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Flooded Car? Your Auto Insurance May Cover More Than You Think

6/18/2008

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ARLINGTON, Va. – June 18, 2008 – Insured drivers whose cars have been flooded may be covered for more than they think. Better Business Bureau and the Insurance Information Institute recommend that all car owners read their car insurance policy closely or they will miss out on reimbursements or other benefits they are entitled to when disaster strikes.

“Drivers spend a lot of money on auto insurance, but too often they wait until they need to make a claim after an accident or emergency and don’t remember what their policy will cover,” said Steve Cox, BBB spokesperson. “After a widespread emergency such as a flood, when many people are making claims simultaneously, it’s important for car owners to ask the representative handling their claim about their coverage and deductible, as well as any options that are included, so they get their money’s worth.”

According to the Insurance Information Institute (I.I.I.), a non-profit organization, comprehensive coverage will reimburse drivers for loss due to damage caused by something other than a collision with another car or object, such as fire, falling objects, catastrophic storms, vandalism, or contact with animals such as birds or deer. This includes flooding. 

“Although many states do not require that you purchase comprehensive coverage, if you have a car loan, your lender may have required you carry it until your loan is paid off,” said Carolyn Gorman, vice president of the I.I.I. “Comprehensive insurance is usually sold with a $100 to $300 deductible.”

Many drivers also have coverage for a replacement rental car, although they may not realize it because this optional coverage was added at such a minimal expense, usually just a couple of dollars a month. This coverage provides immediate access to a replacement rental car until repairs are made to their flooded car or they are authorized by their insurance company to purchase a new car. 

Drivers whose cars are totaled may not have to continue making payments on the balance they owe on the car if their auto insurance included gap coverage. This coverage pays the difference between the amount the insurer pays for the totaled car and the amount the insured owes on their lease or loan. Without this coverage, drivers are responsible for paying the remainder of their lease or loan even when their car is totaled.

The best advice is to be prepared – drivers should know what their auto insurance covers. At this point though, if your car sustained damages due to recent flooding, follow these tips:

• Report damage as soon as possible. If your car is not drivable, your agent or claims center may be able to save you time and money by having the car towed directly to the repair facility instead of to a temporary storage facility. In addition, arrangements may be made immediately to provide you with a replacement rental car, if your policy includes this coverage.

• Know what your deductible is and any other additional charges before authorizing work. Expect your insurance adjuster, claims representative or repair facility appraiser to review the damage with you and explain the repair process, including the use of original or generic auto parts. Before authorizing repairs, know what your deductible is, as well as any additional charges you will be expected to pay once repairs are complete.

• Ask about warranties on repairs. Ask whether your insurer has a repair facility referral program that offers a written limited or lifetime repair warranty backed both by the repairer and insurer for as long as you own your vehicle.
• Do business only with a reputable company. Obtain insurance from companies, independent brokers or direct marketers that have a proven track record of handling auto insurance claims effectively. Before signing a contract or making a purchasing decision, you can check out businesses with BBB at www.bbb.org. You can also get a referral or contact your State Department of Insurance for information.
As part of a nationwide consumer education program, entitled Wiser Drivers Wise Up, BBB and the Insurance Information Institute have teamed up to inform and educate drivers to review their auto insurance policy annually to make sure they have adequate coverage for various types of incidents, including severe storms. The “Wiser Drivers Wise Up” program includes a detailed Web site at www.wiserdrivers.com.
 
Both BBB and the Insurance Information Institute advise drivers to take a few minutes to read their policy or talk to their insurance agent once a year to make sure they have the coverage they want and need. The best advice is not to assume anything when it comes to insurance. If a specific coverage is not listed and explained in the policy, the loss probably won’t be covered. For more details, go to http://www.iii.org/individuals/auto/a/basic/

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About BBB (www.bbb.org/us)
BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business BBB Reliability ReportsTM and charity BBB Wise Giving ReportsTM, and educational information on topics affecting marketplace trust. To further promote trust, BBB also offers complaint and dispute resolution support for consumers and businesses when there is difference in viewpoints. The first BBB was founded in 1912. Today, 126 BBBs serve communities across the U.S. and Canada, evaluating and monitoring nearly 4 million local and national businesses and charities. Please visit www.bbb.org/us for more information about BBB.

About the Insurance Information Institute
The Insurance Information Institute (www.iii.org) is a non-profit, communications organization supported by the property/casualty insurance industry.

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