Does insurance pay for cars people ruin by fooling around?

Factual Questions
21

Couple of minor corrections.

First, dear god, but do the rules on minimal coverage vary from state to state. And some states that you expect would have reasonably high requirements utterly fail to do so. My biggest bitch historically was policies I wrote for California, where the minimal requirements were 15k per person, to a maximum of 30k per accident for Bodily injury liability, and a pathetic 5k (!!!) for damage to another person’s property. That was terrible 10ish years ago when I was selling P&C policies and it’s worse NOW.

And that leaves out the various flavors of no fault states that are generally a good idea, but not always well implemented, where each person’s coverage pays for them regardless of fault.

Second, damage to the owner’s vehicle is split in most states between Collision (COLL) which is pretty much any impact with another vehicle or object (other than animals) and Comprehensive (COMP), which is collisions with animals and generally all the other ways your vehicle can get damaged that don’t involve an impact. Now, all the BS mentioned in the OP is going to be a COLL claim, but they are distinct coverages. Of them, I always advised dropping the Deductible on COMP because it’s normally the cheaper of the two, and more likely to happen (hail damage, cracked windshields, etc).

Third, Deductibles - in the US they’re your Co-pay or co-insurance, the amount of damage you are responsible for before the insurance is required to pay, or the amount deducted from a total loss settlement to you. A related issue, is Actual-Cash-Value, which is how 95+% of claims are settled, where your final payout/determination of a total loss is based on the value of the car at the time of the loss based on pre-damage condition, age, and milage, which brings me back to my concerns for Gap/payoff coverage.

On to the other points, various states have different notification requirements, and they all tend to work in a pretty delayed manner. One semi-common exception is what is known as a SR-22 filing. Such filings are often required in the case of someone getting a license back after a license suspension, accident without insurance, or severe driving violation. In that, their continued license is contingent upon the insurer keeping that filing on record with the state, and failing to do so usually results in very quick re-suspension of license and driving rights.

Also to be noted, @LSLGuy (who knows a lot for a layperson, don’t get me wrong!) is semi-incorrect about the notification of the lienholder, but it rarely matters. For most carriers, if coverage goes past delinquent on payment, or is otherwise cancelled, they will notify the lienholder… but it’s traditionally as an automated letter to the address on file for said carrier. Which means a LOT of options for it to not be received, misfield, failure to scan in, and plenty of time between the cancellation, the letter, the processing, and the lienholder having the people and time on THEIR end to start contacting the purchaser, threatening to put their own (COMP and COLL only) coverage on the vehicle and adding it to the lease (very expensive).

In other words, it’s complicated!

In general (huge variations over the companies), if your vehicle was reported missing/stolen in a timely manner and it’s a non-custodial theft, then if the coverage was still in effect at the time of the thief causing the loss, then (IN GENERAL AGAIN) the carrier will pay for the damages to the car under COMP (theft being proximate cause of the loss). Depending on the optics, they may make an exception to chose to pay liability, but it’s almost never going to happen. To a degree (jurisdictions) Liability follows the DRIVER, not the vehicle, which is why if you’re driving a legally rented vehicle, your liability transfers to the rental car (not the COMP or COLL). So parties hurt by the thief may try to recover from THEIR insurance (if the thief has any) UM/UIM/UPD (uninsured motorist, underinsured motorist, uninsured motorist property damage), COMP/COLL, etc depending on state and their coverage.

And then sue the thief, and yes, if there’s provable negligence a case can be made against the owner but probably not the insurance company.

Last note - custodial theft was a semi-significant source of loss and fraud investigations for my company back in the day. Car gets taken by a household member (family or not), often explicitly excluded from coverage under the policy, and then gets involved in an accident. Policy holder then claims after the fact that said person “stole” the vehicle, used it without permission, etc etc etc. To which our first response was similar to @Mama_Zappa - that’s pretty serious negligence. But okay… did you report the car as stolen? Mumbled no. Have you turned your son (or boyfriend/girlfriend/roomate) into the cops for Grand Theft? Mumbled no.

Uh-huh. IF not withdrawn, most of those claims get serious fraud investigation prior to payout, and if there’s evidence of permissive driving prior to or during the incident, they get denied, cancelled, and reported as fraud risks.

22

I did want to clarify something on rental cars: it’s my understanding that you ARE covered for damages to the car, which is why the jacked-up collision damage waiver you’re offered when renting is usually a major ripoff. You’d still be subject to your deductible, if you wrinkle that rental.

It’s quite possible this varies by state / policy.

