Always buy the underinsured/uninsured motorist coverage. My daughter was hit by a car, the main payout was from my insurance, and not from the person who hit her.
Liability is everything, the cost of the car is nothing. Get the umbrella policy on your house. Buy liability insurance when you rent a car.
It's not just the medical bills- it's also the legal damages.
If you get a loan on a vehicle also get GAP insurance. It's stupid cheap, $10-20/mo. I had a car stolen and totaled that I owed $26k on. USAA, who were absolutely horrible to deal with after 20+ years of using them, was only willing to give me the "Local cash market value" - this means they open up craigslist and look for the cheapest private party car of your model. This is not hyperbole.
They gave me $15k. I went from a beautiful 2008 Lexus IS350 to a $2500 2001 Honda CRV because I had no money to buy a car with other than the cash I had left over in my bank through bo fault of mine. It was actually even worse with lot fees after the police found the car and impounded it, etc. But that's another story.
GAP covers that, and car thefts are up at a massive scale now. I get GAP on every car and if the dealer has some anti-theft option I get that too. I bought a car last week and I think it was $900 and if the car is ever stolen or wheels stolen over 5 years I get something like $5k cash. I'm also going to put a DroneMobile system in it.
Don't get a car stolen. Garage it if you can. I used to have that "USAA will cover me! hehe! no worries if it's stolen!" naivete until it happened.
I seriously can't explain how rude they were to me. Had a fraud investigator come to my house and grill me in the most despicably rude way possible. They acted like I tried to get it stolen or something to get out of the car payment. "I've had this car since it was new, never missed a payment, and I I'm still employed making $YZ money. Why would I try to get out of my payment by .. hiding my car? Leaving it open to steal?" I'm not kidding. It got stolen when I walked into a Walgreens to buy a frozen pizza.
I work in insurance. Local cash value is normal. It’s not a Craigslist lookup, it uses industry standard published tables and is the same across all companies. People are frequently shocked that they are underwater on their cars so much, but it’s worth what it’s worth, car insurance has no reason to cover loans. As you found out, GAP is insurance on the loan itself, most lenders will strongly encourage GAP coverage or even mandate it.
There was absolutely no way I could walk into anything but the most decrepit used car dealer and walk out with a car anywhere near what I previously owned for what they gave me, completely unrelated to whether or not I had a loan. The KBB was around 20k dealer. They gave me the crumb not fully loaded non F-sport (a $5k package) private party low end. $15k was shockingly low. Mine had like, 15k miles and the 15k range had over 100k. Their criteria seemed to be "Lexus I of some sort, cheapest." I don't think the IS250 was even normally that low.
Maybe it's what they all do, but it sucks. And it's not what a lot of people expect.
You may have been able to push for a better settlement if you saw their comps and noticed they were not actually comparable, but at the end of the day, no insurance company will give you more than local market value. If you're underwater on the loan and the value doesn't cover it, that's om you. I never buy GAP; if you need to buy GAP, you should be buying less car.
Yeah I really had no idea what powers/options I had in the situation. The way they treated me made me seriously want to somehow get them to recover a LOT of money I had to spend (around $4-6k in impound lot fees they wouldn't pay). They pretty much went out of their way to make me feel like I should be grateful they helped at all.
I was maybe 23 and definitely didn't have money for legal help. I hate how I let myself get treated.
Don’t beat yourself up over it. But also, post the learnings not just the mistake without the context only for both of them to come out later after people point them out.
You may have done some, but you can negotiate with the insurance company and either seek legal help or file a protest with the department of insurance if they are not in good faith servicing your claim.
FWIW our car (2014 RAV4 EV) was totaled in California in 2018, and the insurance payout pretty much exactly covered replacing it with a near-identical new model (actually a bit lower mileage!) from a local used car dealer. I think we actually came out a few hundred dollars ahead.
We were insured with Travelers.
I’ve wondered since then if that’s how it usually works out, or if we were a lucky fluke.
