Acts of God and Car Insurance

Storm or Bad Weather Damaged Your Car?

If you carry the basic state mandated liability coverage on your car, you’re only covering the damage to someone else’s car and the medical bills as a result.

Your own car is not protected in the event of an accident, and though most states do not require you to provide proof of full coverage insurance (unless you’re financing your vehicle through a bank) this is the only way Acts of God are covered under an auto insurance policy.

What is an Act of God?

An Act of God refers to anything such as: flooding, hurricane, tornado, or even a deer coming out in front of you, causing a collision. If your car is damaged, or completely total as a result of an Act of God, your insurance company will not pay anything to you, unless you have full comprehensive and collision coverage. If you have nothing more than the state mandated minimum coverage amount for your area, then you will be the one responsible for repairing or replacing your vehicle.

Do you need Act of God coverage?

If you live in an area prone to storms and other natural disasters, then carrying comprehensive and collision coverage is a good idea in most cases. However, because the Act of God coverage will only cover a maximum of the value of the car at the time of the incident, it may not be worth it, especially if you drive an older car. If the car is only worth $2,500 when the tree falls on it, that’s all you’ll get–and in most cases, that’s not enough to replace the vehicle you were driving. Plus, you have to remember your deductible. Typically, you’ll have to pay a deductible of $500 to $1,000 before the insurance company will do anything on your calm,. If your car isn’t worth much more than the deductible you pay, then you’re getting little to no insurance coverage, and it’s not worth the money you pay on your premium.

What if you have a brand new car, but the insurance company deems the maximum value less than what you owe the bank? Unless you purchased GAP insurance coverage at the time of vehicle purchase, designed to cover the difference in what you owe on the loan and the value of the car at the time of loss, then you’re stuck paying the bank the difference. If you elect not to pay the difference to the bank, then you’ll default on the loan and your credit report and score will suffer, making it difficult to impossible to obtain another car loan in the future.

Things to Consider

  • Where do you live? If you’re prone to natural disaster, it may be worth the investment.
  • Is your car relatively new? If so, it’s worth it. If not, then it’s probably not.
  • Do you owe the bank on the car? If you’re financed through anyone, even a buy-here-pay-here lot, you’ll likely have to carry comprehensive and collision anyway, which means Acts of God are covered.
  • What deductible do you want? The higher the deductible, the lower the premium, but the more you have to pay in the event that you need to make a claim.

If you have any questions or concerns about what is or what is not covered under your car insurance policy, talk to your insurance agent. He or she will be able to tell you what to expect from your policy in the event that you need to make a claim. If you find out you’re not covered the way you want or need to be, then you can make changes to the policy accordingly, or shop around for another provider who can provide the coverage you need at a more affordable price.

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What to Do After an “Act of God”

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