All Auto insurance policies may not be the same, even though many people wish they were. Here is one example.
You purchase a used car at a local dealer and it has 20,000 miles. You drive your car to work, and then park it on the lot. Soon after, you receive a security call that says there is smoke coming from underneath your car’s hood. You call the fire department already and they arrive right at your place. The wiring harness is all that smokes when you open the hood. It is almost like a toaster wire. It will also do this if there is a short and the current from your battery causes this. The fire department then puts a few extinguishers on it until it stops. Call the auto manufacturer and you will find the warranty information in the glovebox. It turns out that the warranty on this part of the vehicle only covers 10,000 miles.
Call your insurance agent to report the claim. Your insurance agent will send an adjustor to inspect your vehicle. The adjustor also pointed out that there was no smoke coming from the short. The adjustor denies the claim. You dispute the fact that your policy provides coverage for fire-related losses. The adjustor takes out the policy and points to the exclusions that do not include damage from flames. This is the time to bring it up with anyone who will listen.
To see the warranty, you can go back to the seller of the car. They only cover the engine and drivetrain.
Finally, you realize that the $2500 repair bill is yours. Is this what we would expect? What insurance company wouldn’t pay for this bill? It was certain that it was due to hot wires. As was mentioned, it all depends on what the policy defines as fire. It may be possible to exclude damage from something hot enough to melt wire insulation, but not too hot to burst into flames. I will admit that I was surprised to hear about this.
This is only one example of how policies’ definitions can affect your coverages. This raises the question: What can you do to stop this from happening to your policy?
It is up to the consumer to learn about the coverages. Although most people believe it is the responsibility of the agent to inform them about the absence of coverage, they only have to answer any questions that you might ask them truthfully. Not obligated to tell you all they know.
If your agent tells you, you have coverage and it is found out later that the policy does not cover that loss, the insured will surely attempt to bring the agent’s E&O coverage into play. An agent who is sharp will seek the advice of an underwriter or company officer to prevent this from happening. They will then explain the policy’s interpretation of a loss.
Each insurance company has precedents on how they handled claims similar to yours. You should be able to find out what their past actions were on claims like yours. The way that this section is defined will determine if your claim has a unique enough status to be considered. There is always room for speculation.
If they refuse to speculate on the loss management, I won’t be buying their coverage. It is your responsibility to question your agent and company and to answer any questions honestly. How do you choose which questions to ask?
This is why you should ask this question. Are you looking to get cheap insurance or high-quality insurance? You won’t find the same thing, but you will know what to do.
Comment added
We would love to hear from you about any unusual insurance experience. If you can give me as much detail as possible about the claim and how it ended, I might include it in my next book. If your claim is accepted, you can mention the name and case number of the company. Unless you specifically authorize me, I won’t mention your name in this article. Contact me at the email listed on the site.
