Archive for the ‘vehicle claim’ Tag

A review of personal insurance – Auto insurance (physical damage)   3 comments

Dog Blog

I’ve been waiting for a little while now….

OK OK I know that I said I’d be back to finish up auto coverages a few days ago.  Business being what it is, it’s taken me a little while.  But here we are, and off we go!

Last week we reviewed liability and injury coverages.  This week, we are going to review the coverages in place to protect the damages to your vehicle itself and ways to save on them.

  • Collision  – Even though this is “backwards” from how the coverages appear on your policy, it’s easier to explain starting with Collision.  Collision provides coverage for your vehicle when it collides with some other inanimate object, or is hit by another moving vehicle.  In the state of PA, unfortunately, that includes when your car is hit by a shopping cart.  Some examples of collision claims:  if your car is parked and gets hit by another car (or shopping cart!), you hit a patch of black ice and slam into a tree, or you are at fault in a multi-vehicle accident.  Ways to save – see note after Comprehensive
  • Comprehensive (Comp) – Comprehensive is most easily explained as “all other covered forms of physical damage to your vehicle,” hence the name.  In PA, comprehensive coverage does pick up one type of accident that would otherwise be considered a collision – hitting an animal or pedestrian.  These damages would be covered by comprehensive.  Other examples of comp claims:  if your car is stolen, catches on fire, suffers flood damage, a tree falls on it, etc.  Windshield and other glass damage is covered by comp (unless caused by a non-animal collision).  Ways to save – Easiest and most common way to save is by increasing your deductible.  Be wary of two things, though – first is that collision is far more expensive than comp, so it’s far more effective to increase your collision deductible.  Second is that you should be aware that the savings by increasing the deductible will not offset (in one year) the increased out of pocket cost in the event of a claim.
  • Comp or collision pay for a total loss of the vehicle based on the depreciated (Blue Book) value of the car.  All other (partial) losses are paid based on the actual expense of repairs (less the deductible).
  • Rental Reimbursement (RR) – RR provides coverage if you need to pay for a rental car as a result of a covered comp or collision claim.  In other words: you have a covered claim.  Your vehicle will be in the shop for two weeks.  You need a car in the interim.  You pay for a rental vehicle.  RR coverage will reimburse you for the cost, up to specified daily limits and maximum duration (typically, $30 a day for 30 days).  Ways to save – only real way to save here, outside of not purchasing it at all, is to carry lower per day limits.
  • Towing & Labor (T&L) – T&L provides coverage in the event that you need some form of roadside assistance (change a flat tire, charge a dead battery, keys locked in your car) or need to be towed for virtually any reason (mechanical breakdown, run out of gas, etc).  No real way to save here, it’s generally very inexpensive to begin with.  Only thing to consider – if you are paying for this AND AAA or some similar road service, be aware you may be paying twice for the same coverage.
  • Gap Coverage – This provides coverage for new cars that are purchased using a car loan.  As noted above, in the event of a total loss to your car, the policy will only pay for the depreciated value of the vehicle, NOT the loan amount.  Typically, the loan amount is higher than the depreciated value, creating a “gap” in coverage.  Gap coverage fills the void by paying for the difference.  This coverage can be purchased through the dealership or on your auto policy.  Compare BOTH terms and pricing before choosing where to buy the coverage!

That about does it for this review.  There are other liability and physical damage coverages available, but these are by far the most common (at least in PA).

Relax

So just relax and enjoy the ride – knowing you are well covered!

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4 ways NOT to save on your insurance (and what you SHOULD have done) – part 4 (Frequency)   1 comment

Insurance Claim

Sammy attempts to demonstrate a minor claim

The fourth & final installment of our 4 ways not to save thread may ruffle your fur a little bit.  Keep in mind while reading that it’s simply a different perspective to consider.  We are going to address the issue of whether or not you should file an insurance claim.

There are quite a few websites that offer thoughts to consider, especially when it comes to whether you should file a claim on your auto insurance policy.  Truth be told, there are scant few solid answers that apply to every situation.  99% of the time, it’s ultimately going to end up being a (hopefully) well-educated decision.  Oftentimes, personal preference also plays a significant role.

Agents are always asked “If I file this claim, will my rates go up?”   As I said above, there’s hardly ever a concrete answer that’s going to apply in every situation – it’s heavily circumstance-dependent.  If you ask your agent this question, you are often going to receive the answer, “Well, maybe….  If thus & so happens, then …..”

Insurance rates are a very complicated calculation, and do not simply involve whether or not you’ve ever filed claims before.  I’ve addressed this very briefly, only glancing across the surface of the issue.  That being said, your claim history IS a major factor behind how much (or little) you are paying for your insurance coverage.

Your claim history is based on two different factors, from a premium perspective – frequency and severity.

This post is going to address frequency.  I will write a short post early next week to address severity.

Frequency of claims is something that insurance companies keep a close eye on.  With regard to auto insurance, companies often have very specific measurements they follow, monitoring things like claims frequency and your driving record (speeding tickets & other violations).  Obviously, the higher the number of claims & violations, the more likely it will be that you will either A) be paying more for your coverage, or B) not be able to obtain insurance with a desirable company.  This happened to a person I was obtaining quotes for recently.  They had not ever had any major claims, and only had one violation.  However, in the past two years, they had filed four separate, small (under $1000 each) claims.  As a result, I had a very limited number of companies I could obtain quotes from, and they ended up paying a substantial amount for coverage.

Similarly, companies watch the frequency of claims on policies like home owners or business/commercial propertyFiling multiple claims is something that will often drive your premium up – in essence, the company views you as more at risk of having at least one claim in a given year.  This is one of the reason that the rates for coverage with a higher deductible are often substantially lower (as I briefly addressed in part one of this series) – if you have a higher deductible, it significantly reduces the frequency of claims.  Unfortunately, even if you had no control over the cause of loss (IE – a windstorm or lightning strike caused damage), if you file a number of claims, your premium will in all likelihood go up.

If you are in a claim situation, I would recommend that you pull together all the applicable information – date, circumstances, item(s) damaged, estimates for repair/replacement, etc – then contact your agent.  Your agent will review the data about the loss, your personal claims history, and the guidelines of your insurance company.  They will be able to offer you thoughts & suggestions, but as I said about, in most cases, you are going to have to make an educated decision about how you want to proceed.

That’s all for this week – we are going to review severity shortly!

Quick hit for those who just bought a car!   Leave a comment

car insurance

Want to sleep easy? Make sure your newly purchased vehicle is listed on your insurance policy!

Did you just buy a car recently – new or used?  Doesn’t matter.  You better call your insurance agent, just to make sure that your new vehicle is listed on your policy.  A lot of times, the dealership tells people that they will call your new vehicle information in – and most times they do.  But there are occasions that it doesn’t happen for whatever reason, and the vehicle doesn’t get added.  If you don’t call it in, people like my daddy won’t know to add it.

Make sure your vehicle is insured BEFORE the loss occurs!! Call your agent.

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