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The Smartest Way to Buy Auto Insurance (Part 1 of 4) The Smartest Way to Buy Auto Insurance (Part 1 of 4) Look at a Lot More Than Just COST, Because Comparison Between Companies is Meaningless Without Research on These Three Topics for Each Company You Are Considering: 1.complaints filed with your state insurance commissioner 2.payment practices that increase your chances of being sued 3.miscellaneous topics, such as use of credit scoring to set premiums, denial of medical treatment to their own insureds, insisting on the right to deny the consumer the right to arbitration in UIM claims, etc. So you heard or saw an advertisement for low cost auto or motor vehicle insurance and you are thinking of making a switch: DON’T DO IT until you have read about and considered all aspects of such insurance coverage. Otherwise, you might have saved a few bucks, but exposed you and your family to inferior coverage—and, in the case of some hard-nosed companies, exposure to being sued, should you ever cause an accident. We want to invite our readership to consider some of the important factors that ought to come to mind when one is selecting a company for auto or motor vehicle insurance. The airwaves are full of advertisements, and most of them feature some combination of alleged advantages in cost and fast service. The problem is, there is a lot more to auto insurance than just those two factors, and we believe the factors we list herein are MORE important than just fast service or cost. The fact is, auto insurance will most likely come to your rescue at some point, so it's imperative to purchase a worthwhile policy. The very first thing to consider is your knowledge of the product you are about to buy. How can you make a knowledgeable decision, comparing one company’s coverage to that offered by another, unless you know what each component of the policy will do for you? DO NOT COMPARE one insurance company with another until you have done the necessary research. Insurance companies and their practices just differ too much to allow one to assume certain practices are “standard throughout the industry”. For example, while your company may pay for chiropractic treatments for your eighteen months, the low-cost carrier you are considering might have a hard-nosed policy of terminating chiropractic benefits after only four months. Wouldn’t you agree that a person should know that type of defect before jumping in with a new company? Glossary of Terms to Consider When Buying Insurance: Here is a brief glossary of terms you will encounter during your research: 1.Full Coverage: You better not rely upon this term at all, since it DOES NOT MEAN that you have full, comprehensive coverage. Instead, all this term indicates that you have all the minimum coverage for your state of residence; it does not necessarily mean you will always be fully covered, since there are a lot of insurance provisions available in addition to the minimum coverage. 2.Split Limits and Combined Single Limits of Liability: Have you seen your bodily injury liability limits denoted as (25/50/25), or something similar? Split limits of liability provide for separate coverage limits for bodily injury (or Underinsured Motorist coverage). In this example, the limits are $25,000 per person bodily injury, $50,000 per accident aggregate bodily injury, and $25,000 per accident property damage. A combined single limit policy has one coverage limit for the total cost of injuries and damage, but you will rarely see them because split limits of liability are much more common. 3.Policy Limits Per Person: The maximum amount of money your insurance company will pay out for any one individual for bodily injury losses; many states have minimum required limits. 4.Policy Limits Per Accident: The maximum amount of money your insurance company will pay out for bodily injury losses for any one accident, irrespective of the number of persons who were injured. 5.CLUE: (Comprehensive Loss Underwriting Exchange) is a database of consumer claims created by ChoicePoint that insurance companies can access when they are underwriting or rating an insurance policy. What information does a CLUE report provide? The report contains consumer claim information provided by the insurance companies. It includes policy information such as name, date of birth, and policy number, claim information such as date of loss, type of loss and amounts paid, and a description of the property covered. It can include a detrimental report for each time you notified any insurance carrier of even the mere possibility of making a claim. For example, reporting a wind damage claim under your home owner’s policy, EVEN IF you never actually made a claim, will be counted against you and result in a higher auto insurance premium! For auto coverage, it includes specific vehicle information, including past claims involving that vehicle. For more information, visit the excellent site of the Washington State Insurance Commissioner: http://www.insurance.wa.gov/factsheets/cluefacts_s.asp 6.Credit Scoring in Premium Pricing: Many insurance companies feel strongly that a mediocre or bad credit rating means you're a high risk driver. A credit score is a number insurance companies assign consumers based on their credit history, such as bill-paying history, the number and type of accounts they have (including “zero balance large open credit card account), late payments, collection actions, outstanding debt and the age of their accounts. For more information, visit the excellent site of the Washington State Insurance Commissioner: http://www.insurance.wa.gov/factsheets/creditscoring_s.asp 7.Bodily Injury Liability: It's the part of liability coverage that insures you against the injury you cause to others in an auto accident. It consists of two figures. One limits the cost of injury coverage per person injured, and the second limits the total dollar amount of injury coverage (for everyone injured) in any single accident. 8.Property Damage Liability: It's the part of liability coverage that insures you against the cost of damage to another's property caused by you in an automobile accident. "Property" includes other cars, houses, fences, telephone poles, etc. 9.Uninsured Motorist: Uninsured motorist bodily injury coverage pays for medical expenses, lost wages, and general damages (e.g., pain and suffering, loss of enjoyment of life) when policyholders, authorized drivers, or passengers are injured in an accident caused by a driver who has no insurance coverage. It can cover members of the owner’s family household. It usually consists of separate limits for bodily injury and property damage, so you will have to insure your own property against injury from another person. This policy is required in some states. 10.Underinsured Motorist: Underinsured motorist bodily injury coverage, pays for medical expenses, lost wages, and other general damages when policyholders, authorized drivers, or passengers are injured in an accident caused by a driver who has insufficient coverage. It can cover members of the owner’s family household.It typically pays the difference between the at-fault driver's liability limit and the holder's policy limit. There are separate limits for property damage and bodily injury liability, so you will have to insure your own property against injury from another person. This coverage is sometimes combined with uninsured motorist coverage under one policy, and may be required in some states. On to Part 2 About the Author Jeanine Steele is an editor with SettlementCