Your Car Insurance Coverage Might Not Be Good Enough

Insurance Is Expensive

Having reliable and sufficient car insurance coverage is so important. But how do you know if you have enough? Car accidents are incredibly expensive today! Here's how I found that out the hard way.

Several years ago, I did something stupid. Instead of backing straight out of my parking stall, I turned too soon. As a result, I crunched the side of my car Rhino into a pillar. I wasn't inebriated, tired, or high. I was just in a rush to meet a friend.

The last time I had an accident was in 1998. Instead of backing up into a pillar, I backed into the passenger side door of another car which was also backing out at the same time. It looks like there's a pattern to my accidents. But who told that Mustang to run into my bumper?!

I remember trading insurance information, paying a $200 deductible, and sending in a sketch of what happened. My insurance company probably paid, but I don't remember for sure. My premium stayed the same and the cost didn't stand out. 

Car Accidents Are Crazy Expensive Nowadays

After hitting the pillar, I called my insurance company and confessed my stupidity. Then, they sent me to their “preferred” auto body shop to get a quote. 

Always skeptical about insurance companies, I decided to first check out another body shop in a cheaper part of town. After doing so, I realized I was in the wrong business!

The first place I went to was in an area called Parkside. That's the southwestern part of San Francisco where homes are cheaper than the median.

Food and services are also cheaper there compared to an area like Pacific Heights, where similar quality homes are easily 100% over the median. If I wanted a deal, I had to go to a cheaper part of town!

My craptastic house contractor gave me the skinny that his fellow contractors purposefully charge more for people who live in more expensive homes, even if the cost is the same, because they know the homeowners can afford it, and tend not to push back as much.

Auto Body Repair Costs Soar

Before telling you how much the quote was to fix the two damaged panels on Rhino, take a look at the image above and guess the estimate. We're talking a 3 mph accident with no other vehicle involved. I've seen people simply take off a panel, pound it out from the inside, repaint and be done.

Did you guess $500? $1,000? Maybe $1,000 for each panel? Or how about an aggressive $3,000?

Personally, I guessed $1,000. I was willing to pay $1,000 out of pocket to avoid potential insurance premium hikes since my deductible was $1,000.

Now, take a look at the Parkside auto body shop estimate below.

Car Accident Insurance Estimate

To fix two dented panels requires 41.1 hours of labor at $94/hour for a total of $3,881! What?! Parts are relatively cheap at only $967.66. 

The combined total cost was a whopping $5,397.41! The funny thing is, the auto body owner gave me the three page print out with a STRAIGHT FACE!

If I had to play poker with this guy, I'm sure I'd lose. How in the world you can give a $5,397.41 estimate for such a minor accident is beyond me.

Crucial Car Insurance Coverage

The first thing he asked me was who was my insurance carrier. The last thing he asked me was to verify my insurance carrier. In other words, the cost he estimated depended on which insurance carrier he thought he could screw over the most!

He proceeded to tell me that if we skipped the insurance company, he would knock off $1,000 from the estimate. I told him thanks, but no thanks. I was curious to see what my auto insurance company's preferred dealer would quote.

Side tip: If you are going to remodel your house, you might as well get the finest materials possible. As with the auto repair quote above, it's really the cost of labor that will account for the lion's share of your construction project.

New Car Repair Quote

Car Accident Auto Body Estimate Cost

My car was pretty new at the time I had my accident, which made me feel so dumb for denting it. But at least parts were easy to come by and nobody got hurt.

To my surprise, the preferred auto body shop came in 39% cheaper at $3,293! If I didn't first get a quote at the Parkside auto body shop, I would have been sick to my stomach. But with the new estimate at $3,293, I was kind of happy. Damn that shady guy!

Unfortunately, $3,293 was still way over my $1,000 deductible, and way over what I thought such a minor accident would cost.

Thus, I paid my deductible and received Rhino back three weeks later. What a long time to be without my car. I guess it really does take close to 40 hours of work to fix!

Lower Quality Steel, Higher Repair Costs

I spoke to the 65-year-old owner and asked why cars cost so much to fix nowadays. He said that because cars today are made from such low tensile steel, it's impossible to just pound out the dents like the old days.

