Meet the Mishaps: Liability Larry and Catastrophe Cathy are married with two kids, Deductible Dudley and Peril Polly, and a dog, Risk. As their name would imply, they are often faced with very unfortunate circumstances. What’s worse, everyone around them seems to get caught up in their bad luck, too! Join us each month as we dive into some of the adversity that comes their way, all from the insurance perspective!
The Story
The Mishaps were having a rough morning. Everyone overslept. Dudley spilled milk everywhere while preparing his cereal and Polly discovered the printer was out of ink when she attempted to print her Comparative Lit paper that was due that morning. n allcouldn’t find his other dress shoe. It was eventually found in Risk’s mouth, having become his latest chew toy.
These troubles turned out to be just the tip of the iceberg that day.
When she was finally ready to leave, Cathy jumped in her car, backed out of the driveway, and took off for the restaurant. Just then, Polly returned home from dropping Dudley off at school and she parked in the spot in front of the house. Cathy, realizing she forgot some necessary paperwork, returned home almost as soon as she left. Cathy pulled up behind Polly and blocked the driveway, intending to run into the house quickly to grab her bag, hop back in the car and speed away.
Meanwhile, Larry exited the house directly to the garage and didn’t see Cathy who was on her way in the front door. His mind was on his meeting as he opened the garage door and quickly backed out. Absorbed in thought, he didn’t check his mirrors before quickly backing out of the driveway. He didn’t notice Cathy’s newly-leased Mercedes until he had T-boned it.
The Loss
Cathy heard the crash and came running. Thankfully Larry wasn’t hurt, but the bumper of his BMW was hanging off. The passenger side of the Mercedes sustained some hefty damage.
The Investigation
Larry immediately called their insurance agent to find out what to do. The agent checked the auto policy and reminded Larry that he’d recently dropped collision coverage on the BMW, so he’d have to pay for the repairs to that car out of pocket. The Mishaps carried collision coverage on the leased Mercedes, so the repairs to that car would be covered by insurance less the deductible.
The Outcome
Cathy took her car to a direct repair shop as pre-approved by the insurance company. This made the process of adjusting the claim easy and the work was completed within a few days. The insurance company cut a two-party check to cover the repairs on the leased vehicle. The car dealer signed the check and forwarded payment to the body shop. Because her carrier allowed it, she could have chosen any repair facility she wanted. If she had different insurance, this might not have been the case.
Larry and Cathy both had to rent cars for the time they were without theirs. Because Larry’s car wasn’t covered in this accident, he also did not have coverage for a rental car. The insurance company offered Cathy a bucket of money to rent the car of her choice. This is common for top-tier carriers and Cathy was happy to be able to get a car similar to her luxury Mercedes. She declined to purchase the additional insurance at the rental counter because, as their agent reminded her, their insurance policy extended to replacement vehicles rented after an accident. Had she been renting for any other reason, she might have considered the coverage.
The Lesson
If both vehicles had collision coverage under the same auto policy, the damages to both cars would have been covered and the Mishaps would have only paid one deductible. If Larry had kept collision on his car and his damages had been covered, the insurance policy also would have covered a rental car in the same way it covered a rental for Cathy.
It may seem on the surface that Larry should have kept collision coverage on his car. However, after considering the value of the car against the premium for collision coverage and his deductible, he determined that it made better financial sense to drop collision, save the premium and cover the cost of repairs and rental cars out of his own pocket.
Dropping collision can make sense if the car in question is older. However, for brand new cars, or cars that are being financed or leased, carrying collision coverage is usually a better choice.
But the most important lesson here is to always check your mirrors before backing out of the driveway.
Claims Chronicles of the Mishaps is a fictional series based on actual claims. The Mishaps are an imaginary family and any resemblance to any person is purely coincidental. Claim details and circumstances have been changed to protect the privacy of individuals. All insurance policies are different and each separate policy will dictate the coverage in each unique scenario. Nothing in this post is meant to suggest a guarantee of coverage.