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Insurance companies want you to get recalled cars repaired, too

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General Motors ignition assembly parts, including the parts affected under the recalls, being inspected, packaged and shipped Thursday, April 17, 2014 at the GM Customer Care & Aftersales Plant in Burton, Michigan. (Photo by John F. Martin for General Motors)

General Motors ignition assembly parts, including the parts affected under the recalls, being inspected, packaged and shipped Thursday, April 17, 2014 at the GM Customer Care & Aftersales Plant in Burton, Michigan. (Photo by John F. Martin for General Motors)

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Last week we discussed some of the new, unorthodox methods that car companies are using to track down owners of recalled vehicles. But automakers aren't the only companies that want consumers to have their flawed car fixed. Insurers feel the same, and at least one is letting its customers know when they're vehicles are in need of repairs.

The company is Liberty Mutual, and it's launched a new Auto Recall Notification Service that keeps tabs on the cars it insures and sends owners notices about pending recalls.

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Why would it do something like that? The obvious reason is that the notification service gives Liberty Mutual another perk, another selling point, another thing to distinguish it from competitors. In the highly competitive insurance world, that's hugely important.

It also fits with Liberty's brand. Progressive is all about saving consumers money, Farmers claims to make policies simple and decipherable, and Liberty tries to persuade shoppers that, in Liberty's eyes, they come first. 

But perhaps most importantly, getting recalled cars repaired in a timely manner can save Liberty--and by extension, policyholders--a world of trouble down the line.

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Imagine, for example, that your car is recalled because of a braking problem, which ultimately causes you to rear-end another vehicle. Your insurance company will pay out for hospital and doctor fees, repair costs, and other expenses--possibly even lawsuits.

You could sue the automaker, claiming that your car is defective. But if the recall is active and you haven't had your car repaired, that could reflect poorly on you in a court of law. Even if the recall is brand new, and even if you can prove that the accident was due to the flawed vehicle, the road to victory is likely to be a long, expensive one. And until it's over, the insurance company is stuck paying the bills.

The only real downside of the new program is that Liberty's notification service only lets owners know about recalls that have been issued within the past six months. For many--including those who drive used cars--that could be a real shortcoming. No matter where you're insured, we encourage you to check your vehicle identification number on the National Highway Traffic Safety Administration's recall database to make sure your ride is up to snuff.

As insurers take an increasingly pro-active role in overseeing their customers' cars and driving habits, expect more companies to roll out policies like this in the future.

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