Auto Insurance - 5 Costly Mistakes Commonly Made
1. Assuming
you need only minimum limits because "you don't own anything." Recent
graduates starting their careers may not currently have a lot of assets to
protect but they do have a lifetime of future wages. Judgments for damages
caused to others can follow you and cause your wages to be garnished to satisfy
them. The cost of higher limits can be extremely minimal. Be sure to evaluate
the cost benefits of all your options.
2. Not
matching your "Uninsured/Underinsured Motorist" liability limits with
your "Bodily Injury" liability limits. The
reason that you have liability insurance is to protect yourself by paying for
the damage done to others if you cause an accident that is your fault. So what
happens when the accident is someone else's fault and they don't have insurance
or only have minimum limits? You should be protecting yourself with the same
limits that you are protecting others.
3. You
don't have all of your personal policies with one company or one agency. Most
companies offer significant discounts for you to have all of your policies with
one company and in most cases, it makes a lot of sense to try to do that to
take advantage of every discount you can qualify for. In the cases where that
may not be possible, at the very least have all of your policies with one
agency to be sure that you have no "gaps" in your coverage. If you
have assets to protect, (a home, cars, personal belongings) you should have an
umbrella policy that will give you liability coverage in excess of what is
offered on the standard auto policy. A million dollars of coverage may cost
less that $200 annually and can buy an awful lot of "peace of mind."
However, umbrella policies require certain limits be maintained on your auto
and home policies in order to "seamlessly" payout. For this and many
other reasons, you should have a professional agent manage your insurance
program.
4. Assuming
all contracts and insurance companies are alike. Insurance
is basically a promise made by an insurance company to pay a loss in exchange
for premium. Insurance companies have different financial ratings and
reputations. Paying your premium doesn't mean you are going to be satisfied
with the handling of your loss. If you own a nice vehicle- lets say a BMW for
example: unless you have specific coverage for "original equipment
manufacturer" (OEM) parts, generally aftermarket parts will be used on
your vehicle after a loss. This is not a bad thing. Many times the warranties
and quality of these parts are the same or perhaps better than the original
part but if you are concerned that new windshield has "BMW" stamped on
it, you need to specifically have that coverage.
5. Assuming
you don't need "Medical Payments" coverage because you already have
"great" medical insurance. What about all the
other people in your car? Most contracts include any family member and any
other person occupying your vehicle. It also usually covers funeral expenses
and the coverage limit applies to each injured person. The limit can also
"double" the amount if a seat belt was being worn. There is also no
deductible unlike most health insurance.
Auto insurance is a very important part of your personal
insurance program. Many considerations go into being properly covered. You
don't need to "over pay" for proper coverage but being with a great
company, with great coverage that exactly fits your needs is what you should be
striving for. Here's hoping you never have to use it!
Sharon L Graeter, CPCU is Co-Founder and Director of
Development for West Connect Insurance Solutions. She has 35 years experience
in the Insurance Industry and is a contract expert. If you would like to sign
up to receive her free informational e newsletter, please go to http://www.sharongraeter.com
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