by melakwa » Thu Jan 27, 2011 05:06 pm
Hi, I need some advice. I financed a used car for my daughter to drive. The deal was she'd pay for the insurance. She did get a policy w/ liability and uninsured motorist, but unfortunately she did not include collision/comprehensive in the policy, and I failed to check and make sure she was covered. Last week she was at fault in a wreck and the front end damage to the car is extensive - it will cost far more than the value of the loan ($5k) to fix it. The bank that financed the deal took a copy of my existing insurance card, but my daughter insured it with a different carrier. I know I'm on the hook for the loan. My question would be if the insurance company my daughter used would normally send a copy of the policy to the bank, since they're listed as the lien-holder.
Posted: Wed May 25, 2011 12:09 am Post Subject:
I had this insurance for six months and never heard from my insurance company or financial institution about my policy until I got into an accident.
Your insurance company is under no obligation to tell you that your lien holder may require insurance. This is between you and your lien holder.I'm betting in your loan agreement, that you signed, you agreed to carry comp/coll on the vehicle. Also, you would have needed to personally add it onto your policy. If you did not, then you should know you are assuming the responsibility if the vehicle is damaged.
Your lien holder should have protected their interest by either reminding you to obtain coverage and/or force placing coverage (for a high premium billed to you). But if they did not, this still does not change your responsibility.
Posted: Mon Jul 18, 2011 02:20 pm Post Subject: Comp and Collision Coverage
If a vehicle does not have comp and collision coverage and is totaled in an accident, will the insurance company pay anything for the vehicle (less the deductible, of course)?
Posted: Mon Jul 18, 2011 02:44 pm Post Subject:
Not if its the insured's fault. What deductible... there is not coll or comp.
Posted: Mon Jul 18, 2011 09:24 pm Post Subject:
Collision and comprehensive coverage is for damage or loss to your property not the fault of someone else. If your driving led to the total loss of your vehicle, without those coverages you have no claim. If someone else's driving caused your vehicle to be a total loss, their insurance pays your claim.
Posted: Thu May 24, 2012 03:00 pm Post Subject: LEINHOLDER RIGHTS
I purchased a car and financed it in NJ. I also purchased a new insurance policy with full coverage on the policy with the lien holder listed. The check I gave to the agent unfortunately was returned by the bank without me knowing it and by the time I found out they had cancelled my policy back to the inception date. They however never sent the cancellation notice to the lien holder. So I then have an accident in which the car is totaled and I have no coverage. The question is doesn't the insurance carrier have to provide the lien holder notice? My contract states that if I fail to maintain coverage they may obtain a policy. So if they had received a notice they might have had insurance on it. I asked them to put a claim in as the lien holder because they are going to repossess the car.
Posted: Thu May 24, 2012 11:24 pm Post Subject:
The check I gave to the agent unfortunately was returned by the bank without me knowing it
With most banks charging $25-$40 for a returned check, I find this statement hard to believe. The bank sends you a notice of the charge and/or you see it on your statement.
They however never sent the cancellation notice to the lien holder . . . doesn't the insurance carrier have to provide the lien holder notice?
While it is customary for insurance companies to do this, you have to read your contract to see whether they will or not. Technically, it's your responsibility to notify the lender when you know you have no coverage -- that's probably in your loan contract close to where you know the lender has the right to insure the vehicle and charge you for the privilege. But, then again, if the operative word in your loan contract is "MAY" even the lender is not required to obtain the insurance.
You now have no car and a loan balance which remains to be paid off.
Posted: Mon Jan 28, 2013 07:14 pm Post Subject: collision insurance
I have several autos insured with my insurance carrier for over 30 yrs...always carried full coverage on all autos...in 2010 i transferred an auto from my father to myself...he had full coverage on it and i was under the impression that my agent would continue with same coverage. I had an accident with the 2002 Ford Taurus last October and it was totaled. The accident was deemed my fault. Now my ins co tells me that I have no collision coverage and that it is noted on my bills and ins cards. I never noticed. What are my rights here since I always carried full coverage in the past. Incidentally I never signed anything to drop coverage...can anyone help?
Posted: Mon Jan 28, 2013 11:40 pm Post Subject:
I never noticed. What are my rights
You have the right to cover the full cost of your failure to pay attention to your insurance coverage. What you have done in the past with other vehicles is meaningless.
If you have paperwork that shows you were supposed to be covered for collision and comprehensive (other than collision), then, perhaps, you could sue the agent for negligence.
Posted: Thu Jan 09, 2014 03:22 pm Post Subject: Lienholder Listed but No Comp/Coll
A friend of mine sent me her dec page after an at fault accident. She only had state minimum liability limits, UM/UIM but no comp or collison. The dec clearly listed the lienholder on the application, and renewal. I know that the contract states that a buyer must maintain physical damage coverage, but most people don't know much about insurance and if you take a bill of sale to an insurance agent and ask them for coverage, most people trust that the agent will do the right thing. On the other hand, the finance company should have caught this as well. I know that there are 3 parties who have responsibility here, but I do think that the insurance company acting as a professional and with expertise should know better. We cannot expect plain clothes individuals to "KNOW" what they need to do. This is clearlymy opinion.
Posted: Thu Jan 09, 2014 04:37 pm Post Subject:
I know that there are 3 parties who have responsibility . . . This is clearlymy opinion
Yes, like a Supreme Court Justice you are entitled to an opinion. But any judge will tell you that your opinion is wrong. There may be three or more parties involved in your discussion, but there are only two responsible parties. What complicates the situation in your view is the fact that there are also two unrelated contracts involved.The first contract is that which the insured has with the lender to provide the financing to purchase a vehicle the insured cannot afford (at least as a full cash purchase). The lender is the legal owner of the financed vehicle.
