Get rid of my Collision coverage- Wait there is more!
Today we will discuss the dreaded statement I have heard over the 17 years as an adjuster and now as an insurance agent. “I just paid off my vehicle I do not need collision insurance” that is a huge NO NO!
Here are 3 quick key reasons for keeping collision:
If you paid off your home, would you call your agent and say I do not need home insurance anymore? I will answer that for you no, same with vehicles even though they depreciate, vehicles still hold a high value-which is hard for any family to pull 10k or 20k out of their savings for a vehicle when you can insure it for a lot less. there are other benefits to having collision coverage agents do not tell you or may not even know. Let’s start with this big myth of paying your vehicle off…
1. I Paid my vehicle off and want to get rid of my collision coverage
As an insurance adjuster, I had hard conversations with individuals who took off collision and were in a situation their vehicle was non-drivable and was sent to a tow yard. The client needed to go to work-pick the kids up from school etc. Unfortunately, there was nothing I could do for the client regarding their vehicle because they did not have collision coverage. Even if the other party is at fault the other insurance company normally takes at least 3-5 days (sometimes longer) to get everything in place on their end to begin the process of taking care of your vehicle.
Here I will use a term an agent will possibly not tell you about – mitigate- (make less severe, serious, or painful:) their damages. So, an insured must move their vehicle or avoid driving a damaged vehicle to avoid sustaining more damage (think bumper, fender hanging off the vehicle, or taillight loss). If the vehicle is at a tow yard, the client must move the vehicle ASAP since they are the owners of the vehicle. Tow yards are not concerned with your insurance or who was at fault for the accident, they are seeking payment for towing your vehicle either you are the insurance will pay this fee.
- So how does this work out if one has collision insurance – you call your insurance carrier and give a statement on what happened in the accident? Regardless of fault after the statement and coverages are in order, the adjuster arranges a rental for you (which you must have on your policy as well) and arranges for the vehicle to be picked up by a body shop in the carrier’s network or the client’s shop of choice.
It really is that simple, the client only has to call and release the vehicle to their insurance company, and it is done the vehicle is moved and an estimate is done for repairs or to determine if a total loss.
2. But my vehicle is old – and not worth much
Here I ask the client the make and model of the vehicle – and do a ballpark estimate of the value of the vehicle say the vehicle is $4000.00 and the insured is paying $500 per year in collision coverage. Everyone has different budgets I understand but here is just a simple scenario-
The client has an accident where they are at fault – front bumper needs replacement – the average cost of front bumper $1200 depending on make/model of vehicle, then backs into another vehicle and has to pay $900 for the rear bumper at this point client has paid out $2100- if they had collision they would have had to pay only the deductible which is typical $500- also the insured would have to pay for rental out of pocket if they had a collision with rental they would not have to pay anything out of pocket except the deductible. Wrecker bills and storage fees are all paid under collision.
** Quick side note value of used vehicles has risen over the past year by 40.5%- based off USA money so the $4000.00 our client originally thought it would be has increased by a whopping $1600.00 in one year to $5600. So, it really does pay to have collision coverage on your vehicle along with a rental as well.
3. Liability disputes – If you are struck by an uninsured party or involved in a multi-vehicle accident where it is difficult to determine who was at fault- think of the fog or icy roads accidents 2022 where there is a 100-car pileup every person must go through their own carrier for damages typically. If you do not have collision coverage, then your insurance company cannot help you during such a dramatic event.
Collision benefits – The insurance company handles all the hard work of moving your vehicle from tow yard to body shop or salvage yard if total loss – and can process a check for damages in 2-3 days or a week or have the vehicle in the shop for repairs vs the insured having to handle all this on their own and having no payment for damages -having to dig into savings to replace your vehicle and also having to pay for rental out of pocket.
** Another side note regarding rental vehicles – if you do not have collision on your policy you will have to take out the rental car company’s insurance.
You will thank me your agent in the long run!