Car insurance can be a confusing topic. Personally, we believe that the auto insurance industry has done that to itself with commercials that point out everything except what is extremely necessary for most customers and their families. What does one really need to know? It looks like it could all be a big secret. This can help you demystify the deal and help you understand what is really necessary for you.
Cheap car insurance is good, right?
We know we’ve seen quite a commercial similar to the one you just had on TV. Everyone tries to yell at each other claiming that they will save you a lot on your insurance. The price is very important, however, it is not everything. We usually tell buyers that it’s the same as buying anything else:
You will generally get what you buy. If you were looking for a pair of sunglasses, and you found a pair for $5 in a store, you would expect to get a $5 pair of sunglasses. So if they were lost or broken or didn’t fit you would feel comfortable with that as a result of knowing you bought a pair of sunglasses for just $5.
However, if you pick up a pair of prescription and designer glasses from your local optometrist for $200, you would expect to get something that wouldn’t break or scratch easily, something that would be very comfortable to wear. In essence, you would expect to walk out the door with something of excellent quality. The same goes for insurance and anything you buy. Anyone can sell you a cheap insurance policy, and that’s just what you’ll get.
What is the most important coverage I will need?
Most states have mandatory liability limits for a reason: To promote public goodwill! Liability is the part of your policy that pays for medical bills and property damage for which you are simply legally liable if you are found to be at fault in an accident. However, most of those limits were set in the 1970s, when the price of healthcare and property were considerably less than they are today. The average annual financial gain in 1975 was $8,000!
States have not kept pace with required liability limits with rising healthcare prices or even inflation! When was the last time you heard about a case for less than $1 million? If you have $15,000 to $30,000 to throw away in a box that size, where do you plan to get the rest? Liability limits are offered from the state’s minimum requirements up to $2 million for any bodily injury or property damage resulting from a car accident. Without sufficient liability, you could face devastating lawsuits if you seriously injure someone during a car accident.
What is full coverage?
There is no such thing as “Full Coverage”. If an insurance company sold you every coverage they had in their arsenal, there would still be things that wouldn’t be covered. An example of this may be using the vehicle for criminal activities. Running from the police, smuggling drugs or illicit substances or individuals, and intentional criminal acts are good examples of things that may never be covered if your vehicle is damaged or totaled.
There are only two coverages you can purchase that may be referred to as “Full Coverage”
Collision coverage is the first of these. A collision is the only place on your policy where you will be able to get cash to repair your vehicle if you wreck it and it is determined to be your fault. In no-fault states like Colorado, if your vehicle was damaged in an accident, your collision insurance is the only place you would find the funds to repair your car, even if the accident was caused by someone else.
Comprehensive coverage is the second of these, and it protects your vehicle from non-collision related losses like fire, wind, hail, theft, vandalism, falling objects like trees and rocks fallen from a hillside, and hitting animals.
Typically, banking institutions will require you to have these coverages while you finance a vehicle so that they, the bank, are financially protected against loss if the vehicle were to be in an accident and ended up totaled or destroyed while they still carry the note. in that.
If I am covered by my primary medical provider, do I really need uninsured motorist coverage?
If you are paying someone else for health care coverage, why would you want to pay another insurance company more money for a similar thing? In most cases, where vehicles are covered for collision, and wherever you have health care coverage for you and your family from a reputable medical provider; It doesn’t matter if an uninsured person hits you and you get hurt. You already know that your medical bills will be paid by your major medical provider anyway.
If there are expensive aftermarket replacement tires or stereos installed on my vehicle, will those items be covered by my insurance policy?
We know customers who have paid a considerable amount of money to “customize” their vehicle. Some of that spending has gone up to more than $10,000 for accessories to help make their vehicle look completely unique. There is a cardinal rule of thumb to see if these valuables are covered by your insurance policy, and it’s fairly simple to follow.
“If they are installed as a replacement for factory components, you are covered.”
The tires will clearly be installed in the same location as the tires that came with the vehicle from the factory. The stereo will sit in the same location as the factory stereo. However, some of the accessories such as amplifiers and speakers that are placed in alternate locations such as under seats, inside the trunk of the car, etc. are not covered under your personal auto policy with any insurance provider.
Are my GPS, cell phone or radar detector covered if they are stolen from inside my car?
Your policy will only cover the vehicle. Personal property stolen from inside a vehicle will never be covered by an auto policy. Only a personal property policy such as homeowners, renters, or manufactured home insurance will cover personal property inside the vehicle.
What will cause my auto insurance claim to be immediately denied?
All auto insurance companies have the same basic set of rules, and these are outlined in the insurance policy document. The main reasons why your car accident claim could be denied are:
Driving the car without a license or with a suspended license.
The coverage was expired at the time of the accident.
A newly purchased automobile was not added to the policy within 30 days after the purchase of said vehicle.
If my car is completely destroyed, how much will the insurance company pay to cover the loss?
In general, most major insurance companies will cover your vehicle for its “Actual Cash Value”. Actual cash value is the depreciated value of your vehicle at the time of the accident where it was completely destroyed. Each insurance company has its own system for valuing vehicles. The closest you’ll be able to get to the current rate is by averaging the Kelly Blue Book values for trade and private property.
This can give you a great idea of the typical value an insurance company might pay you if you wreck your vehicle. This may be the highest value or the lowest value on the market for you as the owner of the vehicle. Some policies, usually for traditional automobiles, allow you to insure the vehicle for the declared value or “agreed value.” Most personal auto policies do not allow you to insure a declared value vehicle.
If I need new parts for my car, will my auto insurance company pay for original manufacturer parts?
In the past, many insurance companies guaranteed original manufacturer parts. When the major auto companies got seriously caught in the recession, many of them were stuck assuming those parts would be available. When insurance companies faced a shortage of auto parts made by now-bankrupt companies, they all changed the wording of their policies to protect themselves from lawsuits. It is now the norm to use generic aftermarket parts to repair vehicles since they are more readily available and there is no noticeable difference to the repairs most auto body shops do.
What happens if I die in a car accident? What will my family receive?
Most people assume that if they are killed in a car accident, their family can receive some type of benefit from the auto insurance company. That simply is not true. Some states offer a small benefit on your insurance coverage.
pay medical/personal injury, however, most do not. Coverage pays up to policy limits for medical bills only.