Auto Insurance “Secrets” We’ll Let You In On
Published Tuesday, May 21, 2019
We recently read an internet article entitled, “Secrets your Auto Insurer Won’t Tell You.” The “secrets” were really basic concepts about auto insurance that we hope all clients know. Yes, knowledge is power, and the more knowledge you have as an insurance buyer, the better choices you’ll make in your purchase.
With that, let’s look at these basic concepts. Test yourself. How many did you already know?
- “How much making a claim could increase your rates.” We have counseled clients on auto surcharges for years. When you call in with a claim near your company’s “threshold limit,” we talk with you about the financial implications. It’s an easy analysis--how much would you pay out in a surcharge vs. paying the claim outright. If the surcharge is greater than the claim’s value, the decision is clear. Again, knowledge is power. Once you have the information, you can make the best decision for you.
- “How much your car model affects your premium.” Many clients call us prior to purchasing a new vehicle to find out the approximate premium of a few models they’re considering. We encourage this! Insurance pricing is based on many factors, such as the stability of vehicle in a crash, its repair costs, its theft records. You may be surprised how different premiums can be based on model.
- “Your personal property in your car isn’t covered by your auto insurance.” Your belongings in your car are covered by your home insurance. We encourage you NOT to load up your car with many personal belongings. If you carry a laptop computer in your car regularly, it’s best stored in a trunk or hide-away compartment. Don’t give a thief an invitation to break into your car.
- “Paying in installments will increase your overall bill.” Along with this is another statement: paying late will increase your bill. Not only do insurance companies charge an installment fee (typically $5 per installment), but they often charge a Reinstatement Fee of $20 for paying late. You can avoid these charges by applying for automatic withdrawal from your checking account (called EFT). EFT will not only waive the installment charges, but will ensure that you’re not late in making your payments.
- “Your credit history can affect your auto insurance premium.” Today more than 90% of insurance companies use credit information as a factor in determining an “insurance score.” Other factors may include claims frequency, longevity, payment history, etc. This “score” helps the insurance company properly rate your risk. Individuals with a favorable score will pay less than individuals with a less favorable score. If you would like more information on your score, we would be happy to provide you with further information where you can obtain your personnel data.
- “You’ll pay for your friend’s bad driving.” It used to be that insurance followed the car, meaning that regardless of who was driving, the insurance company of the car’s owner would respond. So it behooved you to be cautious about loaning out your car--especially to a careless driver. This rule has recently changed with some insurers. Now the insurance on the driver may be primary. If the driver does not have insurance, then the car’s insurance may respond. Still, the advice is sound: be careful to whom you loan your car.
Well, hopefully several of these points were refreshers. If any of them trigger a question, please contact us. We’re more than happy to review your specific situation with you. We also encourage you to check out our website any time you have a general insurance question. It is chock full of articles on a variety of topics.