurance agent explained that it actually costs more to fix an older vehicle because the parts are not available for it. So, when they get to be about 10 yrs old, the price to insure them jumps. 

 

As far as the op goes. I'm about to call and drop collision on a couple of our vehicles. They have reached the point where replacing them ourselves is a better option than paying collision on them. Your dd's car value is about where I usually drop it. I hope she was able to buy it outright when she got it and doesn't have to make payments on a car that is gone.  :grouphug: I am betting the agent did offer collision. Your dd may not have understood what it all meant and gone with the lower priced, but still legal, option. 

[gardenmom5]

Sometimes it doesn't make sense to have collision on a car that is lower in value especially when a driver is in a higher priced insurance group (which young drivers generally are). When you factor in a deductible, it's just a risk analysis. A collusion policy for a young person with a low deductible is expensive. For many people, if they are going to have a higher deductible anyway, they just place bets on it being a better deal to drop collision. A lot of this is a matter of how risk tolerant a person is, what he or she can afford to pay for insurance, and what he or she can afford to pay out of pocket for an accident. My dad always said that you should not insure for things you can afford. So he never had dental insurance, collision on our cars, etc. He always went with medical insurance with high deductibles and lower premiums because he could afford most medical events, but wanted to be insured against major medical issues.

 

in addition - dh always put the kid cars in his name and had them on our policy because it was actually cheaper for them. my third is about to hit that magic age of 25 in three weeks.  (I recall how excited 1dd was because she could then rent a car when she flew somewhere.)

 

as a young adult, my nephew moved out of his mother's apt because her license had lapsed, and insurance was even higher because he was living with her.  (moving out lowered his rate)

 

[In The Great White North]

 

 

as a young adult, my nephew moved out of his mother's apt because her license had lapsed, and insurance was even higher because he was living with her.  (moving out lowered his rate)

 

Living with an unlicensed adult raises your rates?

[Ravin]

We've kept collision on our very old vehicle because we literally couldn't replace it at all otherwise if something happened to it, and it's our only vehicle at this point. Thus, it's worthwhile. Also we have USAA, so the insurance doesn't cost all that much.

 

We were in your DD's shoes a few years back when we had only liability; our car was stolen and that put us without a vehicle for 6 months, resulting in DH losing his job. In retrospect, carrying full coverage would have been worth the money. We've done so ever since.

[gardenmom5]

Living with an unlicensed adult raises your rates?

 

it did his - he was a young adult, she was the middle-age parent.   I don't know if that is general, or particular to their state/case.  she *had* been licensed, but it had recently lapsed, and not for medical reasons. (she is now licensed again.)  it could also be something regarding her driving record - and not having a license or her own insurance.  

[Moxie]

in addition - dh always put the kid cars in his name and had them on our policy because it was actually cheaper for them. my third is about to hit that magic age of 25 in three weeks. (I recall how excited 1dd was because she could then rent a car when she flew somewhere.)

 

as a young adult, my nephew moved out of his mother's apt because her license had lapsed, and insurance was even higher because he was living with her. (moving out lowered his rate)

 

But if everything is in your name, doesn't that put YOU in danger if your teen hits someone who decides to sue for more than what the insurance will pay??

[gardenmom5]

But if everything is in your name, doesn't that put YOU in danger if your teen hits someone who decides to sue for more than what the insurance will pay??

 

that's what trusts are for.  everything is in one (including the house) - and the trust is untouchable.  dh's business is incorporated - and separate from everything else.

 

[Lolly]

But if everything is in your name, doesn't that put YOU in danger if your teen hits someone who decides to sue for more than what the insurance will pay??

 

 

There are laws in place that limit the amount of damages that can be collected. We have an umbrella policy to cover things like that...just in case...because we don't trust the legal system. Umbrella policies are pretty low priced.

[bettyandbob]

But if everything is in your name, doesn't that put YOU in danger if your teen hits someone who decides to sue for more than what the insurance will pay??

 

Our insurance is bundled -- house  and auto with the same company. We purchased an additional "umbrella" policy to cover us in case something like this happened. The umbrella policy is not expensive. We did this after my MIL was sued for millions. She went to court and the jury found for her so she never had to pay anything, but the months leading up where she was looking at losing EVERYTHING were just incredibly stressful and scary. She carries an umbrella policy now too. It covers both car and things that happen on your property (like if a neighbor child is injured on your trampoline and injuries go beyond you homeowners policy).

[Splash]

Insurance agent says it doesn't matter if the car and insurance is in their name and they have an accident the people can still come after the parents if they are under a certain age. So we too left car in our name and they are on our insurance.  

[Lolly]

Insurance agent says it doesn't matter if the car and insurance is in their name and they have an accident the people can still come after the parents if they are under a certain age. So we too left car in our name and they are on our insurance.  

 

That would be 18...just like everything else. Hey, since 21 is the new 18 I wonder if they are changing that too.

[poppy]

I have to be honest, I roll my eyes at the idea that it's the agent's fault here.  The agent is responsible for explaining what the policies are and the prices for optional additions.  The agent is not responsible for telling a grown woman how to be practical.

