by Peta Yujnovich
A number of years ago I received a phone call from a very distressed driver. She had just crashed into a brand new black Porsche Panamera which was being driven home by the owner off the lot for the first time. She had hit the Porsche side on with her uninsured 1990 Hyundai Excel and believed she had written off both cars. The accident was completely her fault.
She was right about her Excel. It was a write off and was taken by the tow truck driver to the auto wreaker who paid her a measly few hundred dollars for her car and pointed her in the direction of the closest bus stop.
However, that wasn’t the worst of it. A few weeks later she received a letter in the mail from the insurance company representing the Porsche owner making demand for payment of $120,000.00 for the repairs to the Porsche.
Without any insurance policy covering her Hyundai Excel she was in what I like to call “a legal pickle”!
She had two options:
- Try to negotiate a deal with the insurance company to settle the matter outside of Court, at a reduced amount and with payments being made via a payment plan (which she anticipated she would be paying off for life) or;
- File for bankruptcy and deal with the impact this would have on her credit rating for years to come.
She chose option one and, although she was able to negotiate a reduced amount to pay to the insurer (they will always be willing to do this rather then get nothing out of you), she still had to take out a personal loan and borrow a decent amount from her parents to settle the matter with the insurance company.
So, the legal moral of this story, don’t drive a car on the road without insurance! Here is a quick summary of car insurance if you don’t know what your policy covers or you don’t have a policy of insurance in place.
Comprehensive motor vehicle insurance is insurance that covers you for any damage done to your motor vehicle, and if the accident was your fault, the motor vehicle of the other driver.
If you are involved in a motor vehicle accident and you have this cover, it is as simple as contacting your comprehensive insurer and providing them with the details you gathered at the accident scene. They will then act on your behalf to ensure that any property damage to your car, or the other driver’s car is fixed and they will cover this cost for you.
Third Party Property Damage Insurance
An alternative, and often a less expensive insurance policy than comprehensive insurance is third party property damage insurance cover. In the event of an accident, this insurance will cover the costs of any damage to another person’s vehicle that was your fault, but you will be left to fix your own car. This type of insurance policy is a good alternative for those who cannot afford comprehensive insurance, but still need the protection of a policy that will cover them for any damage to another person’s vehicle. This is the policy my Hyuandai driver wished she had in place!
Not having Property Damage Insurance
If you do not have insurance to cover property damage to either your own, or another person’s vehicle, you may find yourself, as my lady did in a situation where you are liable to pay the full costs of the repair of another vehicle. This would happen if you were at fault in the accident.
Depending on the severity of the accident in which you are involved and the type of car that you hit in the accident, the costs can be in the tens of thousands of dollars, and for this reason property damage insurance is a much cheaper alternative then paying for the repairs on a Porsche you will never get to drive!