NO COLLISION COVERAGE AND THE ACCIDENT WAS NOT YOUR FAULT
WHAT IS COLLISION COVERAGE?
Collision coverage covers any damage done to your vehicle due to an accident whether it was someone else's fault or even your fault.
It will cover towing and storage charges and either the costs of the repairs OR the fair market value of your vehicle, plus tax and license.
If you have a loan on your vehicle, most (if not all) lenders require this coverage to help protect their interest in the vehicle.
DO I NEED COLLISION COVERAGE?
Most of the time the answer is YES. Sometimes however if the vehicle is worth only a couple thousand dollars, some think it makes financial sense to forgo the coverage so they don't have to pay the an extra amount on their insurance bill.
If your vehicle is worth more than a couple thousand dollars, we recommend getting this coverage because even if the accident is not your fault, you might not be fully compensated.
This is because the minimum amount of insurance required for property damage is only $5,000.00 for any and all damage caused by the accident.
WHAT IS PROPERTY DAMAGE COVERAGE?
Property damage coverage, covers someone if they damage other peoples property due to an accident. It covers damage done to every vehicle involved, and any damage done to other types of property, such as: street signs, fences, guard rails and also other people's towing and storage costs and their rental car costs.
Coverage amounts start at the CA state minimum of $5,000.00 and can go up and up from there. Remember, it applies to all things damaged. So that means if you have the state minimum and caused an accident with two other vehicles that were worth 5k each (10k total), your insurance would only pay out 5k ($2,500.00 to each person) and you may be held responsible for the remaining amount.
This minimum coverage amount for property was created in 1974 when a new vehicle was worth $5,000.00 and has not changed since, even though vehicle are now worth at least $20,000.00 new.
WHAT HAPPENS IF I DONT HAVE COLLISION COVERAGE, THE ACCIDENT WAS NOT MY FAULT, BUT THE AT FAULT PARTY ONLY HAS 5K IN INSURANCE COVERAGE?
Well, if you decided to forgo collision coverage, then you better hope the person who caused the accident has enough coverage to cover all your costs. Plus, the insurance company does not need to tell you the amount of their insured's coverage. So if they were driving an older vehicle, we must assume that only they had the minimum coverage.
Also, the insurance company does not have to move quickly to resolve your claim. They may have to complete their coverage investigation and their liability investigation before paying a dime. This can take weeks or even months.
If your vehicle was totaled and towed away, you can expect that the towing company is going to charge you (even though its not your fault) for the cost of the tow and the cost of daily storage, which can be around $50.00 per day. So, its a good idea to get your car out of the tow yard ASAP. You may have to pay the tow yard out of your own pocket to get it out.
You will also want to be compensated for the damage done to your vehicle. If you car is worth 5k and your towing and storage bill is 2k. You may only receive around 3-4k for you car.
So just remember, it can be capped at $5,000.00, regardless of what your total expenses are.
WHAT IF THERE ARE MULTIPLE CLAIMANTS AND THEY HAVE ONLY 5K IN COVERAGE?
So lets say the person who caused the accident hit your car, which caused you to hit the car in front of you which caused that car to drive over a fence. Who gets what? Well, first we need to see how much each persons claim is worth.
Claim # 1 (You). Your car is worth $6,000.00, you were smart and got the car out of the tow yard quickly and so the tow bill is only $600.00. You were also without the use of your vehicle for 3 weeks and so you made a loss of use claim for $600.00.
Total claim: $7,200.00.
Claim #2 (Vehicle 2). The vehicle who you were pushed into is worth $25,000.00 and is considered a total loss as well. The tow and storage bill is $500.00. They rented a car for 2 weeks totaling $400.00. They had collision coverage and so their insurance company is going to seek subrogation from the at fault party to recoup their loss.
Total claim: $25,900.00.
Claim #3 (Fence owner). The fence owner got a quote of $1,000.00 to fix her fence.
Total claim: $1,000.00.
Total claims: $7,200.00 + $25,900.00 + $1,000.00 = $34,100.00
Pro Rata distribution: Each party will then receive a pro rata distribution of the $5,000.00. To find out what the pro rata percentage will be, just take "your number" and divide it by the total claim amount.
Claim #1 (You): Here, it would be $7,200.00 / $34,100.00 = 21%. So you would receive 21% of the $5,000.00, which equals $1,050.00. That's it!
Claim #2 (Vehicle #2) Would receive $25,900.00 / $34,100.00 = 76%. So they (the insurance company) would receive 76% of the $5,000.00, which equals $3,800.00.
Claim #3 (Fence owner) Would receive $1,000.00 / $34,100.00 = 3%. So the fence owner would receive 3% of $5,000.00, which equals $150.00.
NOTE: The at fault's insurance company cannot make a payment to you, until ALL claims have been submitted. This can take anywhere between a couple months, to even a year. Usually, the hold up is one of the victim's insurance company(Claim #2), who had to payout the claim to their insured, wait to get a buyer at an auction for the totaled vehicle, calculate the total amount and then make their claim.
BOTTOM LINE: If you don't have collision coverage and there are multiple claimants and the at fault party's insurance does not have enough insurance, you may get a small fraction of the value of the claim.
We will most likely advise you to help mitigate your damages by taking action to reduce towing and storage fees and also rental car fees. If you knew that you were only going to get reimbursed 20 cents on the dollar for every dollar you spent on storage, rental cars etc. you would think the same way too.