Category: Insurance

You treat your car like you would a child. You take care of it inside and out and no one could ever tell it recently celebrated its tenth birthday. Over those ten years, you and your auto have had some great times together, but now the unthinkable has happened and your car has been “totaled.” Does that mean that the two of you have to say good-bye?

Totaling your car means that you have wrecked it badly, so much so that it is up to your insurer to decide if it is worth fixing. The insurer’s decision is based on the car’s worth. Minor damage to a very old auto could result in your carrier deciding to total it, while major damage to a brand new one might not. Auto insurance claims adjusters typically determine a car’s cash value through their company’s proprietary database of prices.

The decision to total a car varies with insurers. Some companies will total a vehicle if after the accident it is only worth 51 percent of its cash value. Others will decide to total the car at 80 percent. The insurance company pays you the car’s actual cash value less any deductible and your car is sent to a salvage yard to be auctioned off. The end result is usually an auction bidder buying the car for parts. The insurance company keeps the auction money, which offsets any costs over the amount they have collected in premiums.

If you feel your car has been unjustly condemned to salvage, do you have any way to protest the decision? You do have some rights, but they are limited. You enter into a contract with your insurance company when you buy car insurance. That contract states that you can’t coerce your insurer to pay out more than your car is actually worth. However, your carrier is obliged to ensure that you are “made whole.” That means the company is required to put you in the same condition you were in before the accident happened.

If your car has been wrecked but you want to have it repaired, you should be able to do so. Tell your claims adjuster right away that you want to keep the car. Keep in mind that you will have to pay for the repairs yourself, but your insurer still has to pay you the car’s actual cash value, less the deductible and less whatever the car would have brought at auction.

Before you decide what to do with the car, think it through. If you give up your car but later change your mind, it will be difficult to buy it back when auctioned. In most cases you cannot attend the auction without an auto salvage or auto dealer’s license. Newer model cars bring higher prices at auctions because their parts are highly desirable. That amount is probably more that what the company paid for your claim, so don’t be surprised if your carrier decides to send it to salvage in spite of your objections.

Remember, if you keep the car and it is seriously damaged, you will only have a small part of the money needed to repair it. If it isn’t repairable, you will be left with having to dispose of the vehicle.

If you go ahead with repairs, be sure the car is completely repaired. When the insurer deemed your car to be totaled, your state’s department of motor vehicles (DMV) was notified. That’s because your policy expired with the loss of the vehicle. Insurers can refuse to completely underwrite a car that’s been totaled and repaired if the vehicle doesn’t pass a DMV inspection. As long as it passes, however, you should have no problem buying liability insurance, although buying comprehensive and collision insurance may be more difficult. Keep in mind, some insurers won’t provide this type of coverage for a previously totaled car.

About twenty years ago, a famous hamburger chain ran a series of commercials featuring a cute octogenarian named Clara Peller.  This feisty little old lady claimed her fifteen minutes of fame asking that now famous question, “Where’s the beef?”  While it may have been funny to watch her put fast food restaurant owners on the spot, it is not at all funny if you’re in a car accident and you ask the other driver for their insurance card only to find out they have none.

Unfortunately that’s a scenario that happens all too frequently.  As the cost of living rises and paychecks don’t meet needs, people start making decisions about where to cut expenses.  One of those decisions may be to eliminate or greatly reduce the amount of their car insurance.  They need the car and take the calculated risk that they won’t get into an accident, but invariably, they are wrong.  In fact, the possibility of an uninsured motorist hitting you is greater than you may realize.  There are some states in which almost 32 percent of all drivers do not carry automobile insurance.  The national average is 14 percent.

You can protect yourself from an uninsured driver, or even an underinsured driver, whose negligence causes you to be involved in an accident. The first way is with uninsured motorists (UM) coverage.  It provides insurance protection for bodily injury, and in some states, property damage, caused by an uninsured driver.  This type of policy permits you to collect from your own insurance carrier just as if it provided liability coverage for the uninsured driver.

Uninsured motorist bodily injury coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver without car insurance.  Uninsured motorist coverage also pays for injuries that result from a hit-and-run accident.  Policy owners choose the coverage limit when they buy their policy.

Uninsured motorist property damage coverage protects you if your vehicle is damaged in an accident caused by a driver without car insurance.  Other protection provided by this type of policy varies from state to state.  If available, the deductible for uninsured motorist property damage is usually $250.  This is often substantially less than the collision coverage deductible found in your auto insurance policy.

The other policy alternative is underinsured motorists (UIM) coverage.  This provides insurance protection for bodily injury, and in some states, property damage, caused by a negligent motorist who is not sufficiently insured and whose negligence results in an accident.  The bodily injury portion of this kind of coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured.  It usually pays the difference between the coverage limit you select and the other driver’s bodily injury coverage limit.

Underinsured motorist property damage coverage protects you if your car is damaged in an accident caused by a driver with insufficient auto insurance coverage.  Other specific protection provided by this type of coverage varies by state.  As with bodily injury, property damage coverage pays the difference between your policy’s coverage limit and the other driver’s property damage coverage limit.

When you are deciding whether or not to buy either of these coverages, keep two very important points in mind.  Both UM and UIM coverage are broad in scope because they provide benefits for you and your family members’ injuries that occur in your own covered car, in cars you don’t own, and as pedestrians.  Despite all of this protection, the cost for this coverage is reasonable compared to liability coverage and physical damage coverage for your own car.

A black box, also known as the Cockpit Recorder or Flight Data Recorder, documents all of the data transmissions on an airplane, such as altitude, air speed, and voice and sound transmissions.  Typically, black boxes aren’t black at all.  They are brightly colored, which makes them easier to find in the wreckage following an accident.

Everyone knows that airplanes have black boxes.  What you may not know, however, is that your car may have one too.  This box, which is approximately the size of a carpenter’s tape measure, is installed in about 70 percent of all new car models.  It is usually fitted under your dashboard or seat, and it kicks into high gear when your car’s airbags are deployed.

These event data recorders (EDR) as they are known, can record information only in the 5 to 10 seconds before and after it senses an airbag is about to be deployed.  EDRs record the following data:

• Vehicle speed
• Engine speed 
• Brake status
• Throttle position
• If the driver’s seat belt is on or off
• If the passenger’s airbag is on or off
• If the IR Warning Lamp is on or off
• Time from vehicle impact to airbag deployment
• Ignition cycle count at time of the crash
• Ignition cycle count at investigation 
• Maximum velocity before deployment
• Velocity vs. time for frontal airbag deployment
• Time from vehicle impact to time of maximum velocity
• Time between the air bags about to deploy and deployment if it is within five seconds

Insurance carriers and police officers use the information gathered by the box to reconstruct the events leading up to a crash.  General Motors has been installing black boxes in their cars since 1999, and several other car manufacturers have been installing them since 1996.  Crash investigators, insurers, police and government researchers say such information is the cornerstone to learning how to build safer cars.  Privacy advocates say EDRs are a way to obtain data that can be used to incriminate drivers.

The controversial practice of installing black boxes in cars will become even more hotly contested when the National Highway Traffic Safety Administration issues a new rule in 2006, requiring carmakers to standardize black box technology.  The standardization will necessitate that all data is recorded and stored in the same way, which will make it is easier for researchers to recover the information.  However, only a few states have addressed the privacy concerns associated with black boxes and have enacted laws that ensure the car owner’s ownership rights to the data.

Evidence of the importance of wearing a seat belt while in a moving vehicle is not a recent discovery; many studies have been conducted to compare the hospital costs for victims of crashes that wore seat belts against those who did not wear them.   In 2001, the National Safety Council revealed that the average inpatient costs for crash victims not wearing seat belts were 50% higher than victims who were wearing seat belts during the accident.

In 2002, the National Highway Traffic Safety Administration reported that the deaths and injuries that result from not wearing a seat belt cost an estimated $26 billion annually in medical care, lost productivity and other related costs.

Recently, the Minnesota Seat Belt Coalition has been conducting its own research to determine how the use of seat belts impacts the cost of health care. Using Minnesota vehicle crash records from 2002, the group has discovered that hospital costs for unrestrained crash victims were 94% higher than hospital costs for those using seat belts. They estimated that increasing seat belt usage in Minnesota to 94% from the current rate of 84% could reduce the cost of crash-related hospital care an average of $19 million annually over the next 10 years.

Many people might wonder how a simple piece of equipment could be so effective in reducing crash-related hospital costs, and potentially save their life.  To understand how a seatbelt works, one must first examine a basic principle of physics called inertia.

Sir Isaac Newton is credited with refining the concept of inertia in his work entitled Laws of Motion. Newton’s first law stated that, “Every body perseveres in its state of being at rest or of moving uniformly straight ahead, except insofar as it is compelled to change its state by forces impressed.”  Put simply, an object will continue to move in an straight line until something interferes with its path.

Take that basic premise and apply it to a moving vehicle, which contains a driver and passengers. If a vehicle is traveling at 40 miles per hour, inertia should keep it moving forward at this pace, undisturbed. However, other factors like air resistance and friction caused by the interaction of the tires and the road surface are continually slowing it down. The car’s engine is designed to compensate for this energy loss and keep the car in continuous motion.

Separately, everything inside the car has its own inertia. Even though the passengers’ inertia is separate from the car’s inertia, while the car is traveling at 40 miles per hour, the passengers are traveling at 40 miles per hour as well. At this point, both the car and the passengers have the same inertia.

If the car were to suddenly stop because it impacted with another object, the passengers’ inertia and the car’s inertia would be completely independent. The force of the impact would bring the car to an abrupt stop, but the passengers would still be traveling at 40 miles per hour. Without a seat belt, the inhabitants would continue to move forward at 40 miles per hour until their path was obstructed, usually by a steering wheel, dashboard, or windshield. Depending on where and how the passengers landed, they could be killed instantly, injured severely, or walk away from the crash unharmed.

The deciding factor in this equation is the seat belt. A seat belt applies the stopping force to the sturdier parts of the body over a longer period of time. If it is worn correctly, it will apply the major portion of the stopping force to the rib cage and the pelvis, which are better able to handle it than other body parts. The belts extend across a wide section of the body, so the force is not concentrated on a small section of the body and cannot do as much harm as the impact of an object in the car. In addition, the flexible seat belt material stretches to keep the stop from being too sudden.

This simple piece of equipment relies on the properties of physics to save both lives and millions of dollars in health care annually.  It could save you money in taxes and health insurance costs.  The three extra seconds it takes to reach over and fasten the belt seem insignificant when you consider the many benefits of wearing it.  The next time you ride in a car, check to see if all the passengers are belted in; it could be the difference between life and death.