There are many questions to ask car insurance companies before you settle on a policy. If you don’t, you are bound to make some of the common mistakes that vehicle owners make when they buy car insurance. These mistakes include the following:
The most important question to ask when buying car insurance is whether the coverage will repair or replace your vehicle if it is damaged or totaled in an accident, regardless of which driver is at fault. Read on for more questions to ask when buying insurance.
There are many ways to save money on car insurance. Any savings in costs that you manage to negotiate will depend on the type of coverage and the number of deductibles included in the policy. Another factor that will help determine your monthly premiums is your risk rating, which will depend largely on your age and driving record.
Little can be done to modify your risk rating, but insurance discounts can often be found to help you secure lower premiums. Savings can often be secured with the following discounts:
Premiums can also be affected by when you pay. If you get all of your payments in on time, you are more likely to secure lower premiums than if you are constantly late on your payments. Additionally, if you make each payment in full, you are likelier to secure lower premiums than if you break your payments into smaller, more frequent installments.
Your chance of securing lower premiums is greater if you are a homeowner. You can also sometimes secure lower premiums by agreeing to pay via electronic funds transfer. Alternately, you could set up an arrangement whereby funds are deducted each month from your paycheck. You can even secure lower premiums if you purchase a hybrid or electric automobile.
If you are like most drivers, you might assume a basic insurance policy will cover the repair costs for your vehicle if it gets damaged in a collision. The truth is, a basic insurance policy will only cover damage that you inflict on another vehicle in an accident. If you are not at fault, yet the other driver is uninsured, you could be faced with astronomical repair bills in spite of your insurance. If your car winds up totaled, you’ve lost everything.
Here are the coverage types provided by insurance:
Other insurance options cover more minor concerns such as roadside assistance and unpaid amounts on totaled vehicles. Speak with your insurer about whether it would be necessary to get the following protections:
As an alternative to collision insurance, you could possibly augment your liability policy with underinsured motorist insurance, which will cover some of your vehicular damage as well as hospital bills if your car is hit by an uninsured motorist.
It is important to know what liability limits are necessary for the value of your vehicle. No one should carry lower limits than that amount. For comparison’s sake, if a person just rents and doesn’t really own anything, he or she can get away with carrying 50/100/50. If you own a home and it is paid for, you should carry 250/500/100, which may be considered an umbrella policy.
The main priority of liability insurance is to cover any hospital expenses that might result from a vehicular collision. Moreover, liability insurance is mandatory because it helps victims compensate for lost wages due to downtime that stems from accident-related injuries, as well as any subsequent legal fees.
All things considered, basic liability policies often fail to provide sufficient coverage for the risk factors in question, even when you exclude the risks that are only covered by collision and comprehensive policies. The limitations of a basic policy can vary from state to state, so it is best to discuss these matters with your insurer to verify the extent of one policy versus another.
Damages that exceed the limit of your coverage will have to be paid out of pocket. This is the most crucial thing to bear in mind as you negotiate your policy. In a vast percentage of insurance claims, the damages that do exceed the coverage limit often include the following:
In scenarios that involve permanent injuries or worse, most insurance policies will not cover the costs associated with recovery.
The amount of money you have to pay out-of-pocket will depend on your level of responsibility in the accident and the extent of your coverage policy.
If you are not at fault for a collision, it would be the responsibility of the other driver and his or her insurer to cover your vehicular and personal injury expenses. For example, if you are navigating a one-way street and a motorist turns from a cross-street and collides with your vehicle head-on, that would be a case in which the other driver is clearly at fault.
However, if the guilty driver is either under-insured or lacks insurance, you could be left saddled with all of the expenses that stem from the accident. Situations like this are common in California and other border states in which freeways are disproportionately trafficked with drivers who reside in this country illegally and who are therefore uninsured.
In a collision where you are solely responsible — e.g. you make a right turn on a red light and collide with a crossing vehicle — your insurance will cover anything up to your limit, minus your deductible. For example, if your policy limit is $12,000 and your deductible is $3,000, your insurer will cover $5,000 of an $8,000 accident. On the other hand, if the expenses amount to only $2,000, you will have to pay that entire amount, since it falls below your deductible. Likewise, if the damage exceeds your insurance limit, you will have to pay the excess amount as well as your deductible.
One way around expensive premiums is to opt for higher deductibles in the event of an insurance claim. While this can help you save money in the meantime, it could leave you at risk of unexpected astronomical expenses if you do end up in an accident. Therefore, it is wise to discuss these possibilities with an insurer to best determine which option would best suit your budget.
