There are several misconceptions surrounding car insurance. Without educating yourself, you might fall into the trap of thinking you have coverage, or that you fully understand the rules and regulations about your policy. We try to help you comprehend some of the most important aspects about your policy, while explaining common myths. By knowing more about your benefits, you'll pay less, by taking advantage of discounts and not paying for items you simply don't need.
Your Valuables- Not Covered
If the valuables inside your car are damaged or destroyed as the result of an accident, your auto policy is unlikely to cover those items. The homeowner's policy you have may cover those items, but not entirely. If you regularly travel with expensive items (like most electronics) insure them separately from your auto policy to provide the protection you need. Specific scheduled riders can be purchased and the cost is very inexpensive. You can add or subtract items with a simple phone call or online request, and adjustments can also be easily made as the values depreciate. Appraisals may be required for expensive or unusual items. Updates are typically requested every five years.
These riders may be able available on your homeowner’s coverage for cameras and other items (especially jewelry). It may be a good idea to create an inventory of items that you would want to consider insuring separately. You may be required to furnish appraisals so the carrier knows the current replacement cost and market value. A deductible may not apply if items are specifically listed. However, riders may have a small deductible to meet. Coverage tends to be comprehensive, although each carrier may have small variations including policy limits. Several carriers will offer extended benefits that may eliminate a need for a rider. Consolidating riders may provide better coverage at a slightly reduced cost.
Also, it's always a good idea to periodically update the appraisals. Jewelry values can change very quickly. There also may be items that you want to delete along with other items that should be added. Cameras, computers and other high-tech items should be removed if you no longer own them or they have substantially depreciated. There also may be additional homeowner policy options that are now more cost-effective. Often, several jewelry combinations are offered. If additional items are purchased, the covered amounts can be increased. An "umbrella" may be cost-effective in specific situations.
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One Small Claim Won't Hurt, Right?
A small claim submitted by you can have a dramatic impact on your premium. If you're driving an older car or experienced only minor damage, fully evaluate the dents before you file a claim. Unless the damage is significant enough to warrant that claim, think twice in order to save more money. Of course, if the estimate is less than your deductible, paying the bill yourself may be the best option. Higher deductibles ($1,000 or above) will often eliminate the temptation to file a claim for small damage. The most common collision deductibles are typically $500 and $1,000. $2,500 is the most cost-effective option for excellent drivers or ultra-expensive vehicles. Deductibles are offered as high as $10,000 with several carriers.
It is important to consider the potential liability issues if you caused damage to another vehicle. In those types of situations, it is usually important to contact your insurer, since failure to report a claim could end up being a huge mistake. Also, if another person drives your car, you are responsible for any damage they may cause. So be very selective if you let others have access to your vehicles. It's a misconception that your company doesn't care who you lend your vehicles to. Allowing continued access to other drivers could become an underwriting issue. The carrier reserves the right to exclude coverage for a driver that continuously is involved in accidents and claim submissions.
My High Risk Car Doesn't Hurt, Does It?
If you drive what's known as a "low risk" or "low profile" vehicle, you could pay smaller premiums. Although there are several guides about which cars will help you earn this discount, investigating online (including our website) can give you some type of idea about how your current or new car might be rated. For instance, investigating crash and repair reports would help. Your own carrier may be able to provide specific data. Upon request, we can also furnish specific statistical data regarding sports cars and high-value vehicles. We update vehicle values and risks each year. The following sports cars typically have the highest insurance costs: Mercedes-Benz S-Class and E-Class, Audi A8, BMW 5 Series, Volvo s90 T8, Genesis G80, Lexus LS and ES, Porsche 911, and Jaguar F-Type.
Of course, you can expect to pay higher rates for a newer sports car or expensive SUV. Although there are many discounts that newer vehicles qualify for, they still will be much more expensive than older cars or trucks. And if the vehicle is popular for thieves to steal, you'll be charged a higher rate. Regardless, it still makes good financial sense to remove collision coverage from vehicles with more than 100,000 miles, unless the vehicle has retained most of its value. Typically, keeping liability and comprehensive coverage is adequate.
Your Credit Score Doesn't Affect Your Policy
A good credit score can help you secure lower rates on your car insurance, although many people don't realize it. The reason for this is that research has proven that those persons with lower credit scores are more likely to submit claims, which is why insurance providers can make the argument for higher premiums for these drivers. If your credit is strong, that can only help. You can also improve your credit, which may result in savings of 5%-10%. Consumers can request a free annual credit report, but it's important not to be lulled into paying for extra services.
This is just one of the factors that companies use to determine your "risk score". Obviously, those drivers with a higher risk score will be associated with a higher premium. The fewer accidents, claims, and overall risk factors you have, the better price you will receive. For that reason, it’s important to order your free credit report each year. If you have poor credit, several carriers don't consider your score when underwriting an application. However, future potential discounts could be impacted along with higher expenses when applying for loans.
If bad credit persists, we can help place you with a company that doesn't factor it so highly. Conversely, if you have excellent credit, we'll locate the carriers that give you the biggest price break. It's only a myth that good credit doesn't help. Also, if your credit score significantly changes (up or down), changing carriers might result in significant savings, depending on other factors. A recent bankruptcy will impact rates if you are applying for coverage with a new carrier.
Different States Have The Same Rules and Requirements
Each State Has Different Statutes
This is not true. Although some states share characteristics, there are differences and unique situations in every state and particularly if you move (and especially if you move out of state). Keeping that information current, could prove critical in the event of damage or an accident, in addition to providing you with the comfort of knowing you are properly covered. Each state updates minimum requirements and recent legislative changes on their DOI (Department of Insurance) or DMV (Department of Motor Vehicles) websites.
State minimum liability limits will also be different, depending on that particular state. So if you do move, it is important to be aware of the bodily injury and property damage requirements, so you are meeting (and hopefully exceeding) those limits. Typically, the minimum bodily injury per person requirement is about $12,500-$20,000, depending on the state. Fortunately, many states, such as Ohio, have been raised the minimum requirements. $25,000/$50,000/$25,000 is now often the minimum allowed limit.
Also, most states will be "fault" states and others will be "no fault." The type of benefits you have will change if you move to a state with different statutes. If you travel across wide areas, you could be subject to more than one type of regulation that could impact your payment responsibility if an accident occurs. Traveling to Mexico or Canada may require added coverage. Note: Michigan changed from "no-fault" status in 2021.
Once I Get My New Policy, I can Forget The Old One?
Assuming that you have received written notification and you have checked the new contract for accuracy, you can safely terminate the older plan. But of course, it’s imperative to avoid any lapse in coverage and double coverage that results in unneeded extra payments being made. Your request should be in writing, so the refund can be backdated, if needed. Always verify that your new effective date is current, and not a future effective date that will cause a lapse. Written verification is the best method.
Driverless Cars Are Cheap To Insure
Maybe some day they will be, but not right now! And actually, you can not add a driverless vehicle to your policy yet, since much more research needs to be completed before they become available to the public. However, when they are, it is likely that rates will reduce, and perhaps substantially. It's expected that the number of collisions should dramatically reduce. However, hacking issues may have to be addressed. We expect these types of vehicles to become readily available between 2022 and 2025.