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The Biggest Insurance Blunders You Never Want To Make

Insurance blunders can be quite costly, and sometimes, they can be downright funny. This list explores mistakes and blunders that were made by both customers and insurance companies, and the experiences encompass all car types of insurance.

Filing A Late Claim

nice carMany people do not realize that insurance providers specify that a customer can only file a claim during a certain period of time after an accident occurs, and usually this time period is 24 hours.

Despite this stipulation, most companies will work with their patrons to accept late claims, and the terms and conditions of a policy usually include a clause that lists numerous acceptable excuses for not notifying the company of a claim on time, such as being stuck in a ditch or sustaining a serious injury.

Case Study

Several years ago, there was a lady in Ohio whose car was hit and damaged by a reckless driver, and when it was hit, the car had been parked correctly in a private lot. Doing the right thing, the reckless driver stopped and got out of his vehicle, and he preceded to leave a note that included all of his contact information on the woman’s automobile.

She contacted the driver, and due to the fact that he pleaded with her not to file an insurance claim because his rates would rise, she agreed to allow him to make payments to atone for the damage.

The total damage to the automobile would cost $1,400 to fix, and the two parties agreed that each monthly payment would be $150 until the total cost was paid in full.

The person who caused the accident made the first payment, but afterwards, he ceased making payments. After waiting two more months, the woman attempted to file a claim with her auto insurance company, but the provider rejected it because more than three months had passed since the incident.

Additionally, they emailed her a copy of the terms that stated that claims could only be made within 24 hours aftercar accident an accident. Next, she contacted the perpetrator’s insurance provider, and she was told the same thing by the insurance agent. After filing a lawsuit, she went to court two months later, and the defendant instantly pointed out that the agreement to pay a total of $1,400 had never been put in writing. As a result, the case was dismissed.

Sufficient Levels Of Coverage

In order to obtain a driver’s license and to legally operate a motor vehicle in a particular state, a person must have an insurance policy that provides the minimum levels of auto insurance coverage. The average minimum requirements include $25,000 of coverage for the medical expenses of each person who is involved in an accident, $50,000 to cover the total medical expenses of everyone in an accident and $10,000 of property damage liability coverage.

Case Study

A new driver in New Mexico had an insurance policy that provided the minimum auto insurance requirements, and thinking that any accident that he could be involved in would never be his fault, he drove with this policy for about two years without any mishaps.

One day, he was playing with his radio while driving, and he crashed a red light in an intersection that normally wasn’t busy; however on this day, two other cars were crossing the intersection simultaneously.

The relatively new driver’s vehicle smashed into the first vehicle, which as a result of the impact, crashed into the third vehicle in the intersection. Luckily, none of the automobiles flipped over, but serious damage had been done.

car wreck

A car wreck which can be an insurance blunder if not claimed properly. Photo Credt: johnstadnicki

All three automobiles were totaled, and the driver of the car that was hit first had to be rushed to the hospital. All of the drivers survived, but their medical expenses were much higher than the personal liability coverage that the insurance policy of the person who caused the accident provided.

Additionally, the total cost of replacing all three vehicles was around $28,000, and the driver’s policy only provided a maximum of $10,000 of property damage liability coverage. After the insurance company paid a total of $60,000 to cover all of the expenses, the person was still left with a bill of more than $30,000, and luckily, he was able to make payments over a period of five years to cover the costs of the accident.

By getting a quote from an auto insurance company and paying $20 or $30 more per month for an upgraded policy, he could have been fully protected financially from the expenses that were generated by this incident.

Minimum Liability Coverage State by State

StateLiability Limits
(in thousands of dollars)
Uninsured Motorist Coverage Required?
Alabama25/50/25No
Alaska50/100/25
No
Arizona15/30/10No
Arkansas25/50/25No
California15/30/5No
Colorado25/50/15No
Connecticut20/40/10Yes
Delaware15/30/10No
Florida10/20/10No
Georgia25/50/25No
Hawaii20/40/10No
Idaho25/50/15No
Illinois20/40/15No
Indiana25/50/10No
Iowa20/40/15No
Kansas25/50/10Yes
Kentucky25/50/10No
Louisiana15/30/25No
Maine50/100/25Yes
Maryland30/60/15Yes
Massachusetts
20/40/5Yes
Michigan20/40/10No
Minnesota30/60/10Yes
Mississippi25/50/25No
Missouri25/50/10Yes
Montana25/50/10No
Nebraska25/50/25No
Nevada15/30/10No
New Hampshire25/50/25Yes
New Jersey15/30/5Yes
New Mexico
25/50/10No
New York25/50/10Yes
North Carolina
30/60/25Yes
North Dakota25/50/25Yes
Ohio25/50/25No
Oklahoma25/50/25No
Oregon25/50/20Yes
Pennsylvania15/30/5No
Rhode Island
25/50/25No
South Carolina
25/50/25No
South Dakota25/50/25Yes
Tennessee25/50/15No
Texas30/60/25No
Utah25/65/15No
Vermont25/50/10Yes
Virginia25/50/20Yes
Washington25/50/10No
Washington D.C.25/50/10Yes
West Virginia
20/40/10Yes
Wisconsin25/50/10Yes
Wyoming25/50/20No

Reading An Insurance Policy

Do you want to find out more information about avoiding costly blunders like these? You can learn how to thoroughly read and analyze an insurance policy and how to eliminate insurance troubles by visiting this page. This page explains each aspect of every policy that you should consider in depth, includes a comprehensive list of definitions that are related to insurance and demonstrates how to customize each part of your policy in order to ensure that it provides the most thorough coverage.

Joanne Miller

Joanne Miller

Joanne Miller is a business woman who is passionate about cars, insurance and new business strategies. She loves to write about new trends in the insurance industry. I am a mother first, then a business woman. I am very passionate about implementing strategies that improve companies. Currently I manage my family run business.

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