This week, I read a story from Nashville’s NewsChannel 5: “Why a fender bender can total your old car.” It’s a car-insurance story I’ve heard plenty of times before, and I know I’ll hear again and again.
The crux, in case you don’t feel like reading the whole story: A Nashville driver with an older car gets in a wreck, and has his dented-but-functional vehicle totaled. Which leaves him with a problem: The blue-book value payout isn’t enough for a reasonable replacement, but getting a “salvage” title and repairing the old car isn’t financially ideal either.
I really feel for the guy. The biggest bummer with all this: There’s no perfect solution, insurance-wise.
I’d love to tell you I can set you up with a cheap Nashville car insurance policy that’ll make everything a breeze if you bash up your old car. But car values being what they are and insurance calculations working how they do, that just isn’t true.
The truth about totaling
Totaling a car isn’t about how fixable your car is, ultimately. It’s about percentages. Depending on your insurance company and your policy, if the cost to repair your damaged vehicle comes in at more than half of its value, you’re totaled. (Sometimes it’s closer to 60 percent, sometimes lower.)
If you drive a car that’s more than a decade old, you might be surprised at how low the going value is. And we all know how expensive car repairs can be. So, high cost plus low value equals headache.
A little advice
So, what do you do to stay out of this conundrum if you’re driving an older, less-valuable car?
If I were advising the driver in NewsChannel 5’s story, I’d probably say to go the salvage title route, take the insurance payout and repair the vehicle as cheaply as possible. Then, carry liability only — which is all insurers will offer after you’ve totaled. Then drive very, very carefully.
It’s not ideal, I know.
The best approach — though it doesn’t help people who are already in this mess — is to simplify your car insurance beforehand, if you’re driving a low-value vehicle.
I grew up in small-town Tennessee, around a lot of folks driving old, beat-up cars that’d eventually get passed down to their wreck-prone high-schoolers. What those folks did then is what I’d do now: Carry only liability, and put the savings into a rainy-day car-repair fund.
In Tennessee (and other states), you’re legally required to carry a minimum amount of liability coverage. That’ll protect other people’s property from any damage you might cause — and protect you in the process. It just doesn’t cover the damage on your own vehicle. Which, as you can see with NewsChannel 5’s example, isn’t that huge of a loss.
Assuming you drive your old car a good few years without a wreck, the savings you pocket with just liability coverage should provide you with a decent safety net. You just have to make sure you follow through on the rainy-day fund, and don’t drop the cash on more fun stuff. (I’m a ray of sunshine in this week’s blog update, huh?)
Something unique about this here in Nashville:
If a car is over 10 years old, Tennessee doesn’t make you get a salvage title. We’re unique in that, and I’ve seen it benefit clients. One in particular did exactly what I mentioned, recently — he took the payout and dropped everything except liability.
If you’d like to talk about the best car-insurance approach for you and your family, I’m more than happy to help. Drop me an email or give me a call, or drop by and see me in The Gulch. Any questions you might have, I’ll do my best to answer — and I can shop around for different policies that give you the coverage you need at the best rate possible.
For an even easier way to get things started: You can grab a quick online car insurance quote here, too.
Other insurance topics you’d like to know more about? I’m always open to feedback about what I should share here. Just reach out with your suggestions, or drop a comment on the Tucker Coverage Facebook page.