How Well Do You Know Your Auto Insurance?Submitted by Reed Financial Group on June 10th, 2020
Because it might not cover damage during riots and peaceful protests
We have seen the images of city blocks filled with destroyed, burned and looted cars in the aftermath of mass protests across the country.
Many cars were intentionally damaged, but many more suffered incidental damage as the result of just being parked in the wrong place at the wrong time. Would your auto insurance cover such damage if it happened to your car? Maybe. Or maybe not.
Is Your Car Covered?
According to the Insurance Information Institute, it appears that only about 75% of U.S. drivers have the right optional coverage as part of their auto policy. In fact, the Insurance Information Institute stated that:
“Damage to cars is covered under the optional comprehensive portion of an auto policy. This provides reimbursement for damage to the vehicle and its contents caused by fire, falling objects, vandalism or riot. Comprehensive coverage will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage without a deductible.”
Bottom line: if you park your car in a public place, you should review your policy to see what kind of coverage you have. And while you’re thinking about car insurance anyway, let’s explore a few simple steps that might help you lower your premiums without sacrificing coverage.
How to Lower Your Premiums
Though your insurance rates will vary widely according to your driving record, age and type of car you insure, as well as which insurance carrier you select, it also matters where you live. In fact, the national premium for a full-coverage policy averages about $1,300 a year, with rates varying widely in states, from about $1,000 in Maine to over $3,000 in Michigan.
Here are a few things to consider:
Raising your deductible. If you’ve never been in an accident or it’s been a long time since your last one, you’re probably paying too much if your deductibles are low – anywhere from $0 to $250. As with many kinds of insurance, raising deductibles can lower your premiums.
Dropping full coverage. If you’ve got an older vehicle – say 10 years old or older – dropping comprehensive and collision coverage might save you money. Generally, as the age of your vehicle increases its value decreases.
This may also be a good option if you cover teenage drivers. Get your teens a reliable, inexpensive vehicle and consider carrying only high-liability limits.
Bundling coverage. Many individual insurance companies grant pretty significant discounts if you use one insurer to cover your auto and home (which you either own or rent) as well as take out a life policy.
Not only can you save with a multi-policy discount, tracking your coverage and policies may become easier when you deal with a single carrier.
Price Should Not Be the Only Thing
Although price often looms large, consider what you get for the cost. Some carriers beat the competition on price – but if you ever submit a claim or need to speak to the insurer’s customer service department, you wind up wishing you paid a few more bucks for quality in those services.
Start off by asking your current carrier how you can save on premiums. And when you ask other carriers the same question, beware of coverage deals that come in with a very low initial price then drastically increase your premiums after the first six months or at annual renewal.
Your financial advisor is a good sounding board to make sure you insure what matters to you most.