 

I am not putting myself above her, I myself made a really stupid and costly mistake with my first insurance policy by getting limited tort. It's definitely an annoying and confusing system.  It's not simple, especially for inexperienced young people.  And even tough it is so easy to research insurance, mortgages, or any legal policy you put your name on that involves  potentially lots of money these days....... young people the world over dumb, costly mistakes. 

 

I'm glad she is OK.

[dirty ethel rackham]

Wow.  I can't believe the agent didn't mention collision insurance.  You would think that he would want the sale.  Unless someone is driving a beater car, I can't imagine an insurance agent not angling for the higher sale ... unless he was purposefully lowballing to get the business - going for volume 

[QueenCat]

Collision is optional. People look at the value of the vehicle vs the price and payout of collision insurance when they decide to opt in or out.

 

This........... we drop collision when a car is worth less than $5000 (based on trade in prices).

[QueenCat]

But if everything is in your name, doesn't that put YOU in danger if your teen hits someone who decides to sue for more than what the insurance will pay??

 

If the teen is under 18, you're liable regardless of insurance. We actually had to sign a paper saying we understood this when ds got his license. Basically said we were liable for any damage he caused while he was under 18. This was in TN.

[WishboneDawn]

It's not what *she* paid, but what an insurance co would be willing pay out before declaring the car totaled. (not the same thing.)

Just think this bears repeating. One thing I learned was to check the blue book value of a car before buying. That's the value insurers look at to replace a car and it's good to try and stay close to that when buying a car.

[J-rap]

That's terrible. Your poor DD! :(

 

Do you have a good insurance agent you can call for advice? See what is required by your state to inform the consumer when one declines collision insurance. It can't hurt to check. Agents do make mistakes and there are unscrupulous ones who just want your money. If the agent didn't follow the law, she might have a case against his/her E&O policy.

 

Yes, we do have a good insurance agent in our small town.  Our daughter went through another agency since she isn't living here.  I'm sure he'd be happy to talk to us, but it does sound like there's not much we can do about it at this point.  :(

[J-rap]

We've kept collision on our very old vehicle because we literally couldn't replace it at all otherwise if something happened to it, and it's our only vehicle at this point. Thus, it's worthwhile. Also we have USAA, so the insurance doesn't cost all that much.

 

We were in your DD's shoes a few years back when we had only liability; our car was stolen and that put us without a vehicle for 6 months, resulting in DH losing his job. In retrospect, carrying full coverage would have been worth the money. We've done so ever since.

 

Oh man, I'm sorry about what happened to your family!  That's terrible!   It certainly would have been worth it for my daughter to carry collision insurance as well.  I don't know when she'll be able to afford another car, whereas I think she could have kept up with a good insurance policy.  Someday. 

[J-rap]

in addition - dh always put the kid cars in his name and had them on our policy because it was actually cheaper for them. my third is about to hit that magic age of 25 in three weeks.  (I recall how excited 1dd was because she could then rent a car when she flew somewhere.)

 

as a young adult, my nephew moved out of his mother's apt because her license had lapsed, and insurance was even higher because he was living with her.  (moving out lowered his rate)

 

 

Yes, I would guess it would be cheaper if we had just put it under our name, but if she technically doesn't live under our roof anymore, could she do that?  (She is 22.)  She hasn't lived at home (except for holidays) for almost two years.  (Though our address is still listed as her permanent residence.)

 

[mamaraby]

Just think this bears repeating. One thing I learned was to check the blue book value of a car before buying. That's the value insurers look at to replace a car and it's good to try and stay close to that when buying a car.

True, but blue book value can often run high and not every insurance company references the blue book value in a total loss situation. For instance, the insurance company I used to work for used NADA exclusively.

 

This matter is also why I never go without Gap coverage on a vehicle that has a loan. Skip the stuff from the dealership and go with the one from the insurance company, it's usually cheaper. Most auto insurance companies offer Gap coverage right on your policy.

[J-rap]

Thanks for everyone's comments!  I appreciate it.  I have been on the road (actually, in the air) all day so haven't had a chance to get back to these until tonight.  A mechanic is going to be checking out her car tomorrow in case it is salvageable.  No news yet.  (My daughter is not very hopeful.) 

 

It's a tough lesson to learn, for me too.  I'll definitely know how to advise my other kids when they get cars someday.  :(

[J-rap]

 I hope she was able to buy it outright when she got it and doesn't have to make payments on a car that is gone.  

 

She did pay cash for the car.  She had been saving up for a long time.

[Annie G]

Do you have a community college nearby that has an automotive program? Our middle dd wrecked her truck years ago and she had it fixed by the school. It took them nearly 6 months but they did a really good job and she only paid for parts.  It was very cheap because they found salvaged parts and stuff when they could. 

