Expert: Ron Cercone - 3/24/2009

Question
Hi,

I have a few basic questions.

1. If I am in an accident, why do I have to pay a deductible (or any money at all)? Is it because if there wasn't a deductible then some people may crash their car on purpose and collect the balance of money owing + the deductible?

2. What happens if both parties have the same insurance company? How does it get settled?

3. If it's his fault, and I only have liability insurance, it would be wise for me to convince the guy not to report it to his insurance company because...

A) he will have to pay a new monthly premium, so he can simply give me cash to fix my car.

B) if he does report it to his insurance company, then they will fix his car (his premium will go up) but i get nothing because i don't have collision?

thanks,

sk


Answer
Hello SK,

First of all, I don't know about insurance in Canada. I know about California laws and insurance. But some of the principals are universal, so ask a lawyer in your area, or, call an adjuster at a claims department for an insurer other than your own company. They will be less likely to lie to you than your own insurer.

Re your questions:

1. The higher your deductible, the lower your premiums. But even with a "0" deductible, insurance claims are a pain in the rear, especially if your insurer tries to lowball your claim.

2. In the US, most insurers will will waive the deductible if both the parties in the accident are insured with the same insurer. In California, you pay your percentage of the damages to the other driver and the other driver pays you his/her percentage of the damages. If the policy limits get exhausted, then you could be sued in court for whatever remains.

3."A" is true, "B" is false. In some US states, if you don't have "liability" insurance, then you may only collect the minimum legal policy limits (eg. 15,000) for injuries, or nothing at all. But you are usually owed for the property damage.