Car accidents are not only scary but also a monumental hassle. That’s largely thanks to what comes after the accident itself.
After an accident, you’ll likely have to spend ample time on the phone with your insurer. Then there’s dealing with the auto shop and rental car agency. There’s also the possibility of having to shop for a new car. When you consider all these factors, the whole cost of even a minor fender-bender can be hefty — both in terms of time and money.
Three-quarters of all drivers have been in an accident. Three-quarters of drivers also believe they’re well covered by their car insurance policies. Unfortunately, this might not be so. A recent Esurance study found that it’s not uncommon to shell out more than $1,000 after an accident — and spend 20-plus hours dealing with post-accident demands.
Truth be told, we often make the whole thing more expensive than it needs to be. From understanding coverages to researching repairs, here are several ways you can ease the financial (and emotional) burden of an accident.
Understand Your Policy
Most online quote systems will customize coverage for you. It’s based on both your ZIP code and the answers you provide throughout the quote. That way, at the very least, you meet minimum state requirements — plus, you can see relevant coverage options.
However, many people don’t even read their policy after they purchase it. That’s not surprising—insurance policies are long, complicated and not particularly riveting. But knowing the fundamentals of your coverage can go a long way in helping you to be aware of protections you don’t have or reimbursements you’re entitled to.
As a starting point, ask yourself the following as you go through your policy:
Is my vehicle protected in the event of a collision?
While no state requires collision coverage, it can be invaluable. It’s designed to cover repair costs for your car, whether you hit another car or another car hits you. Yet the Esurance study reported that over a quarter of drivers opt out of it — likely in an attempt to shave down their premium.
But consider this: If your vehicle’s a newer model, a damaged bumper alone can easily cost $1,000. That’s because many newer models are equipped with a suite of built-in sensors and cameras. Without collision coverage for your car, even a minor accident can burn a hole in your wallet.
It’s worth noting, too, that collision coverage goes hand-in-hand with comprehensive coverage – in fact, some insurers require that you buy them together. That’s because when you bundle them, they help foot the bill for a wide array of mishaps: crashes, fallen trees, hail storms, hitting a snow bank, vandalism, auto theft, collisions with animals and more. Whether you need to replace a damaged part or your entire vehicle, these coverages can be lifesavers.
Do I have backup transportation?
For many of us, a car isn’t just a luxury, it’s a necessity. Our job, school, errands, doctor visits and the like depend on it. Having an easily accessible backup plan can save you a lot of money and stress.
If your car is in the shop after an accident, having transportation in the interim helps daily life continue as normally as possible. Rental car costs can add up quickly, so knowing whether your car insurance will help cover those costs is critical—especially if the shop is, say, waiting on a replacement part, which could take a couple weeks.
How much will my coverages actually cover?
Having coverage is one thing. Having enough coverage to be reimbursed for the total cost of an accident is another. Let’s say you’re found at-fault in an accident. The other driver is injured and looking at about $100,000 in medical bills. Your bodily injury liability limit is $25,000. That means you could be responsible for the remaining $75,000.
While lower limits might save you money at checkout, it could leave you in the lurch after an accident. Pay attention to your coverage limits and make sure you’re comfortable with them.
What do I have to pay out of pocket?
A deductible is what you pay before you’re insurance coverage pays. When you buy car insurance, you get to choose from a range of deductibles. The more you’re willing to pay out of pocket, the lower your premium is likely to be.
But your deductible should be one you’re comfortable paying. If, for instance, you choose a higher deductible of $1,000, make sure you have $1,000 in your bank account on standby. Otherwise you could be facing a not-so-little snag in the claims process.
Research Local Auto Repair Costs
About two-thirds of U.S. drivers don’t trust auto repair shops in general, according to a 2016 AAA survey. Fear of being overcharged is understandable, so researching auto repair costs in your area can be to your advantage. According to the Esurance study, drivers who had to shell out less than $1,000 in repairs after an accident were more than 60 percent more likely to have done their research on repair costs.
Auto insurance companies typically have a direct repair program. This consists of a network of repair shops pre-approved by your insurance company. After all, your insurer has a stake in this too, and a quality repair job at a reasonable price reflects well on them.
However, direct repair programs aren’t mandatory. Ultimately, it’s up to you to choose the repair shop you want to work with.
Plan for the Unexpected
Lawsuits over emotional distress. Being hit by an underinsured driver. Missing work due to injuries. These are scenarios no one likes to dwell on, but having a contingency plan in case they do happen can bring you much peace of mind.
It’s not just money in the bank that’s at stake. Your assets ought to be top of mind as well — property, equity, savings. For this reason, the general rule of thumb is to purchase the coverage that’s right for you and fits within your budget. An auto policy shouldn’t cost an arm and a leg, but it should protect that arm and leg as well.
Eric Brandt has more than 25 years’ experience in the insurance industry. Eric currently serves as Chief Customer Advocate for Esurance, where he leads the customer experience, including claims fulfillment. Prior to joining Esurance, Eric led customer-centered transformations in the areas of claims, risk management and relationship management for carriers offering personal lines, commercial lines and employee benefits protection. To learn more about Esurance’s car insurance options, visit their website.