On the “custodial” thing: I could imagine a plausible situation in which case Junior, whose license has been revoked for whatever reason, takes advantage of Mom and Dad being out of town, takes the car, and does something dreadful. Mom and Dad get back, don’t immediately look in the garage and see a damaged car, and thus don’t report it. I’m not sure what the expected legal proceedings would be in that case - from what you say, it sounds like they ought to report Junior to the police, along with filing the insurance claim?

When my nephew decided to throw his first seizure, damaging his car and a nearby parked one (no injuries, fortunately!!), he could not drive for well over a year. My brother took him off the auto policy. His insurance agent tried to dissuade him “If he wrecks a car while he’s off the policy, you’re in BIIIIIIIG trouble”. Well, brother and nephew both knew that was simply not gonna happen. But yeah, it could have been risky if the nephew was the irresponsible sort. “I’m fine. It was just that once, for xxx reason which no longer applies. Imma drive now”.

This was years back; the seizures were indeed due to something somewhat transient, and he’s long since gotten his driving privileges back.

23

I can say that a buddy of mine took his brand new 4wd truck into much too deep mud did not get insurance for the tow. It required a tracked vehicle. The truck was fine, just dirty.

24

It various tremendously by carrier, but you’re correct, and I was imprecise in my language since I was focused on the liability transfer. Most major insurers DO transfer COMP and COLL to rental cars (although check your policy for exclusions) but WITH your full Deductible attached. Which, depending on carrier will go as a high as 2500 (wince!).

Some of the major exceptions include if you have a limited drive time policy such is often applied to things like Classic/Antique cars, because it’s not coverage for a daily driver, and a few other niche situations. But thanks for calling me out being overly dismissive!

Well, like a LOT of things, you go based on your experience, tone, and efforts. Yes, I gave the most suspicious scenario, and included a few of the questions we ask to try to elicit an honest response and evaluate.

So here’s the thing - if the driver is excluded on the policy, all coverage is void if they drive. That’s what an exclusion is. They are on the hook for the entire claim. That’s why we probe - if the adjuster is going to go to management to make an exception, we’re going to have to be able to show reasons and ideally evidence of why we should, because it’s a business loss when they don’t have too (other than optics, or retaining business, or anything else that can be used to convince).

So all those questions apply to both sussing out if I’m being lied too, or searches for something I can use to make an exception for if I’m convinced they are honest. And of course, some carriers are more willing to go beyond, and some won’t ever consider it.

In your shared example, the agent was correct - but it didn’t mean your family didn’t know the driver well, and their judgement was proven correct.

ETA - now, don’t get me wrong, the scenario wasn’t common, maybe 2-3 times a year. Of those times, I figure it was 50/50, and the more upfront the customer was about sharing information, they more honest I took them to be most of the time.

A whole lot MORE of the scenario the OP mentions, kid doing something amazingly stupid, bordering on flat out illegal, and us covering it and then saying “Exclude them or we’re dropping you, because that was unbearably stupid”.

The worst was drivers not explicitly on the policy, but not excluded, although they should have been one or the other. The boyfriend/girlfriend (and in several cases exes of various flavors) who had possession of the car, or access to the car, but was never a rated risk, often due to having suspended licenses or other skeletons. Those got UGLY.

And don’t get me started about a couple buying a policy and car in one/both names, splitting up, and the one with the car dropped the insurance, leaving both on the hook for an out of pocket loss, even if the non-possessive owner kept insurance on their car (that was one case where I did go to management to request an exception, as it was a 12 year customer with no loses AND a legal notice of separation where the ex kept the car but was required to keep it insured - we ended up trying to subrogate against the ex but that was another department).

25

Wince indeed.

Not just depending on the carrier, but depending on what you’ve opted, for your policy. You could pay a lot more for a 100 dollar deductible, or a lot less for 2500.

That does raise the question though: if your insurance does not include collision (e.g. our 17 year old CRV still has that coverage, and likely we should drop it), might some policies include a rider for rental cars anyway? And what if you’ve got collision on one car and not on another (as we would, if we drop it on the older car; our newer car still has a loan, so we HAVE to keep collision insurance).

Would insurance have covered such an incident anyway? I always assumed that was what AAA and the like were for. Not that insurance might not have some coverage - when our ancient Civic died, my son called Liberty Mutual for help, not AAA - and they actually did send someone to tow the car to a mechanic.