Travelers does well with that. I switched after I was in a not at fault accident (other side was a commercial vehicle, fully insured, 100% admitted liability) and got screwed over by my own insurer (low ball offer on the value, stalling on giving me access to the comps until the night before the offer expired, reneging on rental coverage, threatening to not cover something with PIP...)
I have two "new" cars (2019 and 2021 model years) that I've had since they were less than a year old, and have new car replacement on both.
Travelers is relatively unique in that their new car replacement is up to 5 years, not 1 as most are (some go to 2 or 3). NCR also integrates gap coverage.
If my 2021 RS 5 gets totaled two years from now, I get a check for 110% of the MSRP for a 2026 RS 5.
We had our i3 totalled a few years ago. Insurance company guy was transparent and said he'd gone to our version of Craigslist here in Norway, found i3's of same age and similar milage, and took the average.
As such I could definitely buy a replacement with the payout.
While I'd much rather be without the experience, I was almost pleasantly surprised by the insurance company.
That’s what progressive did when our older car was totaled by hail.
It wasn’t just Craigslist but it was some similar ones available- and averaged. They’d go buy one for us, or give us the cash, or (what we did) is give us back the car and most of the cash.
It absolutely is a local craigslist lookup— I followed up with one of the dealerships USAA called (6 hours away from where we live, with all of four cars in their "lot") to clarify how their valuation was provided. They explained that Vanessa (the USAA agent) simply asked how much they would sell a VW TDI for if they were a VW dealership. The high-school aged secretary said she didn't really know, so agreed that whatever value Vanessa offered sounded reasonable. This was the value they were willing to pay when their drunk client smashed through my parked car in the middle of the night in his BMW on the way back from the opera. "Industry Standard published tables" must just be the title on the top of the sticky note from her calling around.
The whole thing was an absolutely miserable experience completely stacked against any sort of reasonable resolution, and USAA was caught in so many lies it still irritates me years later. I'm sad that this is so clearly a continual process for people day to day.
Lol, wild. Mine was also a drunk lady slamming into my parked car. I had absolutely nothing to do with the theft and accident at all. And I was treated that way. I was actually out drinking for my birthday and my car was parked (downtown where I lived) next to a bar my friend worked at and he called me.
It seems like the industry has some pretty strong incentives to standardize on the lowest possible values in those tables.
Further, what does “worth” mean if you can’t take the amount of money you were given and easily purchase a car of the same make, model, year, and condition?
Particularly when you add on them keeping your car and parting it out or whatever. I got screwed on that pretty hard... they "forgot" to document all the options and packages (my car was intact, generally, but totaled due to airbag deployments). Even tires (look, I am realistic, I don't expect that to account for much)... I'd just put new performance tires ($1,700) on them 400 miles prior (yay for the odometer reading on the receipt) and they weren't affected by the accident, but the adjuster looked at a scale of "New / Like New / Excellent / Good / Fair / Poor" and described them as in "Fair" condition. When I balked at that they upped the offer by $60, $15 a tire. If it wasn't for all the drama associated with it, I'd have bought the car back and parted it myself.
I had a two year old Audi A4 totaled. I expected that I'd get about $24K for it (this was a couple of years ago). My insurer offered $19K. I asked to look at the comps, and sure enough, most of the comps were between $22K and $27K. Except one, from a shitty little dealer 150 miles away for $12,999. There was obviously something up, salvage title, or some other issue. But they shrugged. "Doesn't say so on the offer, so it's a valid comp".
My two cars now have new car replacement coverage for 5 years that also wraps in gap coverage.
Gap insurance covers a tightly-bounded amount of loss (it will never pay out more than the remainder of your loan), which is why it's so cheap. That's also why it's a great target for self-insurance - you know exactly how much you need to have to cover the worst-case loss. If you have the cash, you are almost certainly better off skipping this one.
Unless you’re going to put 40% down, you’ll have a day when the loan balance exceeds the value of the car.
My last car loan was at 0% (meaning the only cost of financing was the insurance company profit on the collision policy that I had to take because of the loan). No way am I putting down 40% on a 0% loan.
