Family & Consumer Sciences

HOME

Kentucky High School Financial Planning Home Page

Back to E-Mail Updates page

HSFPP Weekly Update # 142—Check Out Your Vehicle History Before You Buy

Message from Bob: This is a short week because of the Thanksgiving holiday; as a result, our next update will be December 5. Also, the update on RATs that we promised for this week has been delayed because of a corrupted file and no backup. So this week we are sending the update intended for December 5 and redoing the lost update. Back up your computer files! It will save you a lot of aggravation!

Special Note for Teachers: Medicare Prescription Drug Plan:

Many of you and your students have parents or grandparents who do not have “creditable” prescription drug coverage (coverage as good as or better than that being offered under the new Medicare law). Recent research shows that seniors Age 65 and over are confused about the new law and need help in enrolling and selecting the plan that is best for them based on the prescription medications they are currently taking. Also, fewer than 21% of seniors in the U.S. have Internet access, which could provide significant help in making the right choice. Yes, they do have the alternative of calling (800) Medicare, but the waiting time on the telephone is significant as the enrollment period began only last week.

If elderly parents or grandparents are spending time with you this holiday season, ask them to bring all their prescription drugs so you can help them select the plan that is best for them. You might also want to encourage your students to help their own grandparents in making this choice. It will be an educational experience for them, as most teens have little contact with the realities and complications of adult life. It could also provide them the opportunity to reflect on how America’s healthcare and insurance system might be improved. Efforts have been made before to improve the system, but it might be up to the next generation to find what works.

Kentucky Cooperative Extension has a Web site with publications and links to sites that can assist you and your students in helping elderly friends and loved ones find the best plan: http://www.ca.uky.edu/heel/medpartd/.

Message from Chris: This week’s article In the New$... illustrates one of the many pitfalls of used-car buying. Smart consumers take every precaution to make sure they are getting a good car; this includes getting a CarFax history report and knowing the title history of the vehicle you want to buy. The Department of Motor Vehicles is the best place to check previous titles. Under Kentucky law, if you request information from the dealer on who was the previous owner, they must provide the name, address, and telephone number, if known or available. Many vehicles are involved in accidents that go unreported, which means the accident will not show up on the CarFax report; so getting the used vehicle checked out by a trusted (and neutral) mechanic is also very important.

We (Bob, Chris, and Alex) wish all of you a peaceful and safe Thanksgiving weekend!

 

Related Updates:

Update #140 - Used Cars from Hurricane states - 7 November 2005
Update #128 - Used Car Buying III - 9 May 2005
Update #95 - Another Danger for Used-Car Buyers - 18 May 2004
Update #94 - Size and Weight in Cars - 10 May 2004
Update #90 - Buying a Used Vehicle - 8 April 2004
Update #34 - Buying a Used Vehicle - 21 October 2002
Update #24 - Car Buying - 28 May 2002

 

Web Site Pick of the Week:

The Kentucky Attorney General’s office has a great Web site explaining Kentucky used-car laws:
http://ag.ky.gov/cp/usedcar.htm#Disclosure%20of%20Previous%20Consumer%20Owner%20Information

 

Activity for Educators:

Have teens read this week’s article In the New$... and answer the discussion questions below.

 

In the New$... Check Out Your Vehicle History Before You Buy

By Chris Hart, Senior at the University of Kentucky

When I was looking for a used car to buy the summer before my junior year at UK, I never would have bought a car that I knew had been wrecked and/or had a salvage title. I paid CarFax to get my car’s vehicle history report and made sure it had never been wrecked, flooded, or otherwise seriously damaged. However, if the previous owner never made an insurance claim, I might not know the vehicle had been damaged in an accident. But there is another way of finding out how good the car really is.

Before buying, have your mechanic check the vehicle for drivability and overall condition. In addition, if you ask, the motor vehicle dealership must provide you the name, address, and telephone number, if known or available, of the previous consumer/owner. Anyone buying a used car should take both of these steps in addition to getting a CarFax report on the vehicle.

I would have been very angry if I had bought my car with a clean title and then found out it had a salvage or rebuilt title and had been insured before by the same insurance company. This is exactly what happened to Robert Beaves, of Pennsylvania, who was insured by State Farm Mutual Insurance Company, one of the nation’s biggest auto insurers. Somehow, State Farm forgot that the car Beaves bought was salvaged and allowed it to be sold to him with a clean title.

According to a recent Associated Press article, “State Farm ... agreed to pay $40 million to tens of thousands of car owners to settle allegations that it allowed salvaged automobiles to be resold without appropriate titles [and] the insurer was lauded for being forthright” because State Farm discovered the problem and notified the appropriate government officials of this oversight.

However, Mr. Beaves lawsuit “now claims State Farm crafted a sweetheart deal with attorneys general for 49 states, including Pennsylvania, under which it will pay a fraction of what car buyers are out.”  His lawsuit claims he was “offered up to $2,700 for a Honda Civic he bought two and one-half years ago for more than $14,000.” Because his vehicle is branded salvage, its resale value is reduced and he cannot get back what he put into it, even though none of this was his fault. If the vehicle were involved in an accident, Mr. Beaves would be compensated based on the salvage title only. Also, his extended warranty, which he paid for, is now worthless because the title for the car will brand it as salvage.

Source: Information about Robert Beaves’ lawsuit came from “State Farm Sued Over Salvaged Auto Settlement with 49 States,” Associated Press, 11/07/05. Full story found on the following Web site:
http://www.insurancejournal.com/news/national/2005/11/07/61601.htm

 

Discussion Questions:

1.) Do you think State Farm is the good guy or the bad guy in this situation?

            Yes ___  No ___

            Why or why not?

 

2a.) In Mr. Beaves’ case, should State Farm take possession of the vehicle and pay him the current retail value of the car plus the money that he spent for his extended warrantee because they were the insurer of the vehicle when it was totaled?

            Yes ___ No ___

            Why or why not?

 

2b.) If not, what do you think should be done?

 

3.) What should be done in the future to prevent consumers from being victimized in this way?

 

4.) What would you do in the future to prevent this from happening to you?

 

 

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.