Car accidents happen when we least expect them, and are generally not only inconvenient but also life-changing. Not only are you down a car for repairs—or possibly for good if there is nothing that can be done to fix it—but you can end up paying out way more than you realize with insurance deductibles, repair costs, and sometimes even an increase in your insurance premium itself.
Depending on the severity of the accident, there are also medical bills and lost wages to worry about, and possibly even damages to the other vehicle or any structure that might have been hit, as well as a rental vehicle if your car is going to be out of commission for a while. If your insurance doesn’t cover these expenses, it will all come out of your pocket. Here’s an economic analysis breakdown of a car accident to give you an idea of the costs associated with putting the wreck behind you.
Initial Costs of a Crash
After an accident, you’ll have plenty to worry about, possibly including the time you have missed at work. Even if it’s only one day, it can make or break your budget until your next paycheck. If your car needs repairs, hopefully, you have comprehensive or collision coverage or the person who hit you does. Otherwise, you’ll be shelling out quite a bit since car repairs are never cheap.
If you have to pay out of pocket, you should always use a mechanic you trust, and hopefully you have savings you can use for the repairs. If your car is totaled, depending on if you owe the bank anything on it, you may get money back for its current market value, which you can then put toward a new car. If you have to rent a car, check with your insurance, as they may cover the costs of a rental. If someone else hit you, their insurance may cover the cost up to a certain point. You might also have to pay for other options, such as ridesharing or public transit, to help you get around in the meantime.
Even small accidents might get you sent to the emergency room. Add that to an ambulance ride, and you have quite the hefty medical bill, even if there is nothing wrong with you. The good news is that your insurance, or that of the at-fault driver, should cover the whole cost if both or either of you has coverage for medical expenses.
The bad news is that it could take quite a while for the insurance agencies to sort out who has to pay for what, which may send your bill to collections if you can’t pay it right away. The whole thing could be a little easier to deal with if you also have medical insurance since you’ll only have to pay copays and deductibles, which are way less than if you had to pay the whole bill out of pocket.
Be very careful about keeping track of what you have paid for and when, keep all your receipts, and hang tight until things get sorted out. Medical bills and expenses are some of the top costs associated with a car accident that a good lawyer can help you get compensated for.
It’s not cheap to pay for repairs. Even a scratch to your car’s paint job could cost you over one hundred dollars. Hopefully you have insurance to cover the costs of any damage done to your vehicle, no matter if you were the at-fault driver or not.
Unfortunately, some accidents, even if they don’t seem too damaging, are just too much for your car to handle, and the cost of repairing it just isn’t worth it to the insurance company. Much will depend on the age or condition of your car, however.
You may have to decide if the car means enough to you that you’ll pay out of pocket for the repairs, or just let the insurance company total the vehicle. In that case, you will likely get the “blue book” price for your car, and as long as you don’t owe the bank anything on the car, you can use that toward a new vehicle. If your accident was someone else’s fault, you should consider seeking compensation, even if your insurance is willing to cover your expenses.
Not Enough Car Insurance
What happens if you don’t have enough insurance to cover the damage caused by the accident? Or what if the other person doesn’t have enough? If you do not have enough coverage to pay for the excess damages that result from the accident, you are personally responsible to pay the extra cost, no matter how much it is.
One way to keep this from happening is to increase your property damage liability, so that it would cover the cost of a whole new car, just in case. If the other person does not have enough coverage, unfortunately, you’ll be forced to pay the difference if it was a minor accident. If you needed medical care afterward, it might be worthwhile to take the at-fault party to civil court with help from a personal injury attorney.
When it comes to insurance, you may also want to look into underinsured motorist coverage, since your own insurance would then cover the extra damages that the at-fault driver was unable to cover. Just remember that even after the accident, your premiums might go up, sometimes as much as 41 percent, and if you had perks, you might lose them even if this was your first accident and you have a clean driving record otherwise.
While car accidents are certainly no fun—and insurances companies are generally even less fun to deal with—all drivers will likely have to deal with them at some point in their lifetime. With the cost of covering repairs, rentals, medical bills, and many other expenses after an accident, it’s best to think ahead and make sure you have the right kind of coverage on your vehicle—and enough of it.
Even if you think you don’t need that $25,000 property damage liability insurance, you do, even if just for peace of mind that you are covered if you need it later. Paying a little more every month or every six months is still way better than paying out several thousand if the worst happens. Better to have it and not need it, than to not have it and be stuck in debt because of the expenses that come with a wreck.
No matter how you crunch the numbers, a car accident will cost you money. Whether you have a big emergency fund you can use or your insurance covers everything, there’s a chance that you have another option available. In cases where another person was responsible for your collision, make sure you consult with an experienced auto wreck attorney to find out if you are entitled to compensation.