In Missouri, the average deductible is $500. If you take a loan out on a vehicle in this state, the lender might not even allow you to have a deductible over $1,000.
Questions to ask an auto insurance agent don’t always concern whether or not you have enough coverage for your vehicle. In some cases, any coverage above the required minimum would be an over-expense.
For some vehicles, any coverage beyond the minimum required by law is extraneous. If you purchase a 10-year-old used car for $2,500, your deductible is liable to be higher than the value of the vehicle. One thing insurers don’t often reveal is the fact that insurance will not cover damages that exceed a vehicle’s value.
Essentially, collision and comprehensive insurance policies are only really essential for drivers of newer and more high-priced vehicles. Nonetheless, an insurer might try to sell you on such policies even if your vehicle is old and of low value. Here’s a rule of thumb: if it would be cheaper to simply replace your used vehicle than to have it repaired after a collision, the most extensive insurance you need is basic liability coverage.
On the other hand, you might feel more secure with comp or collision coverage regardless of your vehicle’s low cost. It really all depends on your risk tolerance. While some drivers find such policies extraneous for any vehicle under $7,000, others would be in a pinch without a comp or collision policy on a $2,000 car. After all, the deductibles would only be between $100 and $250.
If you take a loan out on a vehicle, it is wise to consider the costs that could arise if a car is totaled before you have finished the loan repayments. This holds especially true if the vehicle is high-priced. With gap insurance, you will be covered for any remaining balance. If the engine is destroyed just weeks or months after the date of purchase, gap insurance could spare you from a financial nightmare.
For example, if you secure a loan for a $30,000 car that ends up totaled just weeks after you drive it off the lot, your insurance provider might cover three-fifths of the cost. However, the bank will still demand the outstanding $6,000 on the loan for your now-totaled vehicle. With gap insurance, you won’t have to pay that remaining balance out-of-pocket.
In most car-loan agreements, the lender will require that you have a comprehensive car insurance policy. That said, the benefits of gap insurance are among the important questions to ask when buying auto insurance, especially for any vehicle purchased with a car loan.
Some of the most important questions to ask an auto insurance agent could involve the language of a particular policy. If a policy is written in very formalized legal terms, be sure to have any unclear passages translated for your complete understanding. Likewise, if a policy contains pages of fine print, have the agent go over these passages with you in detail. Don’t sign any policy without having a full understanding of each and every consequential detail.
Even though insurance providers exist to help you save money, it is also in their interest to save money themselves. As such, insurance agents are often given instructions for keeping payments down to the lowest amounts possible. Consequently, policyholders who don’t know how to negotiate with agents are often given a raw deal when the time comes to file a claim.
Currently, auto insurance is governed by tort-based laws in 38 states. Under the tort system, the at-fault driver — along with his or her insurer — is financially responsible in the event of an accident. When you speak to an agent, your questions should cover all facets of which policy will best protect your own vehicle.
In advance of signing a policy, it is crucial to know how much the insurer will pay and how much you will be required to pay if you are involved in an accident. After all, your monthly insurance payments will be determined by the amount of coverage offered in whichever policy you negotiate with your insurer.
When you purchase a new vehicle, it is wise to get new vehicle replacement
coverage. This typically only costs $25 per month for $8,000 or more of
coverage in the event that you file a claim. However, the coverage does go
down once you have owned the vehicle for more than a year.
When you negotiate with an insurance provider, you can possibly get discounts on your monthly premiums. It largely depends on the questions you ask. Some insurers offer discounts to drivers who have no prior tickets or roadside infractions. Other insurers will offer discounts to drivers who opt for newer, environmentally sound automobiles. Some insurers will even offer discounts on premiums to students.
If you can furnish proof of your history as a safe and defensive driver, you might be able to secure a discount. With some insurers, however, discounts only apply if you purchase two or more policies, such as liability coverage with gap insurance. If talks lead nowhere and the insurer offers no discounts, ask the agent whether any such deals are offered by other providers.
An insurance discount should be one of your top priorities whenever you look for a new provider. Questions to ask when changing auto insurance should include how to get a discount on your next policy.
Just because you have an insurance policy on the vehicle in your name does not mean the coverage will extend to situations where someone else takes the wheel. The purposes of your vehicle can also affect what is and is not covered under an insurance policy.
