Action Line: Gaps in car insurance policies can leave drivers exposed

Found on www.tulsaworld/ and brought to you by Car Repair Salinas

By PHIL MULKINS World Action Line Editor
Published: 7/17/2011  2:22 AM
Last Modified: 7/17/2011  4:23 AM

Dear Action Line: How do we sort through all the insurance options available when it's time to buy car insurance? These ads say, "take 14 minutes to save on car insurance" and when we need it for a wreck it's: "Oh, that's not covered by your policy." - A.J., Tulsa

A policy that covers "everything" would be difficult to price and impossible to afford," says BankRate.com, in its rundown of major potholes existing in your auto policy.

Intentional damage: When intentional or accidental automotive slights cause reactions and retaliation resulting in damage, typical policies exclude liability coverage for drivers who do the road-raging. Insurers don't want to incentivize negative actions.

Livery exclusion: The term "livery" harkens to the old English, meaning "the voluntary transfer of people or property from one place to another, as in delivery." Using your personal vehicle on a regular basis for livery increases risk to your insurer. That's why most personal auto policies exclude liability, medical and collision coverage when insureds routinely use vehicles to transport people or property. It doesn't apply to car pooling or office workers making occasional office lunch runs. But drivers routinely delivering things should buy "commercial" auto policies to ensure coverage.

Lending or borrowing a car: Liability for borrowed cars is spelled out in insurance policies, including exclusion clauses denying coverage. Borrowers usually aren't covered unless the car's owner had coverage entitling them to use the vehicle. If owners lack collision insurance or have insufficient coverage for damage caused by borrowers, the other party often goes after the borrower for damages or injuries caused.

Acts of nature: Bad weather topples trees and hurls damaging debris. Wild animals take up residence, chew through wiring and make upholstery nests. Your vehicle receives major damage when you hit bears or deer. But if your policy does not include "comprehensive" coverage protecting it from damage not caused by another vehicle or by striking stationary objects, you are completely exposed - not covered.

Theft: Most auto policies exclude from theft coverage items that aren't part of the vehicle itself. Components that came with the vehicle are covered, but your portable GPS, iPad, CDs, etc., are excluded from policy "theft coverage."

Totaled car: When leasing or carrying an auto loan and the wrecked vehicle is deemed unsalvageable, it is "totaled" by the insurer - it will cost more to repair than it will be worth once repaired. When a total loss is claimed, the insurer calculates your payout based on the market value of the vehicle at the time of the crash. As many lease holders and borrowers are "upside-down" in their vehicles for much of their leases or loans, owing more than their vehicles are worth, they are on the hook for the gap.

For more auto insurance insights, see Edmunds' "How to save money on car insurance" at tulsaworld.com/EDsaveoncarins, MSN Money's "Cheap car insurance, the smart way" at tulsaworld.com/MSNMcheapcarins and the Federal Citizen Information Center's "9 ways to lower your auto insurance costs" at tulsaworld.com/FCIClowercarins

Original Print Headline: Be aware of gaps in car insurance