5 Misconceptions You Have About Auto Insurance
Progressive Insurance recently released a list of the top insurance myths, taken from customer complaints fielded by more than 13,000 of their claims representatives. Unfortunately, many customers — particularly those in the online generation — have an overeagerness to buy, so they do so without reading the full terms of their policy. Here’s a look at some of the most common complaints along with the truth behind each one.
Wrong: Full coverage means that everything is covered.
“Full” coverage is a bit of a misnomer in the sense. When customers purchase auto insurance, they may be doing so based on the price of their premiums and what they can afford. That means there is a chance the coverage they think they have is only liability, which pays for damages incurred on the no-fault party. It pays nothing toward repairs on your own vehicle or any medical costs you may incur. In most states, liability is required, while holders of car loan notes will typically require comprehensive coverage until the car is paid off. And while comprehensive coverage does a fine job of living up to its name, there are still a number of things that it will not cover, namely towing, rental, and personal property.
It will, however, pick up damage not resulting from a collision, such as falling objects, fire, certain natural disasters, and vandalism. It also covers theft, glass damage, and damage caused from collision with an animal.
Wrong: Three estimates are required before a repair can be undertaken.
Too much firsthand experience with this one since the start of the year! After having two accidents, I discovered that my insurer was just fine with one estimate provided that I use an in-network repair shop. Even if I wanted to pick on my own, there was no such quote requirement, though that wouldn’t have got me out of saving and turning in paperwork.
Most insurers just need an authentic, documented understanding of what the repair will cost. If there is anything fishy going on, they’ll figure it out pretty quickly.
Wrong: I was in an accident. My insurance premium will automatically increase.
While it’s true that premiums often go up following an accident, it isn’t necessarily a done deal. Premiums fluctuate based on a variety of factors, like your personal history (think: credit score), your car, and your driving record. An accident will enter the fray and cause recalculations, but it’s possible your premium will stay the same.
Wrong: I bought a new car. My insurance company will figure it out.
Hold on there, Mr. Lack of Personal Responsibility! Your insurance company isn’t going to know anything has changed. It’s your responsibility to notify your insurance company within a certain number of days (generally 30) before they can start charging for the new car instead of the old one. And if something happens after that time, you are not covered.
Wrong: My friend borrowed my car and wrecked it. No big deal, right?
This typically falls in one of the optional coverages that aren’t attached to liability. It gets more complicated when you answer the question of whether your friend had a policy of his or her own. If they do have a policy, then it’s probable that they will have to pay first. If they don’t, you’ll have to pay via collision (to cover damages to your own car) and liability (for the other affected parties). You’re also in danger of being sued for loaning your car out to an uninsured driver. And remember: liability can protect you in the above scenarios, but it will only do so to the amount of the coverage limit. That means if you or your friend do $40,000 worth of damage and only have $25,000 limits, you’re on the hook for the remaining $15k.
As Chuck Crist of Progressive states, “Insurance can be complicated. It’s not something people deal with every day. So the more informed you are, the better choices you’ll make.”
Auto insurance is not only a legal requirement in most states, it is your guardian angel when life happens. But as a customer, it’s important to know the ins and outs of what your policy states. Don’t just sign up at the first low premium you see. Instead, take time to read it and/or consult with your agent. Best of luck getting the policy protections you want. Drive safe!