Everyone needs to get car insurance but no one ever wants to have to use it. However, if one does get in an accident, watch for accident damage overcharging, which can add hundreds of dollars to the bill and bump up the premiums even further.
Keep an eye on estimates to prevent accident damage overcharging
Car accidents are bad enough to weather, but the next step after that, namely getting the car repaired, can almost be worse. Not only does one have to deal with the insurance company, but one also has to get an estimate for the repairs. It’s also just that – an estimate. Nothing keeps a repair shop from holding to it before submitting the actual bill.
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According to Edmunds, not all body repair shops are created equal; some will low-ball the initial estimate to not only land the customer, but also to get the insurance company to approve the repair. Once the actual bill comes, it may be a lot higher, which can stick the customer for the difference out-of-pocket. Sometimes it’s perfectly legitimate; damage can sometimes be worse than it appears in an initial inspection. Always get an itemized estimate and review it line-by-line.
Beware of rental car companies
One of the most commonly-accused parties in accident repair overcharging is rental car companies. Over the years, a number of rental agencies have been accused of drastically charging up to twice the amount a repair would cost if a rental car is damaged. In 1988, according to the New York Times, Hertz was caught charging customers more than double the cost of repairs to fix cars damaged in accidents, netting $13 million over several years from the scheme.
A letter written to the “What’s Your Problem?” column of the Chicago Tribune in 2010 claims National tried to gouge a man with charges for new radiator, front grille and bumper for a Ford Mustang a man was driving on his honeymoon in that year. The car broke down unexpectedly, and he got a replacement rental. He never had an accident.
The problem is hardly confined to the United States; according to The Telegraph, “credit hire” services in the U.K., which arrange for repairs and rental cars after someone has been in an accident and wasn’t at fault, are said to be overcharging customers and reaping upward of 200 million pounds (about $310 million) per year from overcharging.
Part of insurance fraud
Trying to get more money out of an insurance company, or by extension a customer by overcharging for repairs, is not just unethical. Legally, that’s called fraud. Faked or exaggerated damage claims, according to the Texas Department of Insurance, is a form of insurance fraud, which the National Insurance Crime Bureau estimates to add up to $300 per year per policy to cover fraud losses at insurance companies.
The NICB also estimates that up to $120 billion is lost annually to insurance fraud and that up to 10 percent of all injury and property claims are fraudulent.
The Telegraph: http://www.telegraph.co.uk/motoring/news/9413143/The-credit-hire-price-sting.html
Chicago Tribune: http://articles.chicagotribune.com/2010-07-15/business/ct-biz-0715-problem-kusmider-20100715_1_national-car-rental-tow-truck-bumper
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