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Ask Dave

Fighting the Insurance Company

John's fight with the insurance company is a hassle, but not an emergency, thanks to his savings.

QUESTION: John in California and his wife were in a car accident. The insurance will not cover the damages due to a technicality. While he fights the insurance company, he wants to get his wife a safe and reliable car. However, he does not want spend their $7,000 in savings and isn't sure what to do.

Dave's ANSWER: If you save up $10,000, you can definitely get something safe and reliable for less than that. In the mean time, I would look at this as a rental car. If you bought a replacement car for $1,500, that would leave you with $5,500 in your emergency fund. Just be your own insurance company, and when your insurance does pay out and you get through all this mediation and other stuff and get the money back, you just build it back into the emergency fund.