The steel is much too malleable and will flex right back. Car manufacturers want to make the lightest, fuel efficient cars possible. While that's great for gas mileage, it sucks for repair costs.

I proceeded to ask him why it took 40 hours of labor to fix my car. Taking off the dented panels and installing new ones seemed so straight forward. He said that one of the two damaged panels is actually two separate pieces. Then he went on rambling about other things I didn't quite understand.

Sufficient Car Insurance Coverage

Honda Fit Parking Job
Why I own a small car in the city!

Having sufficient car insurance coverage is more important than ever. Cars today are just way more expensive to fix than cars of the past!

Rhino was a 2015 Honda Fit that cost $19,200 pre-tax, and roughly $20,835 out the door. Thus, $3,293 to fix the two panels accounted for 16% of the entire cost of the car!

I shudder to think what the cost of fixing my car would be if I got into a head on or side collision. I'm sure $8,000 – $10,000 in cost wouldn't be out of the question because the motor and other mechanical parts might get damaged as well.

Get The Best Value For Your Auto Insurance

Given the ridiculous cost of fixing cars, the irony is that if you are going to drive, you might as well drive the nicest car that you can afford. You get much more “value” for your insurance given your chosen deductible is fixed.

Parts only accounted for 23% of my final $3,293 cost. The other option is to drive the cheapest car you feel safe in, where you don't care if it gets bashed up. That's what I did for 10 years driving a 2000 Land Rover Discovery II before Rhino.

Finally, getting a couple estimates from auto body shops and shopping around for car insurance is a no brainer. It's very clear to me there's some nefarious multi-tier pricing strategy going on with what auto body shops charge based on who your insurer is and your method of payment.

The Bottom Line

My silly accident is a good reminder for everybody to call their auto insurance company to learn about your exact coverage. Here's a helpful car insurance basics primer to help you further understand all the options available.

Find out your liability amount, who is covered, monthly premiums, roadside assistance, loaner car benefits, etc.

I didn't want to pay $2 a month extra to get the loaner car benefit. As a result, I ended up carless for a couple weeks (traveled one week) because I was unwilling to pay $50 a day for a car rental.

After going through your car insurance policy, if you don't like what you're getting for the price, get a quote online.

One of the largest online insurance companies is AllState, which I've used to keep my existing insurer honest. The most important thing is to know what type of insurance you need to keep yourself protected.

My Insurance Specs On A Honda Fit:

Here's a look at what my car insurance coverage specs were at the time in 2016. My 2015 Honda Fit was leased new and only about a year old.

  • Six Month Premium: $546
  • Liability – $300,000 / per person $500,000 for total accident
  • Property Damage – $100,000
  • Uninsured – $300,000 / $500,000
  • Uninsured property damage – $1,000 deductible, if someone doesn’t have their own insurance
  • Medical Payments – $100,000 / person for people only in my car
  • Wage or benefits – $2,000/family member .. total
  • Extended benefits – $45/week for services such as house cleaning, mowing the lawn, etc.
  • $5,000 funeral and death benefits* Roadside service – $1.5/month

How much do you pay for car insurance every six months?

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How much did you initially pay for the car you're currently driving?

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Get Cheaper Car Insurance Coverage

Auto insurance is the second biggest expense to owning your car. AllState is the leading online market place to help you find the most affordable and reliable auto insurance.

They get you comparison quotes to make sure you’re getting the best deal. You can easily purchase auto insurance straight from their website if you like what you see.

It is very important that everyone gets at least basic liability car insurance. You can total your car and be fine. But if you total someone else’s car and injure them, they can go after you for ALL your assets and wipe you out. Check for a better auto insurance quote today.

About The Author

53 thoughts on “Your Car Insurance Coverage Might Not Be Good Enough”

  1. Wow! I can’t believe it’s so expensive to fix a dent like that. Man car parts and labor are so pricey! Very interesting on the difference in price between those two auto body repair shops. Totally shows it’s important to get more than one quote! And fascinating on how the change in steel for fuel efficiency purposes makes it near impossible to bang out dents anymore. Yikes!

