Auto insurance is much more than just a necessity. In fact, the law requires that you carry auto insurance, but that does not mean that the law expects that you understand your auto insurance. We realize that most drivers really do not know a lot about the coverage or even the limits under their auto insurance policy. The truth is that auto insurance is not easy to understand, and given that it seems to change every few years makes it that much more frustrating to grasp as a consumer. We not only feel your pain, we also share it.
We cannot describe everything there is to know about auto insurance in one article, it would go on forever. That is why we stress the importance of meeting with your insurance agent at least annually to review and discuss your coverage, you really do require some professional advice in some of the more important aspects of your policy limits. What better opportunity to ask questions and educate yourself about the changes that impact your automobile, and you.
For a brief overview, think of the following as a starter kit to things that you should know about insurance.
Additional Coverage Is Not Always Expensive
The majority of your auto insurance premium is based on the mandatory coverage you are required by law to carry, that includes liability insurance and your accident benefits. Although collision or comprehensive coverage can be pricey, it varies depending on the vehicle insured (the older or less value the vehicle, typically the less premium charged). But if you are considering coverage for a rental vehicle (due to insured peril damage to your automobile, or a separate endorsement for vehicle rental while on vacation) this is relatively cheap, especially when considered to the priced charged from a rental agency.
Optional Accident Benefits Discussion is a Must
Upgrades to optional accident benefits are highly recommended, the reduced lower limits in recent years make this a priority worth discussing and purchasing to avoid shortfalls. Although insurers were required to send notifications both prior to and at the renewal of all auto insurance policies advising of the changes affecting the accident benefits limits as of June 1, 2016, it is not surprising that most policyholders either did not read the documentation sent or did not understand the impact of the change. Realizing this flaw, Erie Mutual Insurance made a committed effort to contact every auto insurance policyholder to advise, discuss and offer an optional increase. Serious consideration should be given to the benefits effecting medical and rehabilitation limits, as well as income replacement (other accident benefit coverage are also important, but the impact of those identified are significant).
Insurance Prices Vary by Company
You will find when shopping for auto insurance that there may be large differences in premium between the companies you contact. Each is considering their own analytics and historical data in determining what they feel is an adequate premium for the risk insured. We recommend that you ask questions of each insurer, including processes and what to expect in the way of claims handling and customer service. If at all possible, ask a friend or relative about their insurance company and any good or poor customer experience they have had in the past. We believe that every policyholder expects more for their insurance premium, and we promote what we offer in way of value.
Higher Deductibles Lower Premiums
Although deductibles do not apply to all aspects of your auto insurance, they can have a significant impact on the premium you pay for the physical damage coverage of your automobile. If the savings warrant carrying a higher deductible please use your discretion to determine to what level you want to self-insure or assume a higher risk yourself. Make sure you are comfortable with the change, at the time of a claim it will mean more money out of your pocket at that time.
Insurance Discounts are Plentiful
Another important reason to review coverage with your insurance agent, many factors that determine your premium also determine qualifying discounts. As your situation changes from time to time so can the rate you pay and the discounts you qualify for on your automobile insurance. Be sure to ask for an explanation of all discounts offered by the insurer, do you qualify and what is the effect on your overall premium?
Many Factors Impact Your Rate
Never expect that your auto insurance rate will be the same as a friend, relative or neighbour. There are far too many variables in determining the final premium that make it next to impossible to expect the same price. Information pertaining to the vehicle including year, make and model alone can have a huge impact on the cost of your insurance, now add in driver experience, the location in which you live and the distance to work. Have you also taken into consideration driving records impacted by convictions or prior accidents? Your insurance is not an easy equation to calculate, many factors must be accounted for to know if your auto insurance rate is truly better or worse than others.
Article Written by Darcy Johnson
Erie Mutual Insurance Manager – Sales, Marketing & Business Development
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