Even after years of arranging policies, many vehicle owners may not really be sure if they have coverage under certain circumstances or they may believe they are protected when they are not. Motorists don’t usually check with their agents and insurers to find out the exact position with their policies and hold on to a misconception for years. So, here are a few lesser-known car insurance facts, hidden details and unshared insider knowledge to help 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 insurance policies don’t include personal belongings in cars? You will be paid for the damaged or stolen auto but 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 should always keep purchase receipts to prove that you owned the items you claim for. You should always remember not to leave valuables behind. It will only take a few seconds for thieves to smash the car window and grab them, causing damage to the car in the process too.
- Car Insurance Covers Taxes and Fees, too
When a vehicle is totaled you will need to buy a replacement car and pay taxes and registration fees, which 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.
- Do You Have Coverage for Pet Injuries?
These days many people drive with pets and they may have no idea if their injuries are included. Some car insurers will pay up to $1,000 for veterinary bills for a family member’s pet, which was in the car during a collision and injured. You should always check for this option if you regularly drive with or have pets because only some auto insurance companies offer it and it may not be available in some states.
- Credit Score Affects Insurance Rates
It is widely accepted that credit score gives clues about the chances of claims and most states allow the checks when considering applicants. Motorists can save as much as 20% on premiums with good credit scores. Another little known auto insurance fact is that credit score isn’t affected when it is pulled by insurers for the purpose of giving quotes.
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.
- Brand Loyalty Can Cost Policyholders
Many people have been with the same company for many years and they haven’t even gotten a quote from another company in that time. They believe this provider will always offer them the best prices because they are loyal customers. However, they are likely to get much better rates from other companies and save a lot of money. Besides, it is widely believed that many automobile insurers use their best rates to entice new customers rather than to keep existing ones.
- 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 a series of problems later on. The better way of doing it is to contact the company and ask them to cancel because you want to switch providers. Find out when an existing policy will be canceled so that you can set up the new car insurance coverage to start from that exact moment. Talking to the existing carrier saves money since people don’t need to have two covers at the same time. Furthermore, you may be due a refund of overpaid premiums. Generally, policyholders always pay in advance for the time on risk and therefore, they are likely to get a refund even after cancellation fees.
- Auto Insurers Can Cancel Policies
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.
- You Can Save on Premiums by Paying in Full
Here is one of the 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 the premium payment is deferred that would increase the total amount. The more you divvy up the premium the more fees you may be charged. And once-cheap quotes can now cost noticeably more.
In addition, some companies offer about 5% discount when you settle at once upfront. Overall, a 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.
- 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 vehicle insurance coverage. 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 coverage. 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. A car insurance premiums are 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.
Motorists should talk to their automobile insurers or agents when they have questions or wondering about a particular risk. Nobody will complain about the questions. But people may suffer the consequences of misinformation and insufficient coverage.