  2. I work for an insurance company, and spend a lot of time comparing competitors’ policies.
    I thought I’d make a few points on the cost and purchase of insurance:

    1) For a number of large companies, having continuous insurance coverage without lapses and having higher bodily injury limits places you in a better risk bucket, with lower premiums (all things considered).

    2) In most states, except a very few (Hawaii and California, I believe), insurance costs also depend on a factor derived from your credit report. While the calculation of those scores is a closely-guarded secret (and isn’t *exactly* your credit score), a better credit score is generally better for insurance costs as well.

    3) Quoting with multiple companies, especially if you have been with your carrier for a long time, is likely to save you money.

    4) Be careful, if you get a nice car, that your insurance will not, as a rule, cover original equipment manufacturer parts when aftermarket parts will do.

    5) Be careful getting quotes with additional drivers. In some states and companies, the driver might be automatically added to your policy and then be hard to remove.

    6) The tools for detecting lying and fraud on a policy are getting very sophisticated; most insurance companies contribute their claims to one centralized database and insurance companies can easily verify your driving record, insurance history, and a few other reports.

    7) Finally, any data you give an insurance company, even while quoting, stays with them for life, as far as you’re concerned.

  3. We usually “bundle” our home and 3 cars for “bid” by carriers willing to write a 1 year, one payment term.

    The cars are model year 2010, 2009 and a 1993.

    500K liability, under & uninsured 500 ded comp 1,000 ded coll towing

    This year a new carrier won the bid at $1062 for the 3 auto’s and $437 for the home.

    Those dollar figures for 12 mo’s of coverage, based on a single pay premium.
    It PAYS to shop your current carrier against at least THREE or MORE others.
    Happy insurance buying!

  4. Daniel Mercado

    Well I’m not sure if that many will read this, but if you do, DON’T CLAIM ON INSURANCE IF IT’S YOUR FAULT!!

    I had progressive, and I accidentally backed up into my dad’s lowboy trailer (man that thing is a tank, couldn’t tell if I even dented it!)

    I put in a claim, and got all of it paid with a little to spare.

    It ended up costing about $1900.

    But then the next month my rates went into the stratosphere!

    From there it was a long multi-year journey from insurance co. to insurance co.

    I’m finally back with progressive paying about $55 / month.

    Next time I damage my car or something else, I’ll try to see if it would be worth it to handle it without a claim.

    And I’m sure someone will say, “Well why don’t you get a insurance policy that won’t raise your rates?”

    Well you could do that, but I’m certain it’ll be way more than what I would pay otherwise.

    I’d rather just keep avoiding having to drive and drive ultra-defensively to avoid any accidents.

  5. I pay $20/month for liability with USAA. Somebody hit me in the parking lot the other day and it looked REALLY minor. I drive a paid off car with a rebuilt aka salvage title so even cheaper and I didn’t car. However, since it was the other driver’s fault, I filed a claim.

    The quote was near $950. CRAZY! I requested a payout and chose to go on my own to fix it. My backyard mechanic fixed it for $300 and I pocketed the rest.

    Great ROI!

  6. I had very similar damage to my car this summer

    The cost of the repair ended up being 2k. The cost of my labor was significantly less ($42 / hr). The shop was able to pull the metal out, so I didn’t have to get a new rear quarter panel as well. I have a Honda Accord and I’m not sure how the metal is different from the Honda Fit, but that’s good information about these new fuel efficient cars. Save at the pump, pay at the repair shop!

      1. I payed $500 out of pocket (my deductible).

        I have considered raising my deductible to $1000 to save some money on the monthly payments. I did the math though and I would have to be accident free for 5 years before the savings payed off. Living in a city with crazy drivers, I feel comfortable with my current coverage and cost: $480 / 6 months.

        Maryland has a law that prevents the victim of an accident from requesting payments from the driver who caused the accident IF the victim cannot prove he was 100% not at fault. So even if you are the best driver, you may find yourself a victim in a collision and unable request payments from the other driver, depending on the findings of the insurance companies.