I could have charged the car on my credit card for the points and paid it off 45 days later; it’s not a matter of being able to afford it.
Being expensive is not so much an issue as it is buying a car that will depreciate faster than it can be paid for, because that's how people get in over their heads.
It's not just expensive cars, people are putting tiny down payments on cheap new cars financed for long terms and they're under water for years.
Not everyone buys a car to sell their car though. Some of us buy vehicles to keep, collect, race, trade, etc. I could not care LESS what the value of my 2 sports cars is in 15 years unless it soars to the moon for some reason and I become a millionaire.
I have a 3% loan on one of my $25k cars I race because my money makes 8-10% in the markets and having $25k sitting in them vs giving to a leinholder dropped me 3-4% yoy on it (3% loan), but it still isn't 0, or negative it's in the +4-8% range. I also take tons of 0% loans year through year. You can utilize debt and credit to your gain it becomes more of a "Ok I will pay you $30k in 3 months instead of right now because my money sitting here makes more than you charge me to borrow or less than the money makes sitting in my account paying you 3%." You know, those 4.5%+ SAVINGS accounts right now?? I make TWICE that in the market.
It's not smarter to bypass Apples 0% interest financing on a $3500 macbook or VR headset than drop the $3500 that will now make %0 interest for you immediately.
Some of you (all of us?) were taught some moral/ethical line about not incurring debt by our ignorant boomer parents who follow the "don't ever be in debt!!!" mantra, which is literally impossible nowadays. And they are INSANELY in debt. Almost every boomer home owner has a reverse mortgage!! Your boomer parents were rich at $50k. We are not. My boomer parents had a $150k 3500sq ft house. I have a $3100/mo 1300sq ft townhouse. Living good on that $.79 Clinton gas.
Learn financing.
I pay my boomer parents rent now because they royally fucked up their finances. Do not listen to boomers for financial advice. And I mean the bobbleheads on TV as well. I guarantee a LOT of you will be paying your parents rents soon. My moms 71. They were stupid beyond belief with their money. Just remember all the trash they bought in the 1990s, 454 cubic liter 2500 HD suburbans? Hummers? Massive houses?
Go torch your Kiyosaki books and everything else and throw that $1500 Camry you've driven for 35 years in the trash and spend the whopping $20k on a modern car that can survive a collision and enjoy your life. Who gives a fuck if you're rich at 75 when you can't do anything, that new cars compound interest isn't saving your retirement or not.
A bit of a tangent but this is one of the biggest reasons I don't buy new cars. The depreciation in the first few years is astonishing. You are immediately underwater and will be until you've paid off at least half the loan balance (this is not the same as paying half the payments).
There are brands (and probably is market dependent too) where this isn’t always true. Where I live, a 3 year old Toyota or Honda costs 10-15% less than a new one. In that case, it doesn’t really make sense to buy a used one if you can afford it.
Still, I also buy cars used. But I go ~10 year old, from a reputable low maintenance brand and model.
My previous car was new, but only because we were buying a minivan and there were significant new safety features just introduced. But totally agree that buying used makes sense if there's not a significant difference in functionality.
If you want no replacement, replacement value, or loan value it's pretty clear that those or separate coverage and options. It sounds like you just got the wrong level of coverage and blame USAA for that more than anything. TBF, if you used them for the loan, I'd kind of question the proper insurance not being suggested at purchase time, but if not... it's kind of on you.
FWIW, I have USAA and had the almost exact same thing happen to me in 2020 - car stolen and totaled. They paid me a really fair deal on the cash back for the 2yo crosstrek.
It probably helped that it was a cut and dry case - the thief took the keys from inside my house and I called the cops seconds after I saw him drive away with it.
I also had a terrible experience with USAA. I don't know what happened to them, but it is a rotten company now. I switched to Country Financial recently as I can at least talk to a person without a nightmare phone tree there.
> Always buy the underinsured/uninsured motorist coverage.
Agreed. I'm a personal finance nerd, and it felt like an epiphany when I discovered this a few years ago, because it's rarely discussed but seems so important. I max out our UM/UIM coverage now.
