In our sample fault-based policy, the insurance company promises to pay for damage to your car with the following wording:
We will pay for loss to your insured car:
(1) caused by collision (collision coverage), or
(2) not caused by collision (comprehensive coverage)
less any applicable deductibles. The deductible amount applies to each separate loss occurring during the policy period.
The deductible shall not apply to loss caused by a collision of a car owned by you and insured by us with:
(1) another car insured by us;
(2) an uninsured motor vehicle, or
(3) an insured car and you are legally entitled to recover the amount of repairs from the owner or operator of such car and the amount of repairs from the owner or operator of such car and the amount of repairs to the car owned by you and insured by us exceeds the amount of the deductible.
We may pay the loss in money or repair or replace damaged or stolen property. We may, at any time before the loss is paid or the property is replaced, return, at our expense, any stolen property either to you or to the address shown in the Declarations, with payment for the resulting damage. We may keep all or part of the damaged property at the agreed or appraised value. If you retain the damaged property, we may deduct its value following the loss from our payment to you.
Either you or we may demand appraisal of the loss. Each will appoint and pay a competent and disinterested appraiser and will equally share other appraisal expenses. The appraisers, or a judge of a court having jurisdiction, will select an additional appraiser to decide any differences. Each appraiser will state separately the actual cash value and the amount of loss. An award in writing by any two appraisers will determine the amount payable.
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Explanations
Simply put, if you carry car damage coverage on your policy, your insurance company will pay the repair bills when your car collides with something, or is damaged by something other than a collision, minus the deductible.
The Agreement in our sample fault-based policy lists some circumstances when you won’t have to pay the deductible. (Check your own policy—these circumstances may differ.) In this policy, you don’t have to pay the deductible when:
(1) the collision is with another car insured by the same insurance company;
(2) the collision is with an uninsured vehicle;
(3) if the collision is with an insured vehicle (insured by another company), and the other driver is at fault, and the amount of damages to your car is more than the deductible.
If your car was damaged or stolen, the insurance company may choose which of three ways it will pay: (1) give you money, (2) pay for repairs to the vehicle, or (3) replace the vehicle. If your vehicle was stolen, and then recovered before they’ve paid your loss, they may give you back your car plus money for any damage to it, or, they may keep it and pay you for the (agreed or appraised) value of the vehicle. If you take your damaged car back, the insurance company may deduct its value from any payment to you for damages.
If you and your insurer don’t agree on the value of the vehicle, you or the insurer may demand an appraisal. The rules on this are clearly stated in the policy wording.
Additional Payments
Unlike most of the other coverages in our sample fault based policy, the Car Damage section allows for additional payments to be made to you under certain circumstances. The policy says:
(1) If there is a total theft of your insured car we will pay up to $15 per day, but no more than $450, for the cost of transportation incurred by you. This coverage begins 48 hours after the theft and ends when the car is returned to use or when we offer to pay the loss. If other loss under this coverage occurs to your insured car, we will pay you up to $15 per day, but no more than $150 in the aggregate, for the costs of transportation you incur.
(2) If your insured car has loss under this coverage, we will pay for resulting loss of clothing and luggage belonging to you or a relative. Maximum payment is $200 in total for each occurrence.
(3) A reward of $250 will be paid for information leading to the arrest and conviction of anyone stealing or vandalizing your insured car. |
Explanations
Some insurance companies provide rental car coverage for which you pay a separate premium. This policy provides that if your car is stolen, the insurer will make additional payments of up to $15 a day, up to $450 total, for either a rental car or other transportation while you have no car. This requires no extra premium. Note that the coverage ends either when the car is returned or when they offer to pay the loss. It says nothing about if there is a dispute over the amount the insurance company offers, or when they actually pay the loss.
Additionally, if your car is damaged (not stolen), the company will pay up to $15 a day, up to a total of $150 for transportation costs, while your car is out of commission. If your car is in the shop for repairs following an accident, you may rent a car. Most insurance companies have an agreement with one or more rental car companies to provide their insureds with rental cars at a very low price.
If, when your car was stolen, you had items such as luggage or clothing inside the car, the insurer will reimburse you up to $200 as compensation.
It pays to squeal if you have any idea about who may have stolen your vehicle. Your insurance company may pay a reward (here, it’s $250) if the information you give them leads to an arrest and conviction.
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