  7. It was a rear end accident that got me thinking of replacing my Jetta (which I did this summer) a few years ago. The Jetta was a 2000 and at the time I was rear ended to the tune of about $2500. The bumper needed to be replaced basically. It was in good condition with low mileage for it’s age but still old. I think KBB only had it worth about $3500 total. I realized that it wouldn’t be that much longer until a “minor” accident would total the car. I started saving and researching what I wanted after that although I was able to drive the car until I choose to make a change instead of being forced to.

  8. Had a small accident 3 years ago. A guy didn’t yield and hit my car on the right side. My door was busted, the front axis had been damaged, the left front wheel (I was able to avoid him a little, so he didn’t hit me harder) etc.

    The repair cost was 2000 bucks. 2 grand. My car is probably worth 6000, if I am lucky. Or 4000. Fortunately his insurance did cover it all, but it was a clear wake up call than such a mishap can be very costly.

  9. If you don’t like those quotes do a little research (Yelp, Angie’s List, etc.) and get a third. Contractor pricing (at least in Chicago) varies so widely these days. We had similar damage to our Mazda, and the other parties’ insurance company had us in for an estimate at their preferred shop. They wrote us a check for the amount of that estimate. After that, we went to the dealer, who gave us a much better price (I want to say it was 40% less).

    We just had some roofing and tree work done — and had the same experience with wide variances in pricing.

  10. The same exact experience as you as far as insurance costs. A while back I had a fender bender which just cost the deductible and that’s about it not very costly and my premiums didn’t go up. Recently somebody but a little dent in my daughter’s car in the parking lot. It was very minor but the fix would have been $1,500 with the cost potentially going up when they discover more stuff as they described it. Of course my daughter didn’t get the culprits detailed information and she didn’t respond when we called her so I decided just to leave the dent since it was so minor in an old car. Really the cost of fixing a minor dent would be a huge part of the value of the car since it’s an old car. Seems ridiculous to pay for that for a minor cosmetic detail. I think instead of your recommendation to buy the most expensive car is to buy the cheapest car and not worry about a dent here or there. I think health insurance is also going the same way where you pay a huge premium and it doesn’t really cover anything anymore and so much is out of pocket.

    1. Nick, my recommendation is go the most expensive car you can afford or the cheapest car you feel safe in.

      “Given the ridiculous cost of fixing cars, the irony is that if you are going to drive, you might as well drive the nicest car that you can afford. You get much more “value” for your insurance given your chosen deductible is fixed. Parts only accounted for 23% of my final $3,293 cost. The other option is to drive the cheapest car you feel safe in, where you don’t care if it gets bashed up. That’s what I did for 10 years driving a 2000 Land Rover Discovery II before Rhino.”

  11. Gen Y Finance Guy

    I was in Vegas over the 4th of July weekend when a passenger of a taxi cab opened his door on mine while I was driving by.

    The taxi cab company wanted to avoid going through insurance and said they would pay for it out of pocket. There is a whole process in Vegas when taxi is involved in any kind of accident. The police have to come to file a report, and then someone comes to take pictures and report what happened. And a manager even comes down.

    You don’t have to wait, but they pay your $50 on the spot for you to wait. We only had to wait 20 min to get everything taken care of.

    When I got home I scheduled a time for an estimator to come out. In all honesty it scraped my handle and put a minor dent in the side of my door (you can barely tell). Once I get it buffed out you won’t know its there unless you are looking for it.

    The estimator said it would cost $1,250 to fix. The parts were only $87…so I got the check and decided to pocket it instead of getting it fixed. At some point I will probably replace the handle for the $87 and buff out the door.

    But I looked at it as free money.


  12. I drive a 2000 Saab, and carry no collision (though I carry some minimal uninsured/underinsured property damage coverage, because it’s cheap). What I DO carry, and highly recommend that you all carry, is hefty personal injury liability coverage combined with hefty uninsured/underinsured coverage for personal injury. How hefty? $500 k with a $1 million umbrella. If you’re a safe driver it’s more affordable than you’d think. It’s also worth it if you’re unlucky enough to either (a) cause an accident that hurts someone else or (b) get seriously injured in an accident caused by someone with little to no liability insurance. I’m a personal injury attorney, and I see it all the time.

