How to Insure a Car That Has Prior Damage

Not everyone is a fanatic about having a pristine car. Sometimes a small amount of damage is tolerable, especially if your bank account is low. If you've had some minor damage, you may want to do without the repairs.

Still, that doesn't necessarily mean you do not want car insurance protection. Whether you can insure a previously damaged vehicle, however, will depend on a few factors.

Prior Damage Is Not Covered by Car Insurance

First things first: Any prior damage is never covered by a new car insurance policy.

For example, say you buy a used car from a friend. Your friend had a $1,000 deductible on both comprehensive and collision coverage to reduce their car insurance cost. A deer bounced off the rear quarter panel, leaving a noticeable dent. The repair costs $900, so with a $1,000 deductible, insurance will not help. Instead of paying for the repairs, your friend is selling the vehicle to you.

No insurance policy will cover this damage. Insurance is designed to protect you from future repair costs, not existing ones.

Coverage You Can Get

Liability coverage is usually legally required, and you'll be able to get it regardless of whether your vehicle has damage. That's because liability coverage does not protect your car against physical damage. It does, however, protect drivers of the vehicle against damages to others' property and injuries to them and their passengers.

Be sure the damage to your vehicle is not a safety concern. Damage to the main structure frame or airbag could prevent you from getting insurance coverage—or at least drive up the costs.

Each state has its own set of rules regarding minimal liability coverage laws. Any time you read about car insurance, you usually will find the minimum recommended amounts of coverage are not enough. Consider going beyond the minimum coverage and purchasing the recommended $100,000 / $300,000 limits of liability. In that case, $100,000 would be the maximum amount your insurer will pay out per person, up to $300,000 per accident. $100,000 property damage coverage is also recommended. All of these amounts are realistic possibilities in a serious accident.

Rejection Hurts

If a vehicle has more than just minor scratches and dings, many preferred insurance carriers will not want to provide physical damage coverage. Physical damage includes both comprehensive coverage and collision coverage.

• Collision Coverage: Collision coverage assists when you accidentally damage your vehicle by hitting an inanimate object or another vehicle.
• Comprehensive Coverage: Comprehensive coverage covers claims not involving a collision. If you hit a deer, experience a car fire, theft, vandalism, cracked windshield, or experience weather-related damage, comprehensive will pay the cost of the repairs minus your deductible.

Options for Physical Damage Coverage

It's going to be tough to get a preferred insurance carrier to allow physical damage coverage on a vehicle with preexisting damage. You may have better luck shopping with a non-standard insurance carrier. A non-standard carrier seeks out high-risk drivers and offers specialized, higher rates based on this risk level.

If you do seek coverage, be prepared for a few things:

• Always disclose the damage: Do not try to hide the current damage. The last thing you want is to be investigated for insurance fraud. It is most definitely not worth the risk or trouble.
• An agent will document the damage: Most likely the insurance carrier will want the damage documented. They will probably have a form to fill out where they list a description of the damage. The agent will want to see the vehicle and take photos of the damage.
• Filing a claim: If you do file a claim, the insurance carrier will have the prior damage on file. Repairs to the preexisting damage will not be covered.

If You File a Claim Without Reporting Prior Damage

Do not panic! It is not all that uncommon to file a claim for a significant amount of damage while there is some relatively minor damage to your vehicle that was never fixed. Insurance adjusters have seen it all. And in most cases, an adjuster will be able to see the difference between prior damage and the current claim you are filing. 

Always be honest. Let your car insurance adjuster know about the prior damage. The more forthcoming you are with the details of the events, the better. Do not try to hide prior damage or deny its existence. If your new damage directly overlaps the prior damage, the adjuster might authorize repairing it all under one claim. It is unlikely car insurance fraud accusations will arise as long as you are transparent with your insurance adjuster.

Ultimately, they might handle your claim in one of two ways:

• Multiple claims: The adjuster might decide separate claims need to be filed to cover both the preexisting and current damages. Two deductibles would be charged and all the repairs can be made at once, assuming you had the proper coverage listed on your policy at the time of the prior damage.
• Ignore the prior damage: If you are not concerned about the prior damage, the adjuster will probably tell the body shop only to worry about the new damage. You would need to pay the deductible on the current claim, and the repairs would only be made for this particular accident.

Car insurance is frequently full of special situations. A lot can happen to a car and every circumstances is different. It's always best to seek out the advice of a licensed insurance agent when you have complicated car insurance questions.