Side note: My wife is a stay-at-home mom and I've long wished for a disability insurance product that would cover the economic value that she provides, i.e. cover the cost of daycare / after-school care if she couldn't care for the kids. As far as I can tell, there's no such product for people who aren't wage earners. The closest thing I've found is UM/UIM coverage, since the most likely cause of disability is a car crash. Presumably it would pay for at least some of the other things beyond medical bills.
> Buy liability insurance when you rent a car.
Why do you say this instead of just relying on the liability coverage under your regular auto insurance?
>>My wife is a stay-at-home mom and I've long wished for a disability insurance product that would cover the economic value that she provides, i.e. cover the cost of daycare / after-school care if she couldn't care for the kids.
There is absolutely disability insurance for homemakers and non income spouses in the USA. I've written that exact policy both individual and for employers / employees.
>Side note: My wife is a stay-at-home mom and I've long wished for a disability insurance product that would cover the economic value that she provides, i.e. cover the cost of daycare / after-school care if she couldn't care for the kids. As far as I can tell, there's no such product for people who aren't wage earners.
AD&D (accidental death and disability) is the closest you’ll come. It’s most commonly offered by workplaces I believe, and is not expensive. On the flip side the situations it pays out are pretty narrow.
The only other alternative I know of is life insurance but of course that covers death, not disability.
> AD&D (accidental death and disability) is the closest you’ll come. It’s most commonly offered by workplaces I believe, and is not expensive. On the flip side the situations it pays out are pretty narrow.
This is the problem. Those policies usually cover “unable to work at all” which is extremely narrow (some won’t pay out if you can do any job anywhere, even if you were a doctor lawyer 10 programmer CEO before).
You can find a policy to cover stay at home spouses, but they’re often somewhat custom, expensive, and only pay out until children are X age. Long-term care can also be added, even more.
Like the employer offers coverage that extends to a non-employee spouse, like family health insurance?
I remember finding one product sold to individuals including stay-at-home parents a few years ago by Bright Peak Financial. Now I can't even get their website to load to see any details, so maybe it doesn't even exist anymore, but the coverage limits were pitifully low. Like it would cover only fraction of our childcare costs, and only for a time measured in months.
We definitely have term life coverage on her that will run until our youngest kid is a teenager.
Getting the umbrella is good, because during the process they review the rest of your insurance (at least they did for me).
>stay at home mom
I'm in the same situation, it sure would be nice. We do both have life insurance at least.
>Why do you say this instead of just relying on the liability coverage under your regular auto insurance?
To be careful. If you don't buy it, make absolutely sure that your own auto insurance covers it. [also people who don't own a car won't have auto insurance..]
Know your state laws. Uninsured often only applies if you can prove they are uninsured. Uninsured people will hit and run, so if you don't catch their plate, you are out of luck. Make sure you have a dash cam. And if you do catch them, good luck getting any compensation from someone with no insurance. You will likely have to sue them just to collect 10 dollars from them for a couple months before they disappear. Best case scenario, they go to jail.
My car got hit-and-run'd while parked in a hotel parking lot, and there was no evidence of who did it. I filed a claim with State Farm and the repair process was super smooth. I paid my deductible and they gave me a rental, and that was that. It's the only claim I've ever filed, so I don't really have anything to compare it to.
Insurance can or can't be easy depending on 50000 circumstances. What you just described is worst possible situation for many people.
- a 1200 dollar deductible on a car worth 4 grand is a life ruin-er for some people.
-if insurance decides to total your vehicle and you have to dispute the value, absolute nightmare.
Personal story,
I am 7 months in awaiting my court date for an uninsured dude that totaled my buddys car I was driving. It's my buddys extra car, no UIM or comprehensive coverage. I paid 7 grand to fix it out of pocket, because his insurance would have totaled it and charged him deductable. car is valued around 4k or so, despite being the cleanest 0 legacy on the planet. all new paint, mechanic owned. Other motorist hasn't paid a dime and is ignoring all court orders.
Why is uninsured a separate category from insured driver insurance? The insurance company should just pay out regardless of the characteristics of the other driver. What if they are wearing a funny hat instead of a serious hat?! Seems like a scam by the insurance companies to pad their premiums.
>Why is uninsured a separate category from insured driver insurance?
Because if another driver hits you and that driver was insured to cover all the damages they caused then their policy would cover you and you'd never have to make a claim on your own policy.
There's a lot of different types of insurance you can buy:
Liability - this is mandatory. Covers damages paid to other people caused by you.
Everything else is, typically optional.
Collision - Covers damages to your car paid to you caused by you.
Comprehensive - Covers "act of God" situations paid to you like tree falling on you car, hail damage.
Uninsured/underinsured coverage - Covers damages paid to you caused by other people who weren't carrying enough insurance to fully cover the loss.
It's because each coverage covers specific causes of losses. The pricing of the coverage needs to be justified by actuaries. It's a very competitive market, so they can't just "pad their premiums"; another company will undercut the price.
I can buy coverage to repair my vehicle if it’s damaged in a collision where I’m at fault (“collision insurance”). I can buy coverage to repair my vehicle if I’m not at fault and the other driver is under-insured (“under-insured coverage”). Same for another driver at fault who is un-insured.
Those are different risks and not everyone wants coverage for all of them.
That scenario doesn't happen; you can't get money from someone who has no money.
(Theoretically, you might be able to get money back if it's a rich person who loves the thrill of driving without insurance or something. Theoretically, you could also find a winning lottery ticket on the sidewalk after the crash.)
Agreement. My wife was in a crash with an uninsured (and, as it turns out, unlicensed and with outstanding warrants) driver. Everyone was uninjured, thankfully. Our car was a total loss.
The only monetary payout we got was our uninsured motorist coverage. (Seeing the lady who hit her get arrested at the scene and taken to jail was nice. Our insurance company pursuing her in court was also nice, too, though having not been thru the experience before we were taken aback when my wife unexpectedly received a summons to testify.)
I max'ed out our uninsured driver coverage after that.
A decade ago, I was "judgment proof" after a decade of drug dealing and general degeneracy... the person I was then allowed me to be the phenomenal asshole we are all capable of channeling: fuck you, I got nothing! "Blood from a stone."
Life is so much simpler, yet more satisfying, now that I've lived long enough to secure away a few assets. God willing, we'll all live long enough to not be the pieces of shit our youth/ignorance once allowed.
----
I read the other day that 20% of male Millenials are currently uninsured.
As someone with two kids, can I ask, does health insurance not work in this situation? I ask partly because at the moment we own no cars. If health insurance doesn’t cover it I’m wondering how we should insure.
So she was a pedestrian when she was hit (she's OK, but messed up two years of her life). This makes me wonder if it's worth owning some crappy car even if you never drive it, just for the privilege of having auto insurance...
Anyway, yes health covers it but they are first in the line getting reimbursed, even before the lawyer- which I think sucks, I mean what am I paying them for?
The reimbursement right that the insurance company has is called subrogation. The basic idea is that whoever was at fault shouldn't be better off because the injured party had insurance; otherwise it would be rational for individuals to not have insurance as long as most other people do have insurance. Subrogation means someone will still sue you into the ground even if the person you hurt was made whole by insurance. There can be many links in the insurance chain before you get to the person who actually caused the problem, and in your case it sounds like UMC was the final link.
At least, this is the stated public policy reason for subrogation. You are right that your health insurer got reimbursed even though they promised to cover your loved ones, and that feels weird.
Your insurance will cover your children even if they are not listed in the insurance contract. Being redundant to be clear: if a random driver hits a pedestrian child, parent's auto insurance will cover the costs even if they are not involved in the accident. The insurance company may chose to not pursue legal action even if they pay for the costs. The injured party can still do.
Liability is everything, the cost of the car is nothing. Get the umbrella policy on your house. Buy liability insurance when you rent a car.
It's not just the medical bills- it's also the legal damages.