How is this in any way justice?

Car insurance was never meant to replace your car, just to pay off damages. Although I have seen commercials that say they will replace your car now. I’m sure it is very expensive and the lady that has been involved in many accidents probably couldn’t afford it.
No, I don’t think this is fair.

Insurance when paid out, is not for “PROFIT”, as @chyna said it only pays for damages. Your friend is “whole”, the insurance company paid for the old vehicle and she got an additional $500.

She now has $500 for a down payment for another car.

It is fair because she has three years of car payments she doesn’t have to make, while getting a good mark on her credit.

She can use that sudden boost in disposable income to buy a new car with a similar payment.

@Tropical_Willie…and the three years of car payments she had already made?
@zenvelo…and she will have another five,six years of car payments now instead of only three. I don’t see how that is an advantage.

In Economics the payments that were made for three years are called sunk costs. They are gone and not recoverable. You don’t get 36 months times $350 equaling $12,500.

@Lonelyheart807: The three years of car payments she has already made went to the brand new car she was driving around in for three years. No car repairs, little fear of the car breaking down because it was brand new, the status of driving around in a new car.

That she got an extra $500 after the old (new) car was paid off is a great thing.

Would she have rather had the old (new) car repaired and need to keep paying off a car that has possible damage to the frame and may never be aligned properly, may always have uneven wear on the tires, etc.?

She can take solace in the fact that the lady who hit her will have high payments on her insurance, probably already had high payments from her previous accidents.

It does not seem fair to me either. If the insurance company decided that the old car was not worth repairing, they should have paid it off and provided enough money to buy a used car of about the same age as the original. There is not much in the way of cars that you can buy for $500.

@LostInParadise She now has the option of buying another new car or used car with a down payment. Really that is what insurance does, it not there to make you rich or a profit (that is insurance fraud).
So @LostInParadise the insurance company should pay $20,000 for a car accident when the car is worth $10,000? ? ?

@LostInParadise: All of the car payments (3 years worth) that were going to go toward the old car can now be put toward the new car. All the person needs is a down payment. You can put $500 down on a new car.

Like @Tropical_Willie said, if the old car is worth 10k, the insurance company should pay that off plus give her a good amount of money for a new car?

This is life and no smart person ever said it was or supposed to be fair. She didn’t have to accept the $500 without a fight. I’m sick of people whining about life not being fair.

A Fair proposal:

Replace her totaled car with a used car of the same make and model and similar mileage. Then make her continue to make the payments on her car loan.

That makes sense. It leaves her in the same position she would have been in if the accident never happened.

The only problem with that (if it were me), is that when you buy a used car you don’t know how well it’s been maintained. When you have your own car, you know it was maintained well, oil changed, etc.

When I had a car totaled I received the market value of the car. I had full coverage and the other driver did to. Another time there was a lot of damage to my car and my insurance paid to get it all fixed (~13K worth).

I’m confused as to why the insurance only paid $500. Did she have full coverage on the vehicle? The insurance of the person who hit her should be used to cover her car. Maybe it depends on state laws.

@tinyfaery: The insurance paid off what she owed on her current car plus $500 extra.

Car insurance is to make you whole, monetarily, not make you profit or to give you a new car. The insurance will basically pay up to the market value of the car at the time of the accident. If the car can be repaired and the cost of repairs are less than the value of the car then the insurance will pay for the repairs. If the car cannot be repaired, or if the cost of repairs is greater than the market value of the car, then the car is considered “totaled” by the insurance and they give you the value of the car. Unfortunately, in your friend’s case, it appears that the amount she still owed on the car was just about equal to the market value of the car.

Insurance is largely an evil leech on society. So is the auto industry’s built-in obsolescence. i.e. it isn’t fair, it’s a rigged game in favor of the huge organizations which already dominate the economy and government.

It makes no sense that between the insurance company and the offender, your friend didn’t get reimbursed whatever her car was worth.

It makes cynical sense. I have talked to people in government, and others about reimbursement from crashes, and basically even the people in government who are supposed to advocate for customers say that people generally get ripped off. The insurance companies will for instance use low values for what your car was worth, and pay as little as they can. Car values are also like this NEW car is worth $20,000, but your functional older car, well we can find a dealer selling one for $1000, and yours has some issues,so how about we pay you $350? If/when they can get away with it. Which is usually, since money is allowed in politics, the companies/industry lobbyists have the money and care the most and arrange the laws and business practices to funnel money from people as efficiently as possible.

@flo I think she did get reimbursed three years on a five year loan.

Also, when the insurance company totals your car, you do have the right and the ability to argue with them about what they’re paying you. I had a totaled car once with fairly new tires, and after I was offered a certain amount for the car from the insurance company, I told the insurance adjuster that I had the new tires, and I sent him the receipt. I got a new amount with a few extra hundred dollars on it to help offset the cost of the new tires. If I didn’t argue, I wouldn’t have gotten that new amount. I say “argue,” but I really didn’t argue. It was a conversation.

Amusing story: a few years ago my parents got in a car wreck (someone blew through a red light and hit them on the front passenger side). The insurance decided to “total” the car, since the body work would cost more than the value of the car. Well my dad’s worked as a mechanic on and off his whole life, and he spent years in fabrication, plus he had access to a friend’s auto shop. So my parents decide to accept the money, but keep the car, since it would still run alright, and dad did the repairs and body work himself on the cheap.

Wow, nice, @Darth_Algar: The last time I totaled a car, I was told that when the insurance company pays it off, they now own it and it’s theirs to do what they want with, meaning sell it for parts or sell it to a used car place that may then fix it.

It might vary from state to state, or from company to company. Or maybe their insurance provider didn’t care because it was the fault of the other driver (and thus the liability was on that person and their insurance). I’m not really sure ether way.