Not directly germane to the OP’s question, but AAA coverage on rental cars may vary. We called them to get our rented SUV out of the snow/mud, this past April. My niece tried calling AAA to help her with a flat tire, and they announced that they wouldn’t work on rental cars. WTF? I think the local AAA franchise was just being snippy.

26

Disclaimer again, check your policy. Okay, In General, most policies that don’t have COLL on at least one vehicle will not have riders for non-owned vehicles. So, yeah, you’ll need the rental car’s coverage. But, if at least ONE vehicle has COMP and COLL ( I can use the abbreviations now I hope, I’ve explained them upthread!) then that coverage will transfer.

Side note - I’ve mentioned this repeatedly in other threads, but if anyone is checking their policy as a result of this, do check on the price of lowering your COMP deductible. As I said earlier, it’s normally the cheaper of the two, and the one you’ll use the most. I convinced people to drop the COMP ded from $500 to $100, which was a bi-annual cost difference of like $20 but a huge savings for actual claims. YMMV.

Most, but not all policies have a “network” they work with for roadside assistance, and if you’re somewhere really remote, or with really weird requirements, you, like a Doctor’s PPO, may end up with noticeable Out of Pocket costs. Similarly, most rental car coverage has a max per day and max per claim, which was not keeping up with rental car prices last I checked. Although again, they’ll often have a partnership that mitigates it. As an example, here’s the link to Progressive’s Roadside Assistance:

If you notice, yeah, it’s a partnership, and they’ll tow you anywhere in 15 miles, or nearest qualified repair shop, anywhere else, and you’re paying for the excess. And, for the scenario above, and the OP (FAFO):

  • Winching service: If your car is stuck in mud, snow, water, or sand (within 100 feet of a road or highway), we pull your car out with a motor-powered cable or chain.

So if you’re off in the distance screwing around, rather than immediately near the road… well, no, the insurance (or I should that THIS insurance) won’t pay to get you out of trouble.

As for AAA, they go back and forth between more permissive days and less permissive days, with the latter being ever more common. They’re (well, Southern California AAA [ CSAA] ) one of the two companies I’ve worked for, and they were moving in the latter direction despite a tradition of the first, because as their customer base aged, their claims vs income ratio had been steadily getting worse, and they had a hard time securing new customers. But this was over a decade ago.

27

Interesting. Thank you for adding your professional expertise to the thread. Both in this cited post and all the earlier ones.

I reside in, and mostly drive in, dense urban / suburban spaces. Nevertheless dealers and the sorts of repair shops I’d trust with my car are a lot farther apart than every 15 miles.

If I had that coverage and my car crapped out at random on some drive someplace, I’d expect to pay something OOP to haul my car the 20 or 30 miles to a place I’d be willing to trust to work on it. Conversely, were I living out in the exurbs or true ruralia, I’d be expecting to pay OOP for 30 or 50 miles of towing plus the 15 they’d pay for.

As you say, they’re not keeping up with reality; they’re selling a feature in a checklist, not a fully usable product.

28

You’re welcome, one of the things I love about this place is that there are so many experts and former experts willing to share.

I would say, even if it’s verging on IMHO rather than FQ that insurance is an inherently conservative business, especially once a company is no longer seeking aggressive growth. That leads to policies being slow to change, and expensive until the risks are known when there is a change.

I also can’t stress enough how important it is to read your policy for the little bitty issues that don’t seem important, like Roadside Assistance, until suddenly they are.

One, that I touched on earlier, is the loan/lease payoff or Gap coverage that I suggested upthread for new car buyers and could easily apply to the OPs scenario with expensive sport/muscle cars.

Great, I advised it, and mixdenny mentioned it was required by their lienholder. You’re safe, right?

Except… for many carriers (I’ll throw shade at Progressive again, but it’s by no means only them), they’ll pay only up to 25% above the ACV (Actual Cash Value) of the totaled vehicle.

Ideally, no, you’re not that upside down, but on something that’s been depreciating fast, especially for young drivers who have little credit and/or little to put down or fell afoul of a too-good-to-be-true 0% down option? It happens, sadly.

29

Was he ice fishing?

30

His family was. They were all drinking heavily --I know you probably shocked ALCOHOL was involved. Luckily no one died.

31

Some ice fishermen (mostly men, occasionally women) have their vehicles, ice sheds, etc., fall through the ice every winter. It doesn’t require fooling around or any, much less heavy, drinking. Sometimes the ice isn’t as uniform as you’d like.

Of course being in a hurry to go fishing as soon as possible once it gets almost cold enough almost long enough for good ice certainly is a temptation to excessive risk.