Comments on: How The Simple Dollar Just Saved Someone $2,850 (And A Personal Finance Tip To Boot)

By: Richard Speidel

Richard Speidel — Sun, 24 Aug 2008 08:59:30 +0000

It’s worth remembering that when you’re making payments, almost always collision and comprehensive is REQUIRED. They want their interest protected,the same way the bank wants your house insured as part of the mortgage deal.

By: cr

cr — Sun, 11 Mar 2007 22:43:37 +0000

Wow. Just wow. I’m the so-called “Instant messager friend” that Trent wrote about in this post. So here’s the scoop. I called my agent’s office to find out for sure. I’m awaiting a call back from my agent this week because the guy that answered the phone was confused by the wording in my policy. Trent’s advice to me was not misleading. I checked into my policy, if it turns out they can’t help, at least I know how they define their policy. But if they can help as the policy seems to suggest, then great. Either way I was encouraged to look into something that I had no idea about.

By: Tim

Tim — Fri, 09 Mar 2007 21:08:56 +0000

it doesn’t matter how anyone defines liability, comprehensive, collision, et.al.

Bottom line: if the insurance company will pay for it, good for him. Read those policies’ fine print people.

Also, did the person have gap insurance as part of his coverage?

By: Trent

Trent — Fri, 09 Mar 2007 19:54:26 +0000

One other thing: this person did not give me any indication as to why he was having these problems. Most of you are assuming that the engine failure was the result of “wear and tear,” but I didn’t make that assumption when talking to him because he didn’t tell me anything about what caused it.

By: David

David — Fri, 09 Mar 2007 18:42:38 +0000

I think that we all understand that we should be checking our policies in the event we need to. However, I think the larger issue that should be covered here is the fact that he has full comprehensive on a vehicle that is worth far less than 3100 dollars. He’d be better off switching to liability and having a couple grand to go buy another junker when something like this happens. You never put a substantial amount of money into something that you can’t get that money back out of it later. Anyone agree?

By: Trent

Trent — Fri, 09 Mar 2007 18:42:19 +0000

Look, I was attempting to suggest solutions and be helpful – and checking your policy is a worthwhile solution. That’s all there is really to say here.

By: Alex

Alex — Fri, 09 Mar 2007 16:05:46 +0000

Hmmm, you did say: “…I told him that I thought that the engine repair would likely be covered by the insurance…” So, you are contradicting yourself.

I know you’re trying to write a dozen posts a day, but don’t sacrifice quality over quantity….

By: Tyler

Tyler — Fri, 09 Mar 2007 12:48:26 +0000

I do not believe that insurance companies would do this as every car has wear and tear after a while and this increases the company’s risks. If this person’s insurance company covered this, then I’d love to know the name of the company. I might have to give my insurance a call today.

By: Trent

Trent — Fri, 09 Mar 2007 02:34:55 +0000

You can debate the definition of “comprehensive” over and over again, but it varies from insurance policy to insurance policy. The only advice I gave to the person, and the only advice I’m giving you, is knowing exactly what your policy covers. The person I talked to had no idea what his policy covered, and by me encouraging him to read his policy, he discovered that his problem was indeed covered. I have at no point claimed that comprehensive means that everything is covered, I’m just saying that you should look at your policy if you’re having some kind of car trouble and actually understand what is covered.

By: TFB

TFB — Fri, 09 Mar 2007 00:19:47 +0000

I don’t want to use Trent’s blog as my own Q&A space, but the short answer is that Liability covers loss you caused to others, Collision cover loss to your own car by a collision (duh!) and Comprehensive covers loss to your own car by other forces — theft, vandalism, road debris, fire, lightening (?), … EXCEPT driving usual.

By: TiP

TiP — Thu, 08 Mar 2007 23:59:20 +0000

Here’s a site the covers all the definitions for liability, collision and comprehensive. TFB is correct, I have liability only.

http://www.carinsurance.com/CoverageDefinitions.aspx

By: TiP

TiP — Thu, 08 Mar 2007 23:57:44 +0000

Here are some defs I found at :http://www.carinsurance.com/CoverageDefinitions.aspx

Collision Coverage:

Covers damage to your car when your car hits, or is hit by, another vehicle, or other object. Pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car. Coverage is limited to the terms and conditions contained in the policy. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.

Comprehensive Coverage (Other Than Collision or OTC):

Covers your vehicle, and sometimes other vehicles you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. Pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. Coverage is limited to the terms and conditions contained in the policy. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.

By: TiP

TiP — Thu, 08 Mar 2007 23:50:29 +0000

TFB: I think you’re right as far as the word substitutions go. I know you’re right that engine failure due to wear & tear is not covered.

Actually, what is the difference between collision and comprehensive then?

By: TiP

TiP — Thu, 08 Mar 2007 23:49:32 +0000

TFB: I think you’re right as far as the word substitutions go. I know you’re right that engine failure due to wear & tear is not covered.

By: TFB

TFB — Thu, 08 Mar 2007 23:31:53 +0000

I think you are very misinformed. Comprehensive insurance covers damages other than collision, but it doesn’t cover engine failures due to wear and tear. It has to be a result of a covered loss. If a vandal pounded your car with a hammer and damaged the engine, the insurance will cover it. If a rock fell from the hill while your car was parked, the insurance will cover it. If a thief stole your car, comprehensive covers it. If your engine blew while you drove as usual on the freeway, comprehensive insurance won’t cover it.

What TiP wrote isn’t accurate either. Replace “collision” with “liability” and replace “comprehensive” with “collision” in TiP’s post, then it starts to make some sense.

Trent, please, do your readers a favor and know what you are talking about before you write misinformation like this. Show us any auto policy that covers engine failure as a result of regular driving. Manufacturer’s warranty or extended warranty covers it. Not auto insurance.

By: TiP

TiP — Thu, 08 Mar 2007 22:56:12 +0000

I’m very skeptical at this point…

My understanding is that collision insurance means that if you’re in an accident your own car isn’t covered – you eat the repair costs. It only covers the repairs to the car you hit. I have a very old car so I only have collision coverage on it. It also means that if my car is stolen, I get nothing. But since my car is only worth about $700 Bluebook (actually it’s worth more than that to me as reliable transportation, but that’s another matter) I really don’t care.

However, my understanding of comprehensive insurance is that if your’re in an accident and you are at fault, your insurance co will also cover your car repairs in addition to the repairs for the car (or whatever property) you hit.

I think you might want to have your instant messanger friend re-read his policy. I’m sure it said that engine repairs needed due to accident or theft damage are covered, but not engine repairs that are not connected to some accident or theft.

By: Joe

Joe — Thu, 08 Mar 2007 21:05:34 +0000

After his priemiums go up because of a claim, you probably didn’t save him as much as you think and may have ended up costing him money.

The real moral of the story: Insurance doesn’t work like a savings account. If you make a claim, your rates will go up.

By: Trent

Trent — Thu, 08 Mar 2007 20:59:22 +0000

Anne: I don’t know for sure, but most comprehensive insurance doesn’t go up unless you are at fault.

By: Anne

Anne — Thu, 08 Mar 2007 20:37:47 +0000

Are his premiums going to go up because of the claim?

By: Trent

Trent — Thu, 08 Mar 2007 19:57:28 +0000

Many comprehensive policies cover this. “Comprehensive” does not have a strict definition – you need to read your policy and see clearly what is covered.