Monday, September 29, 2008

Auto Insurance - FAQs

Frequently Asked Questions - Auto Insurance

Question: Why do rates differ so much from company to company?

Answer: Insurance companies spend millions of dollars to research their clients, each geographic area, vehicle safety ratings and accident statistics among many other factors to determine their prices and target market. Some companies feel that they want grow specific areas of their books such as the 16-21 year old market. Others may focus more on older drivers or specific areas. Companies change discounts and rates based on what they feel their company needs in order to grow in clients and in profits. This is why companies change rates and discounts so frequently.

Question: How can I lower my insurance premium?

Answer: In many cases by adding your auto and home insurance with the same company can account for large savings.There are many different ways to lower your insurance premium. I would recommend first setting an appointment with your agent to review your policy. This should be done at least once a year. In some cases, just by evaluating your policy with you agent you may find new discounts the company offers that they did not when you started your policy. Auto insurance is very competitive from company to company and discounts change frequently.

Question: Does "Medical Coverage" on auto insurance pay if an accident is not my fault?

Answer: Yes, Medical insurance coverage on your auto insurance policy covers any of your medical expenses incurred in the event of a covered auto accident. Medical coverage will pay out according to the limit chosen at the time of policy issuance. Obviously each claim is different so it is important to consult with your claim adjuster at during the claim process.

Question: What does a claims adjuster do?

Answer: A claims adjuster's primary role is to investigate your insurance claim and evaluate your insurance policy to determine if the insurance company is liable for payment. A good way to look at your claims adjuster is as your insurance agent for your claim. A claim adjuster understands every endorsement and exclusion within your insurance policy and is a great resource for questions regarding your claim. In most cases your agent cannot directly answer legal questions regarding your claim and will forward you to your claims adjuster.

Question: What is "Uninsured Motorists Coverage"?

Answer: Uninsured Motorists Coverage is medical coverage (and property coverage in some states) for you and occupants of your vehicle if the third person involved in the accident is "At Fault" and does not have insurance coverage. Your policy, within the limits of the uninsured motorists coverage pay for medical damages to you and the occupants in your vehicle. Coverage is usually stated as 100/300. This means that the maximum that the insurance company will pay is $100,000 for any one person and $300,000 maximum for any number of occupants in your vehicle.

It is important to not that uninsured motorists coverage only pays when the accident is not your fault and the accident is the "other person's" fault.

Get a free auto insurance quote today.

Question: How will my car be assessed for value if it is a "total loss". Will I get blue book value?

Answer: Insurance companies usually do not use blue book value per say. They usually use a more comprehensive calculation method in determining the value of your vehicle should it be declared a total loss. Companies handle this differently so the payment you receive for the value of your vehicle may be more or less than what you find in the blue book.

Question: What does my "Comprehensive Deductible" cover?

Answer: First, your comprehensive deductible is the amount you are responsible to pay before the insurance company will pay for the repair or value of your vehicle damaged by a peril defined in your policy as a "comprehensive loss".

Such damage would include vandalism, hit-and-run, acts of good (a tree struck by lightning falls on your car, hail damage, etc. Your claims adjuster will determine whether a claim is filed as a comprehensive or collision claim. Their is only two ways that your claim will be classified, either comprehensive or collision.

Question: Will a comprehensive claim cause my policy premium to increase?

Answer: Maybe, this answer will vary from company to company. In most cases your policy premium will not increase due to the fact that in the case of most comprehensive claims you are not in control of the vehicle.

You may lose a discount that you were eligible for before having a comprehensive claim and this may cause your premium to increase. This is usually a small increase in most cases.

Question: Will I have to pay upfront for towing coverage services?

Answer: Maybe, assuming that you have added towing coverage to your policy; you may or may not have to pay upfront in the event of a towing claim. Some companies do not have their policy holder pay upfront. All paperwork is handled behind the scenes. Other companies will have their policy holders pay upfront, submit a receipt to their agent and issue reimbursement in the form of a check. This reimbursement check is usually mailed and takes about 15 days at the most. Please consult with your agent to determine how your insurance company will pay if you are in need of towing services.

Another way is to change specific policy attributes. Increasing your deductible will decrease your insurance premium. It is important to understand how this will affect you in the event of a claim. Simply put, if your willing to assume for of the upfront costs of an accident; the company lower your premium. Before hanging coverage on your policy it is always recommended that you consult with your insurance agent.

Question: How do I cover my after-market stereo and equipment?

Answer: In order to cover after-market products within your policy you will need to add an endorsement to your policy. Contact your agent, provide a receipt of all items and request that your agent retain a copy in your file. Adding coverage for additional equipment may increase your premium. Consult with your agent on how your policy will payout should such equipment be stolen or damaged in an accident.

Question: How does "New Car Replacement Coverage" work?

Answer: This coverage is usually only available on new cars or cars that are within 2 years old. By adding this coverage you may see an increase in coverage. This coverage would guarantee that if your car was declared a "total loss", the insurance company would pay all necessary costs to replace your car with a new one of "same kind". This may be different from company to company so it is recommended that you discuss this with your agent.

Question: How does "Accident Forgiveness" work?

Answer: Accident forgiveness is an added endorsement to your policy that allows you to have an accident, usually within 3 years of adding the endorsement, without incurring an increase in premium on your policy. Again, most companies now offer the coverage on their policies. Consult with your agent to see how they define this coverage and exactly how it works on their policy. Adding this to your policy will in most cases increase your premium.

Question: What is deductible buyback?

Answer: This again is an endorsement to your policy that lowers your deductible for every year you are accident-free. Most companies now offer this coverage on their policies. Consult with your agent to see how they define this coverage and exactly how it works on their policy. Adding this to your policy will in most cases increase your premium.

Get a free car insurance quote today.

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DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.

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