The more you know the better you will prepare against possible risks involving with owning and driving a car. Policyholders would probably not know everything about coverage. Especially younger motorists learn new things every day. Being aware of essential car insurance facts, terminology, workings of price calculations and procedures can be very helpful.
There may be things you are not aware that are covered. Or there may be things that aren’t by a standard policy but most people assume otherwise. Also, there are lesser-known vehicle insurance facts, hidden details and unshared insider knowledge. Ten of those are brought to your attention below. Hopefully, they may help you in arranging better protection, choosing the right provider and finding cheaper prices.
- Belongings Aren’t Covered Even If the Car Is Fully Insured
Did you know that automobile policies don’t include personal belongings in cars? They will not compensate you for damaged or stolen possessions. You will be paid for the damaged or stolen auto. Nonetheless, the private items within aren’t considered part of the vehicle and not included in its valuation.
You probably have a cell phone, laptop and other valuable items with you in the vehicle. Normally, home content or renters policies cover those personal items you carry with you. You have to make sure that home coverage includes those items you take with you.
You should always keep purchase receipts to prove that you owned the items you claim for. Also, leaving valuable items in vehicles is an invitation for a break-in. It will only take few seconds for thieves to smash the car window and grab them, causing damage to the car in the process too. So, you should always remember not to leave visible valuables behind.
- Car Insurance Covers Taxes and Fees, too
When a vehicle is totaled you will need to buy a new one and pay taxes and registration in the process. These taxes and registration fees may be covered depending on where you live and whose insurer compensates the losses. The taxes and fees may be paid in advance at the time of claim settlement in some states while they may be reimbursed later in others. Some authorities only require companies to reimburse them if a new vehicle is purchased within a certain time after the accident. Third party’s (at fault drivers’) insurers may not be required to pay you for the cost of tax and registration.
You should spend some time to consider the level of protection offered. Actually, you should always compare quotes at each renewal and look at the new position. These little details can quickly add up when you have a claim that it is essential to make the right arrangements.
- Do You Have Coverage for Pet’s Injuries?
Liability coverage pays for the injuries you caused to third parties. You may either have a Personal Injury Protection for yourself and family or family health plan may include traffic related injuries as well. These days many people drive with pets and they may have no idea if their injuries are included. Some of them will pay up to $1,000 (or another set amount) for veterinarian bills for a family member’s injured pet.
Not all of them offer this extra and it may not be available in all states. You should always check for this option if you regularly drive with or have pets. Otherwise, you may need to look into buying a pet plan for their injuries.
- Credit Score Affects Insurance Rates
One of the lesser known reality is that credit scores affect premiums in most states. It is widely accepted that it gives clues about the chances of claims. Today, most states allow the checks when considering applicants. You may have to pay as much as 25% more for automobile insurance for bad credit.
The way carriers use credit history is a bit different from the way banks and lenders use it to assess risks. They use a credit-based insurance score in conjunction with many other well-known variables like age, gender, driving history and claims. Each uses a proprietary method when they take it into account and therefore it can affect rates more or less depending on the source.
If you want to get lower rates you really need to look after your financial affairs and keep the score high. This also helps you get cheaper interest mortgage, loan or card and increase chances of being approved. Another one of little known auto insurance realities relating to credit score is that it isn’t affected when it is pulled by carriers for the purpose of giving quotes. So, there is no reason to worry about getting a few of them.
- Brand Loyalty Can Cost Policyholders
Having set and forget mentality can make you lose out on great coverage and discounts. Today, the numbers of factors considered in calculations have turned the process into a puzzle. Underwriters use complicated software programs to take every little detail provided in the quote form into account. As a result, it is difficult to guess which one will offer lower rates for a particular applicant. And we see dramatic price fluctuations from one carrier to another.
Motorists should comparison shop at least once a year to determine they are getting good rates, instead of letting it renew automatically. The easiest way of finding out if you are paying too much is to get a few cheap auto insurance quotes online. It is quick and you can do whenever you have a few minutes spare time. You can reach to large number of them by using a comparison website like this one. Why not enter your zip code above and start the ball rolling.
There is no real reason to worry that lower prices will lead to less coverage and/or poor service. Today, there are many reputable names providing well-rounded packages, affordable prices and great customer service. We have plenty articles on how it works, choosing the right carrier, arranging sufficient protection and finding the lowest quote, if you want to research further. Simple use the search box above and enter the query.
