Insurance: Where am I going wrong?

[Steve Cassani]

Shopping for insurance on my Kirkham hybrid brought to light a factor that is not subject to competition among insurers. No insurer would issue coverage at values greater than those that already apply to the other car I own, a 2011 Mazda Miata. The policy that insures me while driving the Miata obliges the insurer to a maximum payment under Comprehensive Coverage of $150,000. Every potential insurer of the Kirkham required I provide them a copy of the policy on the Miata before they would state the terms of coverage to be applied to me while driving the Kirkham. They demand this information because the values to be written into the policy for the Kirkham would be the same as those that already apply to the Miata.

I asked of each insurer why the values must be the same for all the vehicles I own, regardless of the varying worth of the cars. After all, varied worth or value has a lot to do with the premium. I was told that, if I were found liable, an attorney for the driver whom I had injured would seek reimbursement at the rate of the most generous policy I have, irrespective of which car I was driving when we had the accident. Suppose the Kirkham is insured by HotCar and the Miata by JustaCar. While driving the Miata I am in an accident for which I am determined to be at fault. If the extent of coverage for Comprehensive is $150,000 for the Miata and $300,000 for the Kirkham, the injured party's attorney will seek reimbursement at a rate of $300,000. He will demand this payment of me by citing the corresponding value in the policy written by HotCar, the insurer of the Kirkham which was in the garage when the accident happened.

Apparently the key to understanding what is going on here is to recognize that I am common to multiple insurance policies. No auto insurer insures an auto. They insure me while I am driving the car whose VIN is specified in a policy. If I am found liable, any assets that are under my name become subject to collection. The insurance policy written to cover me while I drive the Kirkham is, for the purpose of understanding the extent of potential liability, just another asset. The VIN specified in a policy does not work to distinguish among the assets that are mine. So the liability I incurred while driving the Miata is satisfied by the injured party recovering $150,000 or $300,000. The attorney's obligation to his client will have him seek the maximum award allowed under state law and that would be $300,000, payable by me, hopefully through my policy with HotCar.

No where in this explanation does anyone tell me a court has actually awarded damages incurred in an accident involving one car after the court was made aware of the terms of a policy that applies to another car owned by the same driver. Maybe the attorney for the injured party simply demands payment of $300,000 and it's up to me to figure how to satisfy the claim. The court's concern ends with its determination of a reasonable award and here the court need hear nothing of the fact I own and insure two cars.

The implication of distinguishing among cars and not rates of maximum liability staggers when you picture yourself owning a collection of cars having varied market values and limited utility. This may be why car collectors rely less on coverage of each car by an insurer of classic cars and more on property insurance.

Several posters to this forum are well informed on insurance, how it works and more. So the mistakes I've made in my effort to understand why insuring multiple cars works as it does should be made clear before my confusion has spread.