Saving money when insurance doesn’t cover your loss
As an insurance agent for nearly 20 years, I have helped hundreds, if not thousands of my customers through the aggravation of the auto insurance claims process. Having even a minor accident is difficult to deal with, but if you have adequate insurance coverage to pay for the damage to your car, it helps to get through the event with much less pain.
A more frustrating situation is when a loyal insurance customer becomes aware that a particular claim is simply not covered. This misfortune is never pleasant to discover.
Most of the time, this kind of situation occurs when the policy holder has an car that’s 10 years or older and he or she had chosen to reduce or remove their comprehensive or collision coverages to save money.
Although finding out that you’re not covered for an issue is upsetting, In many cases it is not really a bad financial decision to have made. If you calculate the high cost of premiums against a limited claims payout on an older car, and then add in a deductable of $500 or a $1000, you’ll find that in most cases involving an older car, you made the right choice. Insurance carrier actuaries are very good at what they do – It’s really true when they say “you can pay now or pay later.”
With that said, I’ve noticed an interesting phenomenon emerging over the last 10 or so years. Since the mid 1990’s, more and more of my insurance clients have been holding on to their older vehicles. That’s pretty smart; with the cost of a new car and repairs after the warranty has expired, I can see why its appealing to hold on to and maintain that investment.
But sometimes, there’s an option between reluctantly carrying expensive comp and collision on an older car and considering buying a new one when a claim isn’t covered. One story that comes to mind concerns a long time customer, a single mom on a strict budget, who faced exactly this situation. After her car was caught in a flash flood, and wouldn’t start, she was told by the garage she had the car towed to that the engine was seized: full of water and not repairable. Because she had dropped comprehensive coverage on her 15 year old car, she was told she would be fully responsible for the repair. But after the garage gave her an unaffordably high price for rebuilding the engine, she started shopping for a new car.
When she came to my office, we sat and reviewed rates for the replacement vehicles she had looked at. When the payment on a new car and the insurance required to cover it were considered, she came to the conclusion that buying a new vehicle was out of her price range. She didn’t want to buy a used car, worried that she would end up inheriting someone elses problems. So, we looked in a new direction. After doing some searching on the internet, we discovered that it was possible to simply buy a complete replacement engine for substantially less than the price quoted for rebuilding her ruined one. We settled on a company called Gotengines.com, which not only had the most comprehensive site we found online, but also had real people who answered the phone and answered all of our questions on how to arrange to purchase and have a replacement engine installed. Not only could they provide a replacement engine for virtually for any make, model and year of car on the road today, their prices were lower than anyone of the other resources we found on the web. They also have an extensive engine blog, which makes them something of a go-to resource when it comes to learning about replacement engines.
So, to make a long story short, my customer ended up purchasing a used engine (rebuilt and new engines were also available, but we were on a tight budget, of course) and had it shipped to a different local mechanic who was more than willing to install it at a much lower price (including the cost of the replacement engine) than the first garage she was dealing with.
Bottom line; we did two calculations. First, we determined how much she would have spent on the additional Comprehensive and Collision insurance for the previous 5 years. Second, after deducting the price of the engine from and the installation bill from the repair shop, we saw that she ended up saving over $500. Now, that’s a happy ending!
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