    1. Brenda, thanks for the reminder and advice as a personal injury lawyer!

      Now I’m going to go back and check how big my personal injury liability coverage and uninsured/underinsured coverage for personal injury is again, and SO SHOULD EVERYBODY ELSE.

      May I ask, if you know someone has a big umbrella or big personal injury liability coverage, do you naturally then go after them more? And, can you go after them BEYOND their liability coverage? This is super important for us to know.


      1. One thing to keep in mind with insurance is that getting the bare minimum on your liability policy is a terrible idea. They are the three numbers on your policy, which typically show up like this 250/500/250 or 15/25/15. Those three numbers represent your policy maximums with regards to you causing an accident. The first number is the total (in thousands) your insurance will pay to an individual that you have injured during an accident, the second number is the total your insurance will pay out for injuries per accident. So if you injure two people and each costs say 250k in medical bills and your total allowed is 500k then your policy has it covered after your deductible. The last number is the total your policy will pay for property damage. This number covers damage to vehicles, stop signs, shrubs, light poles, etc… If you get the state minimums which in California are 15/30/5 you could very quickly run out of insurance if say you hit a new BMW or Land Rover and cause even a hospital visit from the person you hit. Once you run out your insurance will not pay anymore unless you have an Umbrella policy. This means the victim can come after you financially for the rest of the damages.

        Another thing to keep in mind is that many states have a maximum wrongful death dollar amount but do not have a maximum personal injury dollar amount. Meaning that if you cause an accident that results in a death the family can only sue for the maximum amount allowed by law. If you only injure them they could after you for any amount of money they choose.

        So be careful when buying “cheap” insurance policies. They may not be that cheap in our sue happy environment. If you cannot afford the liability premium that will keep you and your family safe you probably shouldn’t be buying the car.

    2. Callie Marie

      I’ve got pretty much the bare minimum for my insurance coverage, so I’m glad you posted this comment. I was in a minor accident and it turned out to be a huge hassle, because the driver at fault wasn’t insured. If someone had been injured, that would have made things even more complicated!

  13. My husband’s 2006 Civic (new to him this year) was rear-ended recently. The other driver’s insurance company wrote us a check for ~$1700, but we were able to get it fixed for just under $900. We bought a replacement tail light from a salvage yard (Civic parts are abundant in salvage yards!) and took the car to a “$75 Dent Fix” place in a low-rent neighborhood. The car looks great again and we made money! As mentioned in the post, labor is the biggest cost in these repairs, but if you need replacement parts and you can find a place that will let you bring your own, you can save there, too. I completely understand not wanting to drive a dented car. We’ve done it before and it made us feel poor, which isn’t the greatest feeling. It’s one thing to drive a decent-looking older car, but a whole other thing to drive one that doesn’t look like it’s in good condition.

    1. Todd Guthrie

      I did the same thing. Minor collision with minimal damage, insurance estimated it would cost $1500 to fix the dents and scratches, so I kept their $1500 and continued driving around my old car with a couple more dents and scratches on it.

    2. I’d do the same thing.

      In fact, I was probably hoping someone would bash the crap out of Moose, my 2000 LR so I could pocket some nice damage money and not fix it. At 14 years old, dents and stuff were like a badge of honor!

  14. 40 hours of labor sounds ridiculous! But yeah if it took them three weeks to fix I guess that’s what it takes. Maybe it takes that long because they have to keep setting things in place to dry but I really have no idea. I wonder how often insurance companies push back on repairs shops if they suspect the shop is claiming more need to be fixed that what is actually needed. Glad you were able to get your car fixed. Being without it for three weeks must have been a PITA. With those crazy repair prices it makes you appreciate having insurance!

  15. OlderAndWiser

    Can you add to the poll? The $301-400 category for insurance (where my premium falls) is missing.

