Your Money: What I didn't know about auto insurance until an accident

As I was driving along Hennepin Avenue recently, another driver made a U-turn in front of me, dented my front panel and cracked some housing around one headlight. No one was hurt, no air bags deployed, and the driver's vehicle looked undamaged, according to him. The damage to my aged Malibu was about $1,800.

It was my first auto accident in decades. That's my excuse for knowing so little about collision insurance.

My first reactions ranged from "My car is still drivable. Should I even get this repaired? " to "This will cost me $500," my collision deductible.

As I walked toward the other driver, he said, "I'm so sorry. This is totally my fault." I figured that didn't matter. Minnesota is a no-fault state.

I was wrong. A call to my insurance agent revealed that no-fault applies only to PIP, personal injury protection insurance, which is required to be carried by every licensed driver in Minnesota. It pays the first $20,000 of medical expenses related to injuries regardless of who's at fault. It does not apply to collision insurance.

My $1,800 repair bill is covered 100 percent by his property damage liability insurance, not collision.

I also learned that a police report is unnecessary when no one is injured and no crime has been committed. "The two parties can exchange personal information, driver's license numbers and insurance companies, but without a crime or an injury, a police report is generally not needed," said Sgt. Catherine Michal, a Minneapolis police spokeswoman.

I called the other driver's insurance company to give a statement about the accident. It jibed with the driver's statement, so the claims agent suggested a body shop near me to do the repair. The repair was done to my satisfaction at no cost to me. The story had a happy ending.

After admitting what I didn't know about my car insurance, let me tell you what I do know.

Shop around every few years for auto insurance and save as much as $500 to $1,000 a year, according to Twin Cities Consumers' Checkbook (checkbook.org). Many of the top rated companies for good service cost less than poorly rated ones. In my own comparisons last week, prices ranged from about $500 a year at Western National as well as Safeco to $832 from Cincinnati and $1,309 from West Bend Mutual.

Checkbook found that Geico, Progressive and USAA generally offer low prices in the Twin Cities, but other companies offer competitive rates for specific profiles. Western National is often more competitive for Minneapolis residents, Progressive for households with teen drivers and Auto-Owners for drivers older than 70.

Auto body shops are often a good source to ask how well insurance companies pay claims. Auto-Owners, Chubb, West Bend Mutual and Western National received the highest marks, according to Checkbook. Allstate, Encompass (a division of Allstate) and Geico rated the lowest.

Shopping online for quotes may save you time but not necessarily money. Rate comparison sites such as Insurance.com, Netquote.com and TheZebra.com provide quotes from companies that receive commissions or fees and often omit lower-priced companies, according to Checkbook. Check with a local independent agent who can quote from multiple companies instead.

Another misconception about auto insurance occurs at the car rental counter. Agents aggressively push extra coverage or loss of use insurance at an additional $10 to $30 a day. Decline it. Anyone with auto insurance purchased in Minnesota is automatically insured for $35,000 when renting a car in the U.S. or Canada for personal use. It protects against loss of use, liability and collision. Yes, collisions. An accident in a rental car pulls from your property damage coverage, not collision. No consumer who gets into an accident while in a rental will have to pay a collision deductible because it's 100 percent covered as a property damage claim.

Even with only $10,000 coverage in property damage, Minnesota state law mandates the coverage be increased to $35,000 when renting a car. Most agents recommend $100,000 in property damage coverage so you're covered if your $25,000 Accord totals a $75,000 Tesla.

As for loss of use, rental car agents will say the consumer is liable if the car is damaged and then cannot be rented while it is being repaired. Rental agencies may try to collect on this, but insurance companies have successfully fought back by requiring the rental car site to prove that every car was rented during the time the car was out of service.

Some consumers think they should buy the extra coverage at the rental counter so the accident wouldn't count as an accident against their own insurance. Check with your insurance agent. Some do not surcharge for one accident. An alternative is to buy Premium Car Rental Protection from American Express. It adds $20 to $25 to the cost of the car rental, assuming it is paid with an American Express card. It is the only credit card company I know of that offers primary coverage. Enroll your American Express card to be covered at 1-800-326-2078 or americanexpress.com/premiumcarrental.

Finally, if you've recently purchased a new vehicle with little or no money down, look into buying gap auto insurance. Most new cars nose-dive in value as they're driven off the lot. If you total it, you could end up owing more on the loan than the car is worth.

John Ewoldt • 612-673-7633