Does Auto Insurance Cover Preexisting Damage?
Will auto insurance cover pre-existing damage?
Unlike health insurance, car insurance policies do not cover damage to your vehicle that predates the inception of the policy. In order for damages to be covered by an auto insurance provider, the damage needs to have occurred after the policy start date.
If the preexisting damage to your vehicle is extensive, you could be disqualified from carrying physical coverage on your vehicle, i.e., comprehensive and collision coverages.
Will insurance companies insure a damaged vehicle?
This depends on your state, the extent of damage, and your insurance provider. Insurance companies do not like to insure vehicles with considerable preexisting damage, because it could make the company liable for any new or future damage. Some states require each vehicle to pass a physical inspection prior to the addition of collision and comprehensive coverages. In New York, Massachusetts, New Jersey, Rhode Island, or Florida, insuring a vehicle with physical damage coverage requires confirmation of the vehicle's structural integrity.
New York, Massachusetts, New Jersey, Rhode Island, and Florida require drivers to submit CARCO inspections in order to apply collision and comprehensive insurance coverages. This entails bringing the vehicle to a local inspection site, where they will take official photos that can be sent to a prospective insurer.
This is intended to verify the vehicle matches the description submitted to the insurance company. The insurer will look for:
- Physical condition
- General vehicle appearance
The overall goal of the CARCO inspection requirement is to reduce the number of fraudulent claims payouts and the average cost of comprehensive and collision coverage for all drivers.
Most car insurance companies allow a period of several weeks between the date when the insurance policy is purchased and the completion of a CARCO inspection. Every auto insurance company handles this differently, so it's important to check in with your insurer.
The insurance company will use the findings of the CARCO inspection to rate any future claims payouts and to determine acceptable levels of insurance coverage. Filing a claim for damage present during the CARCO inspection will result in a denied claim.
In a state that does not require a CARCO photo inspection, a few scratches and bumps will not prohibit a driver from acquiring insurance coverage. However, insurance providers can still discover damage to a vehicle by referencing the vehicle identification number (VIN). The VIN describes the entire history of a vehicle, including any past insurance claims in which the car has been involved.
Partial vs. full claim payouts for preexisting damage
Note: since every auto insurance claim is handled differently and depends on variable circumstances, there is no one-size-fits-all answer. As a rule of thumb, preexisting damage of more than a few scratches may impact your ability to receive a full claim payout for damage to your vehicle.
When you file a claim, your insurance company will send a claims adjuster to inspect the vehicle to determine the compensation owed. If the insurance claims adjusters feel the damage could have been avoided without the pre-existing damage, you could face a partial claims payout.
Even if you’re deemed not-at-fault in a collision, preexisting damage can hinder your compensation after a claim. An insurance company’s goal is to pay as little as possible in a claim. To avoid unnecessary losses, it's best to be upfront with your insurance company regarding your any preexisting damage.
How to insure a car with prior damage
By this, we mean if your vehicle was previously damaged and repaired. If your vehicle was damaged and then deemed safe to drive, your ability to insure the vehicle should not be impacted. Significant structural damage, however, can impact your ability to sell the vehicle. Even if it was repaired, you will have to disclose this information to the seller.
If your vehicle was totaled and you repaired it, you should expect insurance implications. Most insurance companies see a totaled vehicle as a major liability. Some companies will simply not insure it or only provide you with collision or comprehensive coverage.
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