August 30, 2011

Why Car Insurance Companies Rarely Cover Personal Property Losses

When making car insurance claims, drivers often wonder whether personal property losses will be covered. Sometimes the heaviest losses that a driver sustains in an accident will come from lost property that was stored in the vehicle. This property usually isn't covered by a driver's car insurance policy, however, as car insurance companies are somewhat notorious for only covering actual damage to a vehicle and any permanently installed equipment. This is because insuring personal property could be prohibitively expensive and difficult; insurance companies would have to prove whether a driver was lying about property, and claims adjusters would have to work extra hours to establish the value of almost every item imaginable. Car insurance companies are extremely specific and invest heavily in actuarial tables to establish their annual losses. If they covered personal property, these actuarial tables would be inaccurate and car insurance rates would be very difficult to set.

The good news is that personal property losses might be covered by a homeowner's insurance or a renter's insurance policy. Many of these policies cover losses that occur in drivers' vehicles and they're not necessarily limited to incidents that occur directly outside of a driver's residence–they may cover personal property losses that occur anywhere. Drivers should contact their insurance agents to discuss where personal property losses will be covered, preferably before an accident or theft occurs.

There are also limited circumstances in which personal property might be a valid part of a car insurance claim. When personal property has been permanently installed on a vehicle, it might be covered by a driver's comprehensive insurance coverage. GPS systems that are installed in-dash and permanently installed stereo systems are usually covered by a driver's car insurance policy. "Permanently installed" generally refers to the difficulty of an item's removal; anything that's screwed into a vehicle might be referred to as "permanently installed", while anything that's easy to disconnect and take out of a vehicle wouldn't be permanently installed and therefore wouldn't be covered by most car insurance policies.

Drivers should file personal property claims with their homeowner's insurance and renter's insurance companies as soon as possible after an accident occurs. This improves the chances of a successful claim and can make it easier to prove losses. It's rarely worth the time to submit personal property losses to a car insurance company, however, and drivers should only attempt to get coverage for their vehicles and permanent equipment installed in their vehicles. Other types of property need to be covered by other types of insurance, and by understanding this, drivers can find appropriate car insurance policies.