A deal, but not a stealThe National Insurance Crime Bureau reported in July that hail damage claims have risen 84 percent since 2010, due in part to larger and more frequent thunderstorms. But some of the increase is considered suspicious. That's why the purchase of a hail-damaged car will add a few complications to your car insurance. Most insurance carriers have certain defined risk-management policies that limit the amount of pre-existing damage a car might have when they agree to insure it, says Dan Young, senior vice president of insurance relations for CARSTAR, auto body repair experts based in Overland, Kan., and a 20-year veteran of Allstate Insurance. If the buyer isn't taking out collision or comprehensive coverage, the previous damage might not be an issue, he says. "However, if I just purchased a $30K car for $28.5K because of the pre-existing hail damage, I'm probably still going to have a lien holder on the auto loan who will require both collision and comprehensive coverage."
In that case, any future new loss involving hail would be reduced or offset by the amount of prior hail damage, Young adds. In many cases two estimates would be written: one for the old hail damage, and one for the new. An agent aware of pre-existing hail damage might require the customer to secure an estimate of repair for the damage and keep it in the customer file in case of another loss.