- Stopping Payment Isn’t a Good Way to Cancel a Policy
Many people make the mistake of just stopping premium payments when they are switching. This could cause you series of problems later on. They may report the default to credit agencies that affects overall score. This cancellation due to non-payment may be shared with others as well that can affect future quotes. In addition, they may be required to report you to DMV for cancelling the liability coverage. DMV may see a new policy or write to you for the proof without checking if you have already bought a replacement. There are vehicle insurance realities like this one that may seem unrelated but they can cause many headaches.
The better way of doing it is to contact them and arrange the cancellation because you want to switch providers. Find out when an existing one will be canceled so that you can set up a new one to start from that exact moment. Talking to the existing carrier actually saves you money since you don’t need to have two covers at the same time and avoid possible problems discussed above. Furthermore, you may be due a refund of overpaid premiums. Generally, you always pay in advance for the time on risk and therefore, you are likely to get a refund even after cancellation fees.
- Auto Insurers Can Cancel/Increase Rates or Refuse Renewal
Did you know that they can cancel or demand additional premium at any time if the policyholder is found to violate any of the terms and conditions? Some firms may choose to wait until renewal and refuse to renew the coverage. Some of the reasons for these actions are; failing to pay the premium, driver license suspension or revocation, misrepresenting the facts when the quote was requested and not informing them about the material changes. For example, not mentioning that you had traffic convictions or made several claims in the past with another company may come out. Then, they may decide to cancel the policy or demand more money once new information is considered.
In such cases, they must notify the decision in writing and give you time to make alternative arrangements. They are required by law to declare the reason why they want to cancel or increase the premium. It is not the case with non-renewals. If you want to find out the reason for non-renewal you may need to request it in writing. You can look into legal options or talk to the state ins. department for help if you believe you are being treated unfairly.
Another one of those hardly known truths about automobile insurance relating to policy cancellations is that there is a 60 day binding period following an application with a new carrier. If they find a discrepancy on an application, driving or credit history and any other particulars provided they can cancel the policy within this period or demand more money. This is a legal period that allows assessment of risks involved with accepting a new business.
- You Can Save on Premiums by Paying in Full
Here is one of more helpful auto insurance facts you should know to reduce costs. You may not realize that you would spend more when you request installments. Usually, they charge set up fees and interest when it is deferred that would increase total amount. The more you divvy up the premium the more fees you may be charged. And once-cheap quote can now cost noticeably more.
In addition, some companies offer about 5% discount when you settle at once upfront. Overall, convenient looking installment plan can cost you a lot more. That is why you should always ask how much you would spend in total and if you could have further discounts for a quick settlement. Depending on the answer you may want to try and find a way of paying it in full and spend less.
Full settlements reduce paperwork and risks of cancellations due to non-payment, too. This may seem like you are being tied down for another term. However, you can switch or cancel whenever you want even when you paid in full at the start. They are used to cancellations. They will issue refunds for unused portion of premiums in case of cancellations.
- Insure a Car or Take It Off the Roads
You may think that you don’t need to worry about a vehicle if it is not used. One of the strict certainty is that you have to insure a car regardless of being driven or not if it is on the public roads. DMV will want to confirm availability of liability. Otherwise, they will write to you asking for explanation or proof.
You can submit an off road declaration with the local DMV office if you are keeping the car off the roads in a private property and don’t intend to drive. This will relieve you from the legal requirement of buying liability. Otherwise, DMV may follow up the earlier notices with fines. You should follow the process of taking a car off the road if you want to avoid being hassled and fined.
- You Must Inform Insurers when Details Change
There is a duty of disclosure condition in every policy that requires policyholders to inform of any material changes in details or circumstances. Material change is the change that would affect premiums charged. Remember that it would be based on information about you, other listed drivers, address, car, traffic convictions and several other details. So, you should talk to them when there is a change in any of them.
If you are not sure what is material or not you should tell them anyway and let them decide. The changes may result in additional premiums or refunds. If the risks were considered increased it would increase as well or vice versa. Withholding information about material facts can result in cancelations or refusal of claims in the future. For example, they may refuse a claim following a high speed accident when the policyholder has failed to tell them about two previous speeding convictions.
Now you know more about automobile insurance facts. If you have any questions or wondering about a particular risk you should talk to the agent. Nobody will complain about the questions you ask. But you will suffer the consequences of misinformation and insufficient coverage.