In order to financially protect you, your car, and anyone involved in the event of a car accident, there are several issues to consider when evaluating your auto insurance benefits coverage and premium payments.
• What kind and amount of auto insurance coverage do you currently have (i.e. liability, comprehensive, collision, etc.)?
• Do your current coverage types and amounts cover what you want protected?
• If your coverage is not sufficient, what kind and amount of coverage do you want?
• Is your coverage operating as cost efficiently as possible, or did you just get cheap insurance?
Liability – Legal liability claims against the driver or owner of a vehicle causing damage or injury to a third party or their property.
Collision – The cost of repairing or replacing a vehicle following an accident due to collision.
Comprehensive – The cost of repairing or replacing a vehicle from losses due to hazards other than collision. This would include, and is not limited to, losses from such sources as fire, theft, water, broken windows, vandalism, and impact with animals.
Uninsured / Underinsured Motorists – This provides the insured with protection and compensation for injuries and damages caused by an uninsured or underinsured driver; that is, one whose negligence causes damages in excess of their available insurance coverage.
Personal Injury Protection (No-Fault) – Some states require this coverage which provides for medical and other expenses resulting from an automobile accident, for people specified in the policy, regardless of who is at fault in the accident.
Liability insurance costs are significant at the low end of coverage. However, as your coverage increases these costs per dollar drop dramatically. As such, you will want to aquire the maximum liability protection available that you can afford.
The coverage needs to work for you, not your insurance company. Adjusting your comprehensive and collision deductibles can provide significant savings. Changing these deductibles affects how much you and the insurance company will pay for physical damage to either car in the event an accident occurs.
It works like this: the lower the deductible, the higher the premium payment. Or conversely, the higher the deductible, the lower the premium payment. In other words, you may be paying a higher insurance premium in order to incur a lower out-of-pocket cost in the event of a claim. Does it make sense to do this?
When determining what level auto insurance deductible you want, ask yourself these questions:
• What is the likelihood that I am going to use this deductible?
• Does my driving profile show that I am more prone to have accidents than other drivers are?
• What is the difference in premium cost for the lower vs. the higher deductible amount?
• If I do have an accident, how much of a deductible can I afford?
• Over time, how much premium do I want to pay in order to earn a lower deductible?
• Does it make more sense to pay a higher deductible and use the difference in premium for another purpose?
Each state has minimum coverages, at fault provisions and other specialty regulations for auto coverage. You must make sure that your policy conforms with the appropriate state provisions.
You may need to adjust your coverage according to life’s changes. As your income and net wealth increase it is important that both your deductibles and liability limits of coverage increase as well. Although some may believe that a higher net worth would result in less coverage actually the opposite is the case. With more to lose you should use pennies to protect substantial dollars.
Cheap may not be your friend. Although many ads promote cheap insurance, this may result in significantly less protection than you should have. Additionally, many provisions such as uninsured/under-insured motorist protection may be left out entirely.
Collision coverage applies to the damage caused by you in an accident to your vehicle. The premiums paid can be significant relative to the depressed book value of an older vehicle.
Many people leave this most important provision with 0 or minimal coverage. Under/uninsured motorist coverage is protection provided by your auto insurance company. It pays for damages that you, household relatives and passengers are legally entitled to recover in the event of an accident that results in bodily injury or death if caused by an uninsured, underinsured driver or the driver of a hit-and-run vehicle.
Damages can be recovered for medical expenses, lost wages and pain and suffering.
Medical payments coverage in some cases may duplicate your medical insurance; however, it pays out no matter who is at fault. This may help avoid hassles if one of your passengers is injured and does not have satisfactory health insurance.
You can generally, via an auto club or your manufacturers plan cover such things as auto rental, towing, roadside assistance at a much cheaper cost than through your car insurance. GAP insurance for a lease or loan may be cheaper through your lender as well.
Many people believe that by submitting a claim they will see increases in their premium. This is not necessarily the case and is certainly not the case in a no-fault claim. Check with your agent, an attorney or your financial advisor in determining whether or not to use your coverage to pay for a claim.
Auto insurance provisions are complex. You cannot simply rely on an advertisement to determine your levels of coverage and you should buy the plan with an eye on protection first and price second. Note: Neither Guardian nor its subsidiaries issue auto insurance.
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Leonard P. Raskin, Registered Representative and Financial Advisor of Park Avenue Securities, LLC (PAS), 954 Ridgebrook Road, Suite 300, Sparks, MD 21152. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, (410)828-5400. Field Representative, The Guardian Life Insurance Company of America (Guardian), New York, New York. PAS is an indirect, wholly-owned subsidiary of Guardian. Raskin Global is not an affiliate or subsidiary of PAS or Guardian. PAS is a member of FINRA, SIPC. 2016-32548 Exp 12/18
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