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My first experience with a car insurance company was part of a very, very rude awakening, but it taught me a very valuable lesson.

I was 23, recently out of college, and was moving out of my parents’ house in New Jersey to my new (and current) home of North Carolina.  I had no job prospects yet and no connections, I simply packed my old dormroom-fabulous belongings into my new Honda Accord, downed a red bull, and moved out in the middle of the night.  (This having been the first time I’d ever done anything like this, I remember feeling like I was Jack Kerouac.)  Somewhere in Delaware by the I-95 entrance, as I was fumbling to read the Mapquest directions, a car turned suddenly in front of me and I turned sharply to get out of the way.  The screeching of the back wheels told me quickly that I was turning a bit too sharply.  Fumbling to regain control, I finally did so, at 65 MPH and perpendicular to the line of traffic, a direction which led me head-on with the embankment, and knocked me unconscious for a few seconds.

When I came to (awakened by the shattered industrial black-light in the backseat), I pried the door open and walked out (miraculously, I was uninjured).  The car was totaled, and most of my possessions were destroyed. 

I got a ride back to the nearest Delaware state police station, where I made a tail-between-the-legs call to my father to pick me up and tell me what to do next.  My father had, up to that point, been taking care of my insurance payments for me.  I had not even made an insurance payment on my own before.  I had no idea what to do.

I made a call to my insurance company the next morning and explained the situation.  After some questions, I was immediately set up for a large payment to a rental car company, where I got a van and finally got everything to North Carolina.  Within two weeks, I was sent a check for $5,000, and the remaining $13,500 on the loan was taken care of.  I was able to purchase a new car and, while it was annoying paying the newly raised (though all things considered, relatively cheap) car insurance premium prices and replacing my belongings, I was rather ecstatic for how smoothly the whole process went…and that the supposedly predatory industry which I had been trained in my very naive college environment to despise actually did work well.  After doing a quick calculation, I realized that it would take my insurer well over a decade to recoup their losses on me, and that assumes that they don’t pay out any more.  (After everything went over so smoothly, my father told me that this was why you never get cheap car insurance.)

I feel like I was lucky to get away cheap.  Car insurance helped substantially, and my life would probably have taken years to recover from the loss without it.

This Financial Services article was written by Mark Karavan on 10/14/2009

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