If you have a child who is about to turn 16 and you intend to allow them to operate the vehicle under certain conditions, you will need to have your policy extended to cover your child’s use of the vehicle. Likewise, if you plan to use the vehicle for business purposes, you will need to bring that to the attention of your insurer.
When you negotiate an insurance policy, factor in all the various uses the car will serve over the course of a given month. Will use of the vehicle alternate between you and your significant other? Include that information when you speak with an agent. Will you be using this vehicle to make deliveries? Specify these details to your insurer.
Find out who, exactly, is covered under your policy and to what extent. Make sure every intended use of your vehicle is covered under your insurance policy, regardless of where you drive or who steps behind the wheel.
If your car is hit by another motorist and that person is clearly responsible for the accident, he or she would also be responsible for taking out an insurance claim on your behalf. However, if the at-fault party is uninsured, you are left with only two options if you are merely covered under a basic liability policy:
For obvious reasons, the first choice could leave you in a financial bind. Most drivers who opt for minimum coverage do so because they lack the means for more comprehensive plans. That said, the second option could be equally unrealistic, if not more so, because drivers who skip out on insurance typically do so to avoid premiums. As such, an at-fault driver wouldn’t likely be able to afford the costs associated with a vehicular collision, regardless of a judgment in your favor.
One way to offset this kind of risk is to have an uninsured motorist clause written into your policy, which will provide hospital coverage to you and your passenger for any injuries sustained from a collision with an uninsured driver.
Some insurance providers attempt to oversell their customers on far more coverage than some vehicles would even merit. For example, you might go to an agent to learn about the best policy option on an eight-year-old, secondhand compact car you purchased for $2,000 from a seller on Craigslist. While the car itself might only merit the most basic coverage under the law, the agent might try to sell you on comprehensive insurance with further premium features.
A potential red flag would be when an agent stresses various types of accidents that might occur on the road — however remote some of these possibilities might be — but leaves it to you to bring up the value of your vehicle.
While some insurance companies try to oversell you on coverage you don’t even need, others offer empty coverage at improbably low rates. Examples of the latter scenario are typical with phony insurance providers that masquerade as legitimate insurers. A tell-tale sign is when an “agent” asks you to sign on for some cheap insurance policy without even showing you the paperwork.
Fraudulent insurers will pose as carriers of legitimate insurance policies for the state, when in fact they are selling you an unregulated product. Another dead giveaway is when you sign up for a cheap policy but never receive your insurance card or even a copy of your policy agreement.
Companies that sell fake coverage will often employ aggressive, hard-sell tactics before and during your meeting with one of their “agents.” Whenever you see advertisements for super-low insurance rates that seem too good to be true, the ads are probably from these fake providers. Beware of ads placed in strange places, particularly in the form of fliers on your windshield.
If a policy was misrepresented to you when you signed it, you might not get the coverage you were led to believe. Consequently, you could be left financially out in the cold after a vehicle collision. For example, you might sign up for a policy that was advertised as comprehensive, yet the actual policy contains numerous clauses that bail out the insurer from actually covering all but the rarest and unlikeliest claims.
Of course, when a policy has been sold in a misleading light, it gives the insurer an escape clause should you actually file a claim. The insurer could easily counter-assert that you didn’t read the fine print, when in fact the terms of your policy — which the agent never even went over with you — are written in a vague language that renders most points confusing and open to multiple interpretations.
In a worst-case scenario, you might be sold a fake policy by an unauthorized insurer that sells a product masked as coverage. Since these types of scam companies don’t use legitimate paperwork, it is virtually impossible to hold them accountable once you learn of their deceitful practices the hard way.
Even some of the more trustworthy insurance providers have been known to rip off their customers. In some cases, a rogue agent will enter false claims about an applicant’s qualifications to secure a low rate. When the falsehoods are discovered by the insurance company, the agent will then claim that the applicant lied, when in fact the agent lied. In scenarios like these, the policyholder is often denied coverage upon filing a claim.
If your carrier denies a claim because your agent falsified your info, the agent should have an E&O policy that would cover the claim.
With so many policy options and raw deals on the insurance market, it is often hard for today’s vehicle owners to find a good car insurance policy. At David Pope Insurance Services, LLC, we have been providing car insurance policies to drivers in and around Union, MO, for more than 15 years. Our agents will guide you through all the necessary questions to help you fully understand the terms and conditions of your insurance coverage. Contact David Pope Insurance today to obtain a quote and peace of mind.