Letter to the Editor: Responding to Jim Porter’s auto insurance column
I am writing in response to the failed lawsuit by the policy holder to get the insurance company to replace their car, in lieu of, repairing the collision damage, re: Jim Porter’s column, “Must auto insurer pay replacement value vs. repair costs?”
The article described the legal intent of “breach of contract and breach of implied covenant of good faith and fair dealing” as an attempt to get the insurance company to pay the additional amount to replace the car. In the article the cost to repair the collision damage was less than the value of the vehicle. This is rare; in most instances, the cost to repair collision damage exceeds the value of the vehicle.
The intent of the auto policy’s physical damage (comprehensive or collision) coverage is to put you back into the place where you were before the loss occurred, which is why the auto policy has language describing it will pay the lesser of the cost to repair or the value of the car at the time of the loss.
Insurance companies realize this dilemma, and as the article notes will have specific language stating it will not pay for decreased value. However, the article did not note that some insurance companies offer enhanced physical damage coverage to replace the vehicle. If the car qualifies, enhanced coverage may be included in the auto policy or available for an additional premium. Usually the qualifications are the type of car, the year of the car and the car’s mileage.
Therefore, if you have bought a new car or truck, talk with your insurance agent about the availability of replacement cost physical damage coverage.