  16. Money Beagle

    Many times you’ll find that the ‘preferred’ auto repair shop is actually owned by the same holding company as the insurance agency. They, in essence, recover a good portion of the money that they’re paying out on the claim by doing the repair, but the total costs are often lower because the repair shop has no interest in screwing the insurance company that basically owns them.

  17. Did you consider simply not repairing the damage? I had a similar case on my Prius and chose to simply live with it – and that was ‘only’ a $900 repair bill :-) Granted my car was 8 years old at that point, which did factor into the decision. None the less, one wonders if the inconvenience and out-of-pocket cost was really worth it.

    1. I did, but it bugged the heck out of me to drive w/ the dent on a new car. Furthermore, what’s the point of having insurance, if you don’t use it when these problems happen? My last accident was in 1998. Finally, I would have had to pay sooner or later, b/c Rhino is leased.

  18. Kate @ Cashville Skyline

    I have incredibly cheap car insurance ($663 per year), but I’m also driving a 2006 Toyota Corolla. I’d much rather pay lower premiums and higher deductibles if an accident ever happens. Also, I drive my car as little as possible. I’m less than 5 miles from my office and mostly walk around my neighborhood on weekends. Honestly, I hope to ditch a car completely in the future. But Nashville’s really got to step up their public transportation before that can happen.

    1. Todd Guthrie

      I also got a really good deal on insurance, about $650 for the whole year, for me, my wife, and a 2007 Camry, with pretty high limits.
      Before getting married, my insurance was a lot more expensive, about $900 per year for me, and an another about $1200 or so for her (because her driving record is relatively short).

      Who would have guessed getting married would save us 70% on car insurance!!!

  19. My wife and I shared a free 95 accord while living in Hawaii and carpooling but since moving back to Seattle, splurged on an additional camry. 2000$ for a fully loaded low miles xle and still cheap to insure and good gas mileage.
    Being really rich in my mind isn’t a Ferrari in the driveway, it’s never having to own a car again.

    1. One of the reasons for owning a Honda Fit is that I think it is the PERFECT car for me to bring back to Hawaii. Economical, understated, can fit a lot of people, and put surf boards on top.

      The question is: have you ever driven a Ferrari? Pretty fun, if one can afford it!

  20. Ali @ Anything You Want

    Wow – these prices are crazy! I don’t even have collision insurance on my car because the whole thing is worth about $2k. This just makes me think that driving a cheap car really is the way to go. If I scrape a pole and get a little cosmetic damage, oh well! I would just keep driving the car in all of its imperfection.

    I have been thinking of buying a new car and it is little things like this – worrying about every scrape and bump – that make me really nervous. I don’t want to drive a car that I fear!

    1. Yes, it’s good to drive as cheap a car as possible where if you damage it, who cares! This is part of the reason why I drove Moose, a 2000 LR for 10 years. I didn’t mind bashing the crap out of it. It also helped during situations of chicken on the road too.

      It’s either: 1) buy the cheapest/safest car possible, or 2) buy the most expensive/luxurious car you can afford as your cost is capped w/ insurance.

  21. Part of the problem is the $80 – $94/hr labor rate. In Orlando, the best body shop charges $45/hr and $22/hr for paint. Granted cost of living is much different here, but the work is the same.

  22. I wonder if you might come out ahead selling Rhino with the dent and buying a new one. Fits hold their value very well, maybe the dent only hurts resale $1000-$2000.

        1. If his last accident was 1998, he may have Accident Forgiveness or a similar benefit with his insurance company.

      1. I don’t think you can equate the deductible to the total cost of repair incurred. You must account for insurance premium hike given now you have a claim.

  23. The “driveway effect” is a term some people use for price inflation based on the niceness of a house, it’s why it’s always better to get ballpark quotes over the phone. :)

    My guess for the repair was $1,000, I don’t understand how replacing panels would take 40+ hours of work. I don’t even see how banging out the dents, if that were even possible, could take 40 hours of work. But when they think they’re dealing with insurance companies, I guess they know how much they’re willing to pay… what a joke.

  24. I wonder what happens to the quote when a woman walks through the garage! You should try researching that too! :-)

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