Would pursuing this legally be fruitful (auto insurance question)?

So, two years ago now I got into an accident and totaled my car. The insurance company payed me the amount for having ‘totaled’ my car (I have the payment stubs somewhere which state that), and I went on my merry way.

Well, sort of. That was actually the catalyst that pushed me over the edge into a very depressive time; I lost my job, and pretty much avoided dealing with anything in my life. Not opening mail, not paying bills, etc etc.

Anyway, recently I’ve been getting “back on track,” slowly re-accepting ownership for various debts and responsibilities. Part of which means actually opening my bank statements. Wow. It looks like my old insurance company continued to charge me for insurance on my “totaled” car, after they themselves declared it “totaled” and payed me accordingly.

And, they decided that because my license was suspended (no longer, but it was for non-payment of insurance during the time of unemployment) they cut off my coverage this December, and have forwarded the balance of what I owe them (it was on 6 month terms) to a collection agency!
I realise that this all could have been avoided if I had actually been doing what I ought; reading my statements are realising that I was losing over $140 dollars each month for the last two years, but I never would have thought that they would assume that I wanted to insure a car that was “totaled” and taken away.

I know you are not my lawyer, etc etc, but I’m just curious whether this sounds like something that I might be able to recover some money on, or whether I should chalk the over $3000 loss over the last two years up to my own stupidity and take my lumps.

It is (in Canada, I’m not your broker, yadda yadda) standard operating procedure for your broker to ask you to cancel your policy or switch coverage to another vehicle. Contact your broker. They may be able to convince the company to refund some of your money.

General insurance jive (which may or may not apply to Planet Vermont):
Physical Damage coverages specify that they will pay the value of the car at the time of the loss. Period. So if you total your car and agree to a settlement in which you keep the vehicle and continue to drive it (not at all uncommon, especially with older cars) you can still cover the vehicle for its market value as a car with that kind of damage. To illustrate: a wrinkled quarter panel on a 1982 Honda Civic will cost more to repair than the vehicle is worth, so by definition it is a total. However, the car may still be fully operational. Should you decide to sell it, a buyer will look at the wrinkle and maybe devalue the car a little bit, but in the end what you’ll get for the damaged car won’t be significantly less than an undamaged one. With me? So your insurance policy will view it the same way. A car that was totalled for $2,000 last May could still be worth $1,700 today. Point is, just because the car was totalled doesn’t mean it was without value. Ergo, the company can’t simply strike the coverage from your policy until you agree to do it.

Now, if you surrendered the car when you totalled it, you don’t owe squat. You can’t insure something that you don’t own (google: “insurable interest”). All you have to do is demonstrate that you don’t own the car and haven’t since whenever you settled with the insurance company. A brief visit to the DMV and you should be able to obtain a title history on the car indicating the date you released ownership of it to the insurance company.

And lastly: Sending a car insurance premium to collection? Nuts. Your state has very clear guidelines which spell out how long a policy can remain in force without payment. Your failure to pay the premium is an implied decision to nonrenew the policy. Once you’ve made or implied that decision, the insurance company is entitled to nothing else from you.

Make this simple: start with talking to your agent/broker about the situation. If they insist on being stupid about it, contact your department of insurance. If it continues to be the case that you’re being harassed to pay money that you don’t owe, only then should you start thinking about a lawyer. You just shouldn’t need one for this.

I would agree w/ Inigo Montoya, typically the insurance co. will give you a thirty day grace period. If they haven’t received a premium at the end of that time they cancel the policy and you must reapply for a new policy. It sounds like someone screwed up and they’re trying to collect on their mistake.

Thanks for the responses.

When I get home I’ll re-read the letter I got from the collection agency. I was a little surprised to have gotten it, as the insurance company had been taking money out automatically from my account; why exactly they needed two months worth of payments from me when they canceled my policy I’m not exactly sure.