Seven Things You Might Not Know about Car Insurance
Understanding the basics of car insurance can be difficult enough, let alone understanding the lesser-known intricacies involved with the guidelines, policies and procedures of today's insurance providers. Below, we've outlined some important, yet oftentimes obscure, insurance facts, so you're "in-the-know" when you're on-the-go.
Fact #1: Your credit impacts your insurance rates
Believe it or not, your credit may impact your insurance rates. Insurance providers have found that certain credit characteristics for an individual are useful to predict of how likely it is that the individual will have an insurance claim. These characteristics are not the same ones that a bank uses to measure lending risk, but rather, insurers may use credit-based insurance scores in conjunction with other variables to assess the likelihood of claims submitted. These variables may include age, driving record, claims history, place of residence, the type of car and the average miles driven, among others. As a general best practice, do what you can to improve your credit, be sure to monitor your credit report on a regular basis, and contact the credit bureau to clear up any errors.
Fact #2: Brand loyalty can cost you
If your mindset about automobile insurance is "set it and forget it," you might want to reconsider. Years ago, insurance companies evaluated a short list of factors when calculating your premiums. Today, that list has grown to a confusing labyrinth of criteria causing insurance rates to differ dramatically from provider to provider.
Instead of allowing your policy to automatically renew, comparison shop once a year to ensure you're getting the best auto insurance rates. Some companies provide policies direct to consumers, while others sell policies through agents or brokers. An easy place to start is by getting auto insurance quotes online, which could save you money. If you're worried that lower rates mean less coverage or poor service, don't be. Today, there are plenty of insurance companies that offer affordable premiums, well-rounded coverage and excellent customer service.
The car you drive greatly effects what you will have to pay to get your car covered. If you have a fast, small car you will probably find yourself paying a higher premium for your auto insurance. On the other hand, if you are driving a mid-sized car with all the safety features, your rates will be significantly lower.
Fact #3: Stopping payment? You'll pay in the long run
If you think switching car insurance companies is as easy as stopping payment, think again. Sure, your policy will cancel, but your existing insurance company could report you to the credit bureaus for non-payment, damaging your credit score in the process. What's more, your insurance history will reflect a cancellation which may cause a new provider to decline your application or charge you higher premiums in the future. Instead, be sure to complete the necessary paperwork with your existing provider, such as a policy cancellation form, and time it right by starting your new policy on the date your old policy ends.
When a insurance company sees a someone that has been driving without auto insurance, especially since it is required by state law, they will consider you irresponsible, and often times they will make you pay for it. If you are switching companies, make sure you have a replacement set up the day your current policy expires to avoid extra charges. (And never, ever let your auto insurance lapse!)
Fact #4: Your car insurance company can cancel or non-renew at any time
Your insurance company can cancel your policy at any time if you violate one or more of its guidelines during your policy period. Same goes for non-renewal. Things such as failing to pay your premium on time, losing your driver's license due to suspension or revocation, submitting too many at-fault claims, or misrepresenting your driving history or past insurance claims could all be reasons for cancellation or non-renewal.
In either case, your carrier must notify you in writing within a timeframe legally required by your state. When it comes to cancellation, your insurance company is required by law to state the reason, not so with non-renewal. If you want a reason but aren't provided with one, you must send your insurer a written request. If you believe you've been unfairly treated, you may have legal recourse through your state's department of insurance.
And don't forget about your "binding period," the time when your insurance company is especially conscious of your risk level. The binding period usually occurs within 60 days following your auto insurance application. If your insurer finds a discrepancy on your application, on your driving record or with your credit, it can cancel your policy.
Fact #5: You could save money by paying your car insurance premium in full
You might be surprised to learn most car insurance companies charge an administrative fee to break up your premium payments into installments, such as paying every six months, every three months or every month. The more you divvy up your payments in installments, the more these "convenience fees" add up, and your once-cheap car insurance can now cost substantially more. There may also be charges for the method of installment payment you choose, such as automatic bill pay or pay-by-phone.
Be sure to ask your provider what its administrative fees are. If it makes financial sense and you can swing it, pay your premium up front and in full. Not only will you avoid the added expense, you won't have to worry about missing a payment, or being late on payments, both of which could be grounds for cancellation.
Fact #6: Comprehensive coverage doesn’t mean complete coverage.
While comprehensive coverage may sound like coverage that will cover you in every situation, this is certainly not the case. Comprehensive coverage simply means you are covered in scenarios other than collisions. Theft, flooding, vandalism, and fire damage are examples of when comprehensive coverage will help you.
Fact #7: You can ask for discounts.
Before signing for auto insurance with a particular company, don’t be afraid to ask for discounts. You’d be surprised what discounts you qualify for.
Understanding some basic, but important, facts about auto collision insurance
It is mandatory that you have some basic auto collision coverage in the US. It is against the law to be driving around without auto insurance. If you wish to drive around legally then you will require the basic liability cover. With this cover you will be able to cover costs up to a certain fixed amount if you get hit by another vehicle, objects etc. This coverage will not include fixing your vehicle.
The next big coverage is the full coverage that includes the comprehensive as well as the collision coverage. This type of coverage basically means that the insurance company will cover the costs up to a fixed amount for different types of accidents and will also pay for repairs that your vehicle will incur.
