Several weeks back, I was driving a Lyft passenger when we were struck by another car. Since then, I have been putting together the cash for the repair deductible, which is $2500. Yesterday, I took the car and the payment to the collision repair shop to begin working on the car. The collision itself was not a high speed speed impact. On the surface, it appears to be minor damage to the driver side doors. But the impact also bent the center column between the doors, which is more costly to repair. Now, I need to wait a couple of days to find out if the insurance company will pay for the repairs or declare it a loss.
I'm going to share the details of what factors play into the decision whether my car gets repaired or paid out. To start, the car is a 2012 Toyota Prius with a little over 140,000 miles on it. The best value of that year and model of car I have found from Kelley Blue Book is roughly $7000. This is important because insurance companies use what they call Actual Cash Value of a car in their calculations. How they value a car is not transparent, but they usually attempt to value cars at the lowest they can.
If the damage repair estimate exceeds 70% to 80% of the Actual Cash Value, typically, then the insurance company declares it a loss. At that point, they will pay out the value of the car minus my deductible payment. In the end, I would get the deductible payment reimbursed plus the additional value up to the car's actual cash value. Assuming that the KBB value is the same as the insurance company's calculated Actual Cash Value, then they would pay $4500 for it, and I'd get my $2500 deductible reimbursed, totaling $7000. The car owner, me in this case, is losing $2500.
The other possibility is that the repairs to the car do not exceed the 70% to 80% threshold. In this case, the owner is still out $2500, but the car gets repaired with the insurance company paying the additional cost.
All that was the easy part. Now here come the complicated bits. My personal auto insurance company is not paying for the damage as I was transporting a passenger for Lyft. This shifts the liability to Lyft's commercial insurance. If the accident had happened while I was not working, then my deductible payment would only have been $1000 with my personal insurance. I still had to file a claim with my insurance company so that I could provide documentation to Lyft's insurance that my own insurance would not cover the incident.
There is a third scenario in which I would have been on my way to pick up a passenger. If that were the case, then my insurance would have covered the accident. However, this is typically not covered by most personal auto insurance. My insurance policy has a rider, for which I pay extra, that covers this scenario. I have met other drivers who were unaware of the gap in coverage when they're working but do not have a passenger in the car. They got nothing from their insurance companies after their accidents for damage or medical expenses. Fortunately, I was aware of the gap and found an insurance company that offers the policy rider.
A further complication is that the accident was a hit and run. The other driver left the scene of the accident. Had the driver been more responsible, then his insurance company would have paid the repair deductible and damages for me.
Except that the driver was later identified by a police investigator. So the Lyft insurance company started a process called subrogation in which they attempt to collect the deductible payment and repair costs from the other driver's insurance. I may get my $2500 back. But if the driver was uninsured, then I get nothing and Lyft's insurance still pays for the damages. This process can take a long time.
Obviously, Lyft's insurance can't collect from the other driver's insurance company until they know exactly what the costs were. All this was waiting for me to gather the deductible payment and begin the repair process. Now that the process has started, the collision repair company can start disassembling the car to provide an accurate estimate for the repairs. Within a few days, the insurance adjuster will calculate whether the car can be repaired or declared a loss. Once they have hard numbers, they can then proceed with subrogation with the other driver's insurance, which could potentially reimburse me for the deductible payment and reimburse the insurance company for their cost.
Unless you are accident prone, this is the sort of detail about insurance that you would never know. I certainly had no clue as I have not had to file an insurance claim in ages. My first claim was much simpler. Our insurance totaled the vehicle and paid for the damages to the other driver. That claim took a while as the first collision shop took forever to start working on the car, so I moved it to another shop that got things going in a few days. Otherwise, it was relatively simple.
In comparison, this experience has taught me a great deal about how insurance companies work as there are so many different factors at play. Circumstances changed when the police investigation identified the other driver.
I'm glad, at least, to have kicked off the process to closing out this whole drama. I'll either get may car back or get paid for its value. And, with any luck, I may get my deductible payment reimbursed. If the deductible payment isn't reimbursed, then I may need to start a whole new drama of going to small claims court. That's a problem for future me, if that happens.
What I could have done better is that I should have had a rider on my personal auto policy that would pay for car rental and a rider for uninsured drivers. This would have covered the deductible and rented me a car while waiting for repairs. If I had those riders on my own policy, then Lyft's insurance would have also provided uninsured driver and car rental coverage. I could have had my car repaired or paid out sooner, rather than waiting until I could cobble together the deductible payment.
If there is anything to learn from my experience, it's that you really need to put some thought into your insurance policy. Insurance is not a one-size-fits-all product. You need to tailor it to your circumstances. Yes, you can save money by not having a rider on your policy. But if you do have to file a claim, then can you afford to pay for what wasn't covered? Inadequate insurance, in the right scenario, is the same as no insurance.