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Auto Insurance Claims/New Car Totaled in 24 hrs

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Expert: webfoot - 8/15/2006


Question
Hello -

My parents just bought a used lexus from a dealer and drove away that night.  The next day, they unfortunately totaled the car around noon.  Didn't even have the car for 24 hrs - luckily walked away with minor bruises.  The drove off the lot thinking they had the insurance taken care of on the new car as the dealer took their insurance card and processed something and returned it back to them.  Here it is the night after the accident and we are extremely concerned about the previous limited liability coverage prior to the purchase and the timing of the accident just prior to my parents calling to ensure the coverage of the vehicle thinking the had grace due to the checkup by the dealer.  So now there is no car with a 30 thousand dollar loan - are there any new car laws that give my parents grace so as to not be stuck with a 40 thousand dollar loan with nothing to show for it?  Their insurance carrier is Nationwide and they live in Virginia.

Answer
Generally speaking, when you ad a car or replace a car on an auto policy, whatever coverage was already in place on the existing vehicle is what will apply to the new vehicle.  If they did not have collision coverage before and they had not paid the additional premium to ad such coverage to the new car, then that coverage will not likely apply.

If your parents are unable to pay the lien holder what is owed, then the bank will likely pursue the dealership as it was their responsibility to verify collision coverage before letting the vehicle leave the lot. Either way, one or both parties will make every legal attempt to collect the money from your parents as they were the ones ultimately responsible for the vehicle and insuring it with the proper coverage.

I'm glad your parents are ok, but they may have quite a situation to deal with here.  If this is going to be a financially devistating loss for them, it may be time to seek the advice of an asset protection attorney.

Good luck.

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Auto damage, liability, insurance fraud. I am a full time auto insurance adjuster with experience in collision, theft, liability and fraud investigation. I am also an ASE Master Auto Tech and I-Car Collision Platinum certified. My experience includes 15 years in the auto repair industry, a B.S. in Criminal Justice, Law enforcement and auto insurance. ****** NO "PRIVATE" QUESTIONS WILL BE ANSWERED. I HAVE FOUND THAT NEARLY ALL PRIVATE QUESTIONS COME FROM PEOPLE WHO ARE CONSIDERING OR ATTEMPTING TO COMMIT FELONY INSURANCE FRAUD AND I'M NOT HERE TO HELP YOU! ****** I AM HERE TO ANSWER AUTOMOTIVE REPAIR, CLAIMS PROCESS AND SOME SIMPLE LIABILITY QUESTIONS. I CANNOT ADDRESS COMPLEX LIABILITY SCENARIOS WITHOUT HAVING ALL OF THE INFO FROM BOTH SIDES IN FRONT OF ME. QUESTIONS ABOUT PREMIUMS OR HOW INSURANCE IS RATED SHOULD BE ADDRESSED TO YOUR PERSONAL INSURANCE AGENT WHO KNOWS A WHOLE LOT MORE ABOUT YOUR HISTORY THAN I DO. I'VE NEVER SOLD INSURANCE AND DO NOT KNOW IF YOUR INDIVIDUAL INSURANCE RATES WILL GO UP IF YOU MAKE A CLAIM. THOUGH I'VE HANDLED SOME VERY MINOR SOFT TISSUE INJURY SETTLEMENTS, I PREFER NOT TO ANSWER INJURY RELATED QUESTIONS. I'M NO INJURY EXPERT AND I'LL LIKELY SAY SOMETHING TO HURT SOMEONE'S FEELINGS AS I BELIEVE THAT MANY SOFT TISSUE PAIN AND SUFFERING CLAIMS ARE OVER DRAMATIZED. UNLIKE MANY OTHERS, I AM ON THIS FORUM AS A VOLUNTEER WITH NO PRODUCTS OR SERVICES TO SELL AND PROMISE AN UPFRONT ANSWER BASED ON MY EXPERIENCE IN BOTH SIDES OF THE INDUSTRY. IF YOU PROVIDE ME WITH A HONEST VERSION OF EVENTS, I PROMISE A CANDID AND HONEST ANSWER IN RETURN. I CANNOT ADDRESS ALL CLAIM SCENERIOS DUE TO DIFFERING STATE LAWS AND REGULATIONS, BUT WILL DO MY BEST. PLEASE REMEMBER THAT AN HONEST ANSWER MAY BE ONE THAT YOU DON'T LIKE SO IF THAT IS GOING TO BE A PROBLEM, PLEASE DON'T ASK THE QUESTION. LASTLY, I DO NOT ACCEPT RATINGS AS I DON'T DO THIS FOR RATINGS AND WISH TO SPEAK FREELY.

Experience

20 years in automotive industry, Currently in insurance claims, worked actively as technician and shop owner until about 10 years ago. Current ASE Master Auto Tech and I-Car Platinum Collision Certifications, B.S. Criminal Justice and 10 year auto insurance/extended warranty background

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