[FloridaLisa]

Jhat,

 

Insurance agents can be liable just like other professionals for falling below the standard of care.  Many/most agents carry an errors and omissions policy. It can be difficult to prove insurance agent liability, however, b/c it often comes down to a he-said/she-said situation.  Also, litigation is a long, drawn out process and may not be emotionally worth the value of the car. Collision should clearly be offered.  Whether it was offered, whether your dd understood what it was and whether to take it and whether the agent explained it sufficiently would be issues of fact. It's a terribly difficult lesson.  And I know you hurt for your dd. 

 

Lisa

[Jenny in Florida]

Collision is optional. People look at the value of the vehicle vs the price and payout of collision insurance when they decide to opt in or out.

 

Yes, if you owe money on the car, the lender will usually insist you carry collision coverage (because they want to make sure their asset is protected). However, if you don't have a loan on the vehicle or if it is not fairly new, insurers often recommend you  drop collision.

 

I found an article about this on the Progressive website that puts this decision in terms of the value of the car versus the cost of carrying collision coverage. The example they give is:

 

If your car is worth $2,500 and you would pay $250 for collision on a six-month policy, you would end up paying the entire cost of replacing your car to carry collision for five years, or 20% of your car's value every year. It's often very questionable whether it is worth it to carry collision on an older car.

[Jenny in Florida]

Living with an unlicensed adult raises your rates?

 

My husband did not have a driver's license for a good number of years. (He has a bad back and finds driving painful. So, as long as he could avoid it, he did.) However, when I purchased insurance for myself, I always had to list him on the policy, because the theory is that any adult sharing your home might possibly drive your car. If the young man's mother lost her license for a reason, rather than just letting it expire or something similar, I can see that it could raise the insurance rates for anyone who lived with her.

[Word Nerd]

Is it possible the agent offered it and she didn't realize it because she didn't understand what that entailed? It doesn't sound like she did any comparison shopping or researched her options much before getting a policy. It's an expensive lesson, but I'm glad she's OK. I hope she can get it fixed.

[J-rap]

Do you have a community college nearby that has an automotive program? Our middle dd wrecked her truck years ago and she had it fixed by the school. It took them nearly 6 months but they did a really good job and she only paid for parts.  It was very cheap because they found salvaged parts and stuff when they could. 

 

Well that's interesting!  I'll definitely suggest this to her as something to investigate.  She is in a metropolitan area so there are several community colleges.

 

[Laura Corin]

in addition - dh always put the kid cars in his name and had them on our policy because it was actually cheaper for them. 

 

I don't know if it is the same in the US, but when applying for insurance in the UK, you have to declare who the main driver is going to be, and the premium is based on the risk of that individual.  So, here, if a young person is actually the main driver, then stating that the parent is would invalidate the insurance.

 

L

[QueenCat]

I don't know if it is the same in the US, but when applying for insurance in the UK, you have to declare who the main driver is going to be, and the premium is based on the risk of that individual.  So, here, if a young person is actually the main driver, then stating that the parent is would invalidate the insurance.

 

L

 

We do have to declare the main driver but all three cars are on our policy; one with dh as the main, one with myself as the main, and one with elder ds as the main. He is technically an adult but we own the car, and he still lives here. It's cheaper to insure him on our policy than to put the car in his name and have him insure it. So he just pays us his share.

[Journey]

I know she's young but she should have realized when she got her policy that she didn't have collision, especially by the price.  Collision is expensive and you would/should know if you have it by the amount of the bill.  This is yet another reason why people shouldn't call 800 numbers for insurance...think geico.  You should always have a local agent to handle these things for you....and yes, I do sell insurance and work for a local agent.  I always tell people this when they want to switch to one of those 800 companies.  If someone calls here, like in your daughter's case, we would have explained everything to her and would have given her the best option for her situation.  if she has a loan on the car, she needs comp and collision.  I'm sorry she has to go through this and I'm pretty sure that if she went with the company I'm thinking of, her rates are are going to sky rocket now.   also, even if she doesn't have a loan, we most likely would have encouraged her to go with full coverage...yes it costs more but most of the time it's better than having to come up with the price of another car if it gets totaled.

[Joker]

I know she's young but she should have realized when she got her policy that she didn't have collision, especially by the price.  Collision is expensive and you would/should know if you have it by the amount of the bill.  This is yet another reason why people shouldn't call 800 numbers for insurance...think geico.  You should always have a local agent to handle these things for you....and yes, I do sell insurance and work for a local agent.  I always tell people this when they want to switch to one of those 800 companies.  If someone calls here, like in your daughter's case, we would have explained everything to her and would have given her the best option for her situation.  if she has a loan on the car, she needs comp and collision.  I'm sorry she has to go through this and I'm pretty sure that if she went with the company I'm thinking of, her rates are are going to sky rocket now.   also, even if she doesn't have a loan, we most likely would have encouraged her to go with full coverage...yes it costs more but most of the time it's better than having to come up with the price of another car if it gets totaled.

 

I was curious so I looked at our policy and we only pay just over $8/month for collision on dh's car which has no loan.  We pay just over $10/month for my brand new vehicle that has a loan. Our deductible is only $500 as well, so I don't think I would have known as a teenager whether or not collision was included by the price as it seems rather inexpensive.