Personal auto insurance is a two-party contract between the insurance company and the insured who is the registered owner of the financed vehicle.
At this point, it should be clear to you that there is only one common element in these two contracts -- the insured vehicle owner.
The insurance company has no knowledge of the contract between the lender and the insured. It is not required by law -- neither statutorily nor in common law -- to know what the finance contact requires of the borrower.
Although the insurance company may generally "know" that auto finance contracts usually require the borrower to maintain collision and comprehensive coverage, the insurance company has no duty to the insured to provide any type or amount of coverage other than what the insured applies for, other than the minimum coverages required by law.
The insurance company acts through its agent. The acts of the agent are the acts of the insurance company. But in this case, apparently, the agent failed to fulfill his/her professional responsibility to the insured. That's why the agent needs Errors and Omissions insurance. If, indeed, there was even an agent involved. If there was an agent, now we have a second party with some responsibility.
But this could be an agentless do-it-yourself contract, too. And when the insured saw the cost of collision and comprehensive coverage applied to her minimum liability premium, she said, "I ain't got that kind of money!" and removed (or did not apply for) the coverage even though it was required by the lender.
The lender may have dropped the ball on its end, failing to enforce that provision in the contract that PERMITS it to force-place insurance on the vehicle at the borrower's expense. But I would be willing to bet that the finance contract uses the words, "WE MAY" obtain insurance to protect our interest in the vehicle -- not the words, "WE SHALL". And you should know there is a big difference between those two words. The court will agree with the lender that it has no duty to obtain the insurance, only the prerogative to do so IF IT CHOOSES. The rest of its contract remains fully enforceable, and the balance owed is still due. the only breach of the finance contract was committed by the borrower/insured.
The lender has an enforceable contract based on the security of the vehicle. If the vehicle no longer secures the contract, because it has been declared a total loss, the finance contract has an ACCELERATION CLAUSE that permits the lender to collect the full outstanding loan balance. Presumably, this would be covered in part by insurance. But it wasn't.
Again, the only party with the responsibility to act was the borrower/insured. That's where the primary failure . . . and fault . . . lies.
If an independent agent was involved, then your friend may find her salvation in the agent's E&O coverage, and she needs to make a claim against that policy. For what? Failure to provide adequate coverage, as you surmised above.
Professional knowledge is supposed to be passed on to the customer -- "Ma'am, your lender probably requires you to carry collision and comprehensive coverage. . . . Oh, you don't want it? Fine, then let me just have you sign this statement that says, 'I know I am supposed to carry collision and comprehensive coverage with my auto liability insurance as required by my loan agreement. My agent has also told me this. But I don't want to pay for it, so I'm not getting it. I understand that if I am involved in a collision that I will be responsible to pay the lender the full balance owed, and that the insurance company will not pay that part of the loss for me.' Oh, you don't want to sign that statement? Then it was my pleasure to have met you, but, I'm sorry, I cannot be your agent." That's what a good, experienced agent would do.
If the agent is a captive agent, then your friend has hit the jackpot, because she can allege that the insurance company failed to train and supervise its agent, and therefore bears vicarious liability (under the theory of "respondeat superior") for the ACTS OF OMISSION on the part of its agent. The insurance company will have to defend both itself and the agent, and that means lawyers and expenses, and if the vehicle isn't worth very much, they will just write a check and be done with the whole mess. The agent could end up being terminated.
But you cannot blame the insurance company for doing what the insured has asked them to do. That would be like saying, in life insurance, the dead guy made over $1,000,000 per year, his insurance company should have known he needed $50,000,000 worth of coverage. But he had $0 because he never asked for more.
No one would ever put that on a life insurance company, would they? Absolutely not.
We cannot expect plain clothes individuals to "KNOW" what they need to do.
Really? Are you certain about that?The part you're missing in all this is the same part of life that has largely disappeared from American culture: PERSONAL RESPONSIBILITY.
In your context, overdrawn bank accounts are not the individual's responsibility, but the bank's. Not putting coolant in the radiator is the car manufacturers fault when the car overheats and blows a head gasket, not the owner's. A parent is responsible when their adult child does something stupid -- because the parent should have taught them better. Well, maybe there is some truth to this last one.
What with 99 weeks of unemployment insurance, "free" birth control from your health insurance company, free cell phones for some folks, free this, free that . . . all of it doled out by the federal and state governments . . . we have almost completely turned American couch potatoes into couch mashed potatoes. Let the government take care of me is what people have come to expect in America of late..
I'm not on that bandwagon by any means.
I think we CAN and MUST expect people to KNOW. It's what they don't know that can hurt them, as your friend is learning. Experience is often a painful teacher. But your friend has/had parents who knew about auto insurance, she has you as a friend, who supposedly knows about auto insurance -- didn't you ever ask her if she had proper coverage on her vehicle?
Maybe she should sue you, too, for failure to render professional advice to her. I don't think you would enjoy that. Did you have a direct responsibility to do that? Of course not. What would you have said if your friend came crying to you, "Why didn't YOU tell me this? You know all about insurance."
That's the whole point of forums like the ones here, to educate consumers so that agents and insurance companies will not take advantage of them. I hope you will register as a member and continue to post here.
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