Things to Consider When Reviewing Your Auto Insurance Policy

Posted in: Personal Insurance

Have you reviewed your auto insurance policy recently? If not, you could be either overpaying for your coverage or have inadequate coverage. When your auto insurance policy is up for renewal each year, it is always important to take the time to give it a check to ensure you have the right coverage at the right cost.

Here are a number of recommendations that could help you save money and make sure you have the best protection.

Important Tips to Ensure You are Protected:

  • Don’t assume you have adequate uninsured motorist coverage – many policies do not. Uninsured motorist coverage needs to be at least $250,000 per person/$500,000 per occurrence for bodily injury coverage.
  • If you’re in an accident and severely hurt someone, your underlying policy may not have sufficient limits to cover all of the associated costs. Therefore, you should consider umbrella or excess liability coverage, which provides protection above and beyond your standard auto insurance policy.
  • Check to make sure your policy includes coverage for full glass replacement if your windshield or other window were to crack or break for a reason other than an accident.
  • Consider gap coverage if you are purchasing a car with a loan. Gap insurance is for the gap between what is owed on the car and what the car is worth on the market. If you are in an automobile accident and your vehicle is totaled, the loan company is still going to expect the full amount owed but the insurance company is only going to pay what it considers the car to be worth. Gap insurance will protect you by paying any difference to the loan company.

Money Saving Tips:

  • If you have a well-funded emergency fund (a couple months’ worth of living expenses), consider raising your deductible, which will lower your premium (the amount you pay each month/quarter/year). You just want to make sure you are able to afford the deductible if an accident were to occur.
  • If you have changed the amount you use your car (i.e. stopped commuting, started carpooling, not using your car primarily for business) or if you have a student away at school over 100 miles without a car, discounts might be available.
  • If you own a home and one or more vehicles, find out if you can utilize a multi-policy credit.
  • Make sure that your insurance agent is taking advantage of insurance carriers that give the best rate based on zip code (vs. whether you live in the city or county). Depending on your territory, your rates might be able to be lowered.
  • If you have an outstanding driving record and claims history, you may qualify for a better rating plan.
  • If applicable, inquire whether a good student discount has been factored into your policy.
  • Consider dropping Collision on a car when its value reaches $3,000 or less.
  • Determine whether surcharge points due to tickets or accidents can be eliminated. The surcharges are typically assessed for a defined period (such as 36 months) from the date of the violation or accident.

General Policy Tips:

  • Find out whether rental and towing reimbursement is included in your current policy and if not, ask about having it added. It is an inexpensive option and important because in the event of damage you will need a vehicle while yours is being repaired.
  • If you have paid off your car, make sure the bank’s name has been removed from your policy.

By reviewing your auto insurance policy and asking the right questions, you will protect yourself from having poor auto coverage and/or overpaying on your insurance.

If you have any questions about your current auto insurance policy or would like to have a free review, please contact me at john@psafinancial.com.

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