Monday, June 23, 2008

Got a Small Car? Drive Carefully.

If you are the owner of a small, fuel efficient vehicle, here's something you may not have thought about. If you are involved in an accident that ends up totaling your car, you may not get enough insurance money to replace it.

Here's why: When the insurance company "totals" your car (decides it's cheaper to replace it than repair it), they will cut a check for the Blue Book value of the car. But, as the demand for these cars continues to rapidly increase, so does the "street" value (the amount the car is selling for today, on Ebay, for example). Since the Blue Book value of these cars is assessed using a fairly bureaucratic process, this value hasn't been calculated recently enough, and is therefore under the actual cost involved in acquiring an exact replacement.

Cost is only the beginning. The headaches of purchasing a fuel efficient vehicle are many- if you are in the market for a new car, you'll probably end up on a waiting list. When you do finally get your car, you'd better hope it comes the way you like it- because your other option is to wait some more.

If you're buying a used car, watch out. There are plenty of snakes out there who realize the inflated prices of fuel is the opportunity to fleece the public. They'll sell any small car they can get their hands on, knowing that SUV owners are bailing out and looking for something small to drive to work. They will gladly sell a car on its last legs for a few thousand dollars.

The worst case scenario is that you are driving a "banned" car. This includes highly efficient, diesel passenger cars such as the Volkswagen TDI. Despite their ability to achieve mileage in excess of 50 mpg, most of these cars have been banned from new sales due to high nitrous oxide and smog emissions. Replacing these cars will surely be a chore, as they are being retired from the road every day. On top of that, replacement parts are expensive, and knowledgeable labor is extremely hard to find.

The bottom line: drive carefully. Your car may not be insured to the extent you think it is, and even if it is, replacement can be more complicated due to our rapidly changing transportation economy.

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