A deductible is the amount you agree to pay while purchasing the policy. This is a one-time payment that is paying for a part of the damages. This could range between 100 to 500 dollars most of the time. If you pay a higher deductible you will be paying lesser premiums and if the deductible is lower, then the premiums will be much higher. The deductible will not change but will remain the same irrespective of the money the insurance company has to shell out.
The type of coverage you need will largely depend on the vehicle you own, where you drive, what is the damage you want your insurer to pay for in the event of an accident. The costs will vary depending on many factors such as the age of the driver, the driving record, and the areas the vehicle will be driven.
There are predetermined amounts that will be paid by the insurance companies in the event of an accident. However, with some companies these values may be changed but the premiums will either increase or decrease depending on the coverage you want. If you have a brand new car, it makes sense to take a full coverage because if you hit something most of the companies will pay up the fair market value of the vehicle. However, if you have purchased only basic liability coverage then you will get nothing to fix your new car. If you have taken some form of loan from the banks or lenders to purchase the car, then it will be mandatory for you to take a full coverage until the term of the loan. Choose the coverage based on the vehicle you own.
We'll be happy to help!
We're ready to handle your insurance for Autos, Homes, Property and Casualty, Boats Motorcycles, and all your Umbrellas insurance needs.
New coverage or changes to existing policies;
Give us a call. (407) 290-6262
Understanding Terrorism Insurance
Terrorism insurance provides coverage to individuals and businesses for potential losses due to acts of terrorism.
Individuals Standard homeowners insurance policies include coverage for damage to property and personal possessions resulting from acts of terrorism. Terrorism is not specifically referenced in homeowners policies. However, the policy does cover the homeowner for damage due to explosion, fire and smoke—the likely causes of damage in a terrorist attack.
Condominium or co-op owner policies also provide coverage for damage to personal possessions resulting from acts of terrorism. However, damage to the common areas of a building like the roof, basement, elevator, boiler and walkways would only be covered if the condo/co-op board has purchased terrorism coverage.
Standard renters policies include coverage for damage to personal possessions due to a terrorist attack. Again, coverage for the apartment complex itself must be purchased by the property owner or landlord.
Auto insurance policies will cover a car that is damaged or destroyed in a terrorist attack only if the policyholder has purchased “comprehensive” coverage. Most people who have loans on their cars or lease are required by lenders and leasing companies to carry this optional form of coverage. People who buy only liability coverage are not covered in the event their vehicle is damaged or destroyed as the result of a terrorist attack.
Life insurance policies do not contain terrorism exclusions; proceeds will be paid to the beneficiary as designated on the policy. Health and disability insurance policies may provide coverage for loss of life, injury or sickness to individuals in the event of a terrorist attack.
Businesses Prior to 9/11, standard commercial insurance policies included terrorism coverage as part of the package, effectively free of charge. Today, terrorism coverage is generally offered separately at a price that more adequately reflects the current risk.
Insurance losses attributable to terrorist acts under these commercial policies are insured by private insurers and reinsured or “backstopped” by the federal government pursuant to the Terrorism Risk and Insurance Act of 2002 (TRIA). Under TRIA, owners of commercial property, such as office buildings, factories, shopping malls and apartment buildings, must be offered the opportunity to purchase terrorism coverage. TRIA was renewed for a further two years in 2005 and is set to expire at the end of 2007.For the terrorism coverage to be triggered under TRIA for commercial policies, a terrorist attack has to be declared a “certified act” by the Secretary of the Treasury.
No such declaration is needed to trigger coverage under home and auto policies because there are no exclusions for terrorism.
What is not covered? There are long-standing restrictions regarding war coverage and nuclear, biological, chemical and radiological (NBCR) events in both personal and commercial insurance policies.
War-risk exclusions reflect the realization that damage from acts of war is fundamentally uninsurable. No formal declaration of war by Congress is required for the war risk exclusion to apply. Nuclear, biological, chemical and radiological (NBCR) attacks are another example of catastrophic events that are fundamentally uninsurable due to the nature of the risk. Under the Terrorism Risk Insurance Act, if some NBCR exclusions are permitted by a state, an insurer does not have to make available the excluded coverage.
Business Interruption Insurance Property damage to commercial buildings from a terrorist attack also may include claims for business interruption. Business interruption insurance (sometimes referred to as business income coverage) covers financial losses that occur when a firm is forced to suspend business operations either due to direct damage to its premises or because civil authorities limit access to an area after the attack and those actions prevent entry to the business premises. Coverage depends on the individual policy, but typically begins after a waiting period or “time deductible” of two to three days and lasts for a period of two weeks to several months.
Business interruption losses associated with acts of civil authority (e.g., closure of certain area around the disaster) can only be triggered when there is physical loss or damage arising from a covered peril (e.g., explosion, fire, smoke, etc.) within the area affected by the declaration. The loss/damage need not occur to the insured premises specifically. Reductions in business income associated with fear of traveling to a location, in addition to closure to areas by authorities because of a heightened state of alert, would not be covered by business interruption policies.
Workers compensation Workers compensation—a compulsory line of insurance for all businesses—covers employees injured or killed on the job and therefore automatically includes coverage for acts of terrorism. Workers compensation is also the only line of insurance that does not exclude coverage for acts of war. Coverage for terrorist acts cannot be excluded from workers compensation policies in any state.
Life/health and disability insurance policies may provide coverage for loss of life, injury or sickness to individuals in the event of a terrorist attack.
The content of this
newsletter is taken from sources that are believed to be reliable.