By Wayne Dohrmann
Not all Auto insurance policies are the same even though people would like to think they are. Here is an example of one difference.
You buy a newer car from a local used car dealer with 20,000 miles on it. You drive your car to work and park it in the lot. Soon after, you get a call from security that there is smoke rolling out from under the hood. The fire department has already been called and they arrive at the same time you do. You pop open the hood and they find that there is only smoke coming from the wiring harness. It looks like a toaster wire in places. (It will do this if a short occurs and the current from the battery will cause this to happen) The fire department empties a couple of extinguishers on the smoke until it quits and they leave. You grab the warranty information from the glove box and call the auto manufacturer. You find out that the warranty on that part of the vehicle is only for 10,000 miles.
You call your insurance agent and report the claim. He/she sends an adjustor to look at your car. The adjustor also notes that there had been no flames, just smoke from the short. He denies the claim and you argue over the fact that your policy states that there is coverage again a loss by fire. He takes the policy out and points out the definition stated in the policy excludes any damage that is not caused by flames. At this point you are looking to take it up with any one who will listen.
You go back to the used car lot that sold the car to see what they warrant. They do not cover any thing other than engine and drive train.
You finally realize, you are stuck for the $1500 repair bill. Is this what you would expect. Would you not have expected your insurance company to pay this bill, after all it was certainly caused by a very hot wires. The fact of the matter is as was pointed out, it depends on how the policy defines fire. If it defines it a certain way it can exclude damage caused by something that is hot enough to melt the insulation off of wires, but not hot enough to break into flames. I have to admit when I heard about this I was taken back.
This is just one example of how definitions affect the coverages in your policy. So the question then comes up, what can you do to prevent this type of thing from happening to you?
Strangely enough, it is the consumer's responsibility to find out about the coverages. Most people think it is up to the agent to make them aware of the lack of coverage, the fact is, that they only have to answer truthfully any questions you may ask them and they are not obligated to tell you all they know. If your agent tells you, you have coverage on something and it is found out later that the policy does not cover that loss, the insured will surely bring the agent's E&O coverage into play. To prevent that from happening, a sharp agent, will get the answer from an underwriter or officer of the company explaining how the policy interprets a loss.
Every insurance company has precedent on how they have handled previous claims of the type you are dealing with, you need to know what they did on past claims. If your claim is unique enough so there is no precedents it will now depend on how that section of your policy is defined. That always leaves room for speculation.
If they say they will not speculate on how losses will be handled, then I would not speculate on buying the coverage from them. As was stated, it is your responsibility to ask, and your agent and company to answer truthfully any question asked them. Now, how do you know which questions to ask?
There is additional information on a web site at rel=nofollow www.autoinsurance.wpds1.com.
So in conclusion, you must ask yourself this question. Do you want cheap insurance, or do you want quality insurance? The two will probably not be the same, but how will you know?
Added comment.
If you have an unusual insurance experience, the author would interested in hearing about it. Just give as many of the claim and the outcome about the claim as you feel are pertinent to the case and I may include it in my next book. If you are willing to mention the name of the company and refer to the case number, all of the available facts will be addressed if your claim is chosen to be included. I will not mention your name in the article unless you give me specific authorization to do so. You may contact me at the email mentioned on the web site.
All rights reserved. Wayne Dohrmann 2007 http://www.autoinsurance.wpds1.com
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