3 Dirty Car Insurance Tricks to Watch Out For
Insurance companies, for all the effort they put into advertising that they’re on your side, have developed a bad reputation for ripping off their customers. When you need to file a claim, you’re essentially at the mercy of the insurance company to follow through on their end of the deal, even though you’ve paid them thousands of dollars in premiums over the past couple years. There is one way to protect yourself from getting ripped off by your car insurance company when you need them most: educate yourself about the dirty tricks they pull so you can avoid falling to their trap. Here are 3 of the common tricks that car insurance companies will try to fool you with.
Insisting that you need collision coverage
If you have a newer car, then collision insurance is very beneficial if your car is totaled in an accident and needs to be replaced, since collision coverage will pay you the value of your car, minus any deductible you have. But let’s say you drive an old clunker that’s worth less than $3k. The more you drive and as time goes by, your car continues to depreciate, and its value inches closer and closer to your deductible. Insurance companies will try to push collision coverage on you, but if your car’s value is equal to or less than your deductible, they won’t be paying you any money if it needs to be replaced after an accident.
Not telling you about gap insurance
If you are in that spot where you owe more than your car is worth because of a combination of financing and depreciation, you could find yourself in a bad position if your car is totaled. If you financed your car for $30,000 and get into a bad accident just a few weeks later, your insurance company is only going to pay you the current value of your car, which dropped at least $5,000 from the moment you drove off the lot. So the insurance company might offer you $25,000, but guess what? The bank still wants their $30,000 back, and you’re on the hook for the difference unless you have gap insurance. If you have a “gap” like this, make sure you ask your agent about gap insurance.
Using legalese and anti-concurrent language
Insurance policies are designed to be confusing, although legislation in the US is trying to change that. One of the trickiest parts of any insurance policy is something called anti-concurrent language. An example of anti-concurrent language ripping you off would be if your car catches fire, causing the gas tank to explode. Anti-concurrent language in your policy might allow the insurance company to deny your claim because you’re not covered for damage caused by explosions, even if you’re covered for fire damage and the explosion is clearly a result of the fire. Before purchasing your car insurance policy, make sure you ask the agent about any anti-concurrent language in it, have them show it to you and explain it if you don’t understand.