5 unexpected costs of a car crash

You may think your auto insurance policy provides all the protection you'll ever need in a car crash, but unforeseen expenses can put a big dent in your bank account.

While it's impossible to anticipate all car crash costs, you should carefully go over the terms of your policy to make sure you have adequate protection, says Pete Moraga, spokesman for the Insurance Information Network of California.

If you don't "you may miss some things," he says. "You have to make sure the policy fits your needs."

unexpected costs of a car crash Here are five unexpected costs that often result from car crashes.

1. The cost of replacing customized parts and equipment.

If you have an expensive stereo system, special tires, customized seats or other nonstandard equipment, you can purchase an optional custom parts and equipment policy to make sure such items are covered in a car crash.

Jim Armitage, an insurance agent in Arcadia, Calif., says policies for customized and optional equipment typically cost between $10 and $15 annually for each $1,000 in value. For example, if you had a custom electronics system that cost you $2,000, the cost of your policy would be between $20 and $30 per year.  

According to insurer MetLife Auto & Home, some companies provide a limited amount of this coverage -- typically between $1,000 and $2,000 -- without charge. Check with your agent to see if your policy covers customized equipment.

2. The cost of towing your car.

You typically can add towing coverage to a car insurance policy for about $20 per year, says Kevin Foley, a New Jersey insurance agent. It usually includes roadside assistance. This optional coverage is a good investment, since paying for towing out of your own pocket can cost you $100 or more, depending on how far you need to transport your damaged car.

A short tow of up to 10 miles usually costs less than $100, says Mike Seamon, executive director of the Professional Wrecker Operators of Florida trade group. He says the cost may vary slightly around the country.

Moraga says consumers should be wary of using tow trucks that suddenly appear at the scene of an accident and offer to take your vehicle to a repair shop.

Some tow truck drivers listen to police scanners and rush to accident scenes in hopes of finding customers, Moraga explains. They may charge an unreasonably high fee of several hundred dollars and "hold your car hostage" at a storage yard until you agree to pay, he adds.

3. The cost of renting a car.

If you don't have access to another car, you may have to rent while your damaged automobile is being repaired. Rental car reimbursement is an optional coverage that typically costs motorists about $40 per year, Foley says. It can be a good investment, since renting a car may cost $40 for a single day.

In its Industry Trends report on U.S. auto damage during the fourth quarter of 2013, software company Mitchell International, Inc. looked at how long rental vehicles were used by people whose cars were being repaired. It reported that the average rental time nationwide was 11.2 days. The study was performed by Enterprise Rent-A-Car, using internal data, says Dan Stander, director of the collision division for Automotive Service Association, a trade group for auto body and mechanical shops.

Be sure to check whether your policy is subject to limits for daily car rental costs or for the overall cost of your rental car claim.For example, if you're limited to a rental fee of $30 per day and a maximum claim of $750, you'll have to pay the difference if your bill exceeds those amounts.

Rental car agencies typically offer to sell auto insurance coverage to customers. However, your current car insurance policy may already extend your existing coverage to any rental car you drive. For example, if you already have liability, collision and comprehensive coverages, they typically remain in effect while you drive a rental car.  Be sure to check with your insurance agent to verify that this applies to your policy.

4. The cost of repaying a loan on a totaled car. 

Armitage says many consumers don't realize that when their car is totaled in an accident, they remain responsible for paying off the auto loan. Because new cars quickly decline in value, the amount you receive from your insurer for a total-loss vehicle with an outstanding new-car loan may not be enough to pay off your debt.

The solution, he says, is gap coverage. This optional policy pays the difference between what your insurance company normally would pay for the totaled car and what you owe your lender.

Armitage says you typically can add gap coverage for only about $6 per year.

"It's a very inexpensive coverage that a lot of people don't know about," he adds. 

5. The cost of higher insurance premiums.

After experiencing a car crash, many motorists face a second setback: higher car insurance premiums.

Because car insurance rates are based, in part, on driving records, getting into an accident and making a claim can lead to higher insurance costs, if you are at fault, explains Robert Hunter, director of insurance for the Consumer Federation of America. If you are not at fault, accidents typically will not affect your insurance rates.

Armitage says having only one accident on your record in which you were at fault may not result in higher premiums.

However, if you are at fault for two or more accidents within a three-year period, your annual premium could rise by as much as 40 percent, he adds. "Three accidents in a three-year period is inductive of pretty bad driving behavior," Hunter says.

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