Auto Insurance

Okay, we learn as we go, so i thought I’d share something I just learned about the hard way.
My wife got in an accident with her car last Tuesday, and the other party was at fault and was cited for failure to yield right of way. The damage was extensive, and it was good that she wasn’t injured seriously. I calmed down after I was sure she was okay - not something you want to hear over the phone.
The insurance rules in Texas conclude that the insurer of the party at fault takes care of the claim - and that is that. Okay, I thought, they’ll replace the car and we can go on our merry way. Nope, that ain’t happening.The insurance adjustor claimed it as a total loss because of the mileage and the condition of the vehicle aside from the wreck damage.
We owe 4000 on the note, and they are paying 4500 on the claim - 500 to get another car. That car wasn’t a bad car - very good engine, only 5 years old, and was the better of our two vehicles. Mistake on our end was assuming that paying for full coverage would prevent us from losing our car - in effect, the insurance company sold us too much coverage, since the car was older than two years when we bought the policy.
Word of advice is to trade in at 2 years when on full coverage, and drop to liability only when and if it’s paid off - if you intend to pay off and keep the car, watch out for the other drivers.
We didn’t have the money to get another vehicle, and there is no settlement in question because she was not injured - those who are injured usually get a monetary settlement to avoid a law suit. I already talked to my insurance and to a lawyer, and we have no recourse. By getting in the wreck, they have legally bought my car at their price - no dealing, no negotiation. My wife is living with her sister now, so that she can carpool with her for the trip to and from work, since she was commuting 60 miles each way with her car. I get to be a lone ranger for awhile until I get the money together for another car - I have plans, but that always changes anyway.

Word of advice - keep cash flow in your savings, and be prepared to take a loss on any investment you make.

Well, first off, good to hear your wife is OK.

Second, to answer your last statement, a car is not an investment. A car is an expense. Buy purchasing or leasing a car, you take the responsibility of having to pay into that expense. No matter what, you never make money off of a car, (unless it’s a classic or something very rare), so you can not call it an investment. They depreciate way too fast.

I will agree that you should not take out full coverage on a car that is more than a few years old though. In Canada, (Ontario anyway), you have to have minimum $1,000,000 in liability, and that is the law. The rest, you don’t have to really worry about.

BgDM

Sorry, didn’t mean to imply it was an investment leading to a return, more like a hole in the floor that the money just goes into… kinda like what you said, an expense. Only meaning of investment in a the car is the ability to have a vehicle, as in personal property. If I buy a shirt, I am counting on the use of it for a period of time until it wears out, or fashion causes me to burn it. With our car, I had hoped to apy it off and keep while I got her a different vehicle to drive, something new. Now I’ll get her something new, but I’m stuck with the same old thing… which is likely to be more of an expense in repair sooner or later.
Yeah, thanks, I am also grateful that no one was injured and everybody is okay. Incidentally, the weekend before we had a flat on the front, so we put the spare doughnut on it and rotated another tire into place - that was why she was driving slower than the speed limit on Tuesday. If she had been driving full speed and that guy had tried to cross her, I think it would’ve been much worse.
I think when the girls are old enough to drive, I’m getting them big pick up trucks that can take a hit or two - this guy’s truck didn’t even dent the bumper.
:spin:

I’m sorry to hear about your loss. Cars are an investment, in that they have some value. However, they are a bad investment, and when you count the cost of ownership and what you might be sued for just using them, they are more of a liability! And, when you buy a car (or a house) on credit, your asset=liability, so really you own nothing, Especially when that asset depreciates (like a car, or a house in a bad housing market), often you can even be upside down and have to PAY when it gets wrecked. So at least they didn’t say the car was worth $3K, and you had to actually cough up $1000 just because someone hit you. That would really suck.

Thank you, PapaSmurf, for another strong point. I don’t have 1000 to cough up, so I really need to plan more. I would say that it would be better that the insurance had replaced the car with one of equal value and left me to pay on my note, than to pay off the note and leave me stranded… but I am oversimplifying the process anyway!:slight_smile: