This can be a loaded topic and one that often gets overlooked because everyone wants a screaming deal. For example, if a vendor on the right is offering you a hamburger for $5.00 and the vendor on the left is offering you a hamburger for $2.00 more often than not you will go for the cheaper of the two options. What the hamburger vendor on the left does not tell you is that the burger he is selling for less than half the price contains lower quality meats and chemicals to preserve the beef so that it can be served for longer periods of time; whereas the vendor on the right is serving a freshly ground meat that contains no fillers or chemical additives. The thing is, that most people don’t care. They see the word hamburger, they look at costs and see one is less than half the price as the other and they will choose that one. Car insurance can often be the same way.
In this first blog of a three part series about car insurance companies, I will discuss the car insurance marketplace and what you generally need to know before getting car insurance; or if you already do have car insurance, things you need to look for on your policy.
The Car Insurance Marketplace
You cannot turn on the television anymore without seeing at least one car insurance commercial popping up making claims about being the cheapest insurance and the quickest way to get a quote. I don’t know about you, but when I make a purchase I like to do a bit of research and find out what I am getting for my money. Unfortunately the advertising tactics by the insurance companies like to leave out that important part, and it’s all about how to save a buck here and there. On top of the insurance company creatively leaving out what you are actually getting for the money you are willing to spend in their advertisements, they focus on quick and easy ways to get quotes.
Car insurance companies like to tote their “save 15% in 15 minutes or less” or the newest idea that it shouldn’t even take that long. Well I beg to differ, in order to make an educated decision about car insurance, which includes asking questions about available policy coverages and their limitations, it should take more than a few minutes. It also doesn’t hurt to speak to an agent directly to make sure you’re getting what you want AND need.
A good way to pick your car insurance should be to set a budget for how much you are willing to spend a month/year on insurance. After you come up with a budget, the next item you need to think about is the types of coverage you want and need and then you can decide which company you feel will be able to offer you the coverage you want for the price that you’re willing to pay.
Below are some of the most common types of coverage offered and what they can do for you:
- Liability Coverage– Liability is the most important type of coverage we can stress. This not only covers anyone that you may hurt in an accident that you were at fault in, but also can protect you from having a lawsuit filed against you personally if you have the proper amount of coverage.
- Liability coverage requirements are different in each state, and most states have a minimum amount of coverage that is required by law. Often times we see that even the minimum coverage is not enough to cover those who were injured at the cause of an at-fault driver which can lead to a seizure of assets. It’s always good that if you can afford to get above the minimum required insurance coverage that you do so.
- Collision Coverage– Collision coverage covers all property damage. If you are at fault for an accident your collision would cover repairs to both, your vehicle and the vehicle that you hit. If you are not at fault, often times your collision will pay to repair your vehicle up front and seek reimbursement from the at-fault party if they have available insurance.
- Comprehensive Coverage– Comprehensive coverage should cover all damage to your vehicle and it’s contents in the event of an incident that is not an automobile accident. The most common types of situations covered are: Theft, Vandalism, Fire, Falling Objects, Natural Disasters and Civil Disturbances. It’s always a good bet to check with your agent to make sure what they are actually covering in the event of one of these unfortunate circumstances.
- Uninsured Coverage-Uninsured coverage is simply what it sounds like. You want this type of coverage in case a person hits you and they do not have any insurance coverage. Your insurance company will step in and take over handling the claim. It’s always good to carry the same amount or more have in liability for Uninsured simply because you would want the same protection if someone didn’t have insurance.
- Underinsured Coverage– Underinsured coverage is what it sounds like as well. If you have this type of coverage on your policy, it steps in when someone that hits you doesn’t have enough insurance to cover all medical expenses. This type of coverage is an excess coverage which means that it’s only available up to the limit that you purchase minus what the at-fault insurance company has already paid out. (i.e. if someone had a $30,000 policy limit and you had $50,000 in medical expenses; and you carry a Underinsured policy of $50,000. The at fault insurance company would likely pay their limits of $30,000 and your underinsurance policy could kick in the remaining $20,000 to total $50,000 or your maximum policy limit.
- Medical Payments/PIP– Medical payments coverage is often over looked but it’s a very inexpensive way to help you out if you are ever in an accident. Medical Payments or PIP coverage act similar and protect anyone in your vehicle up to your limits purchased, regardless of who was at fault in the accident. It’s essentially money to cover medical expenses and is separate and apart from any other type of coverages.
As you can see there are many options that you have when buying a car insurance policy, and these are only the most common policy options. Next time someone is saying you can get a policy for dirt cheap make sure you ask what you’re getting for your hard earned money and get enough coverage to protect yourself in case you are ever in a car accident. At Campbell & Associates we can help you if you’ve been hurt in an accident and help you get the money you deserve. For a free consultation give us a call at 704-333-0885, experts are standing by to speak with you 24 hours a day, 7 days a week.