QUALITY INSURANCE: 6 WAYS TO REVIEW YOUR POLICY
As any good blog starts, there is a story behind the crazy. Recently my son-in-law found out he was being sued. It was an extremely slow car accident and everyone drove away. Everyone except him. A law suit, being a law suit, that is all I will say. The silver lining is having a wonderful insurance company. I have been insured by USAA for 15-years. Breezy and Shayne got USAA upon receiving their driver licenses. When I was teenager, I didn’t care about insurance. Most likely they didn’t either. Fortunately, their parents did.
Company That Cares
When I say this company has your back, I mean it. As a parent there is no better feeling than knowing that when your kids get into a mess, they will be taken care of. For Shayne, USAA is working hard to mediate the situation. He is very lucky. Part of Shayne’s insurance provides a lawyer. That is a huge weight off. The process will be stressful, but at least that is all it will be.
Good insurance is not exactly what people picture when they think of finance. However, protecting yourself is priority #1 when it comes to finances.
Before We Get Start
We all cut corners. I get that. I cut corners. This is NOT the place. Let’s say you are currently covered by insurance company A. You pay $100 per month. This, you believe, is too much. Insurance company B will insure you for $75.
You want to pay less. We all do. Don’t get excited and change companies yet. Make sure you know what you are getting.
Six Recommendations to Quality Insurance
1. Minimum Limits – What is it in the state you live? Check your policy. What do you currently carry? If you have more than minimum that is good. By contrast, what is company B offering?
- If company B is less then you will be hurting yourself in the future.
2. Rental Car Coverage – Do you have it? Will company B offer it?
- Sometimes the comparison company offers something the current company doesn’t, that is okay. I’m extremely analytical. Keep a list of both coverages to compare.
3. Towing – Does your current policy have towing? If so, would the new policy?
- This may or may not be a deal breaker. Certainly this is a personal decision.
Three Down, Three to Go
4. Replacement (total loss) policy – Most insurance companies offer ACV (this is not a retail replacement value). What does the latter company offer?
- Actual Cash Value is the insurance standard. Exceptions would be the states (a couple) that offer replacement value. Sometimes, if your car is new within (usually) two years, you can obtain a replacement policy. If company only offers ACV then you will downgrade. However insurance is about hedging your bets. None of us know if we will actually get in an accident. (Side note: If you have GAP on your car loan this is a non-issue. It will pay off any unpaid balance from the insurance company.)
5. Uninsured Motorist – This one is very important. This pertains to a vehicle involved in a hit and run or uninsured motorist (no insurance). This portion of your insurance would pay.
- Forgo this and you are involved in a hit and run, who will pay for damages? This is not required unless there is a lien (auto loan) against the vehicle.
6. Underinsured Motorist – Do you have it? Does the new company offer it? This coverage picks up when the responsible party doesn’t have enough insurance coverage.
- Vehicles are extremely expensive, this isn’t hard to do. This is important because insurance companies do not want to pay if they do not have to. Your company will cover your car. However, you will be stuck paying a deductible.
Tip of The Iceberg
Those are six basics to get you started. All things are not created equal. Neither are insurance companies. Just because one company is cheaper, doesn’t mean the coverage is better or even equal. A quick analogy, getting cheaper car insurance is like leaving Macy’s to go to Walmart. The shirt might look similar, but the quality is not the same. Car insurance, is confusing at best. In fact, until I worked at USAA several years ago, I didn’t even know what I was paying for. It was required, so I had it.
Before you change to a cheaper company make sure you are getting the same level of quality. If not, you will hurt yourself in the end.
It’s Cheaper Because You Get Less!
Say for example your current policy has towing and roadside assistance, but the new one doesn’t. Breakdown? Flat tire? Stuck in the middle of nowhere? Ensure the policy you switch to (if or when you do), covers you in these situations. Heck, if you are not sure what your current insurance covers, check your policy. Some of these coverages are a couple bucks a month.
In the above example, if you needed to call a tow truck, it could easily cost a hundred dollars. Possibly more. Hopefully when you get there the shop won’t charge storage, but they could. We pay $7 per car per month for towing & roadside assistance. That is only $84 year. Sure, I don’t use it each year, but the peace of mind is worth it. Otherwise, it’s coming out of the savings you have been working so hard to build.
Making an Informed Decision
I have zero desire to tell anyone what to do. That isn’t my style. My goal, to provide you the tools to succeed. I want to ensure you are covered in case of a accident. When a tsunami comes, don’t be on the shoreline. When the wave does crash, be as far inland as possible. Stay where the family is protected. We all know someone who lost everything they worked for because they weren’t prepared. The only thing we can do is prepare for when the storm hits.
Research insurance cost before you buy a new car. Certain cars are extremely expensive to insure. Please, please, please do not lower the limits in order to pay the insurance. Again, in an accident the insurance company only pays up to the policy limits. It’s a contract. Nothing more. Anytime Ron and I purchase a new vehicle I call USAA and ask them how much the insurance is. If I don’t want to pay a high amount, I don’t get the car. Why? I don’t want sued (lowered limits), and I refuse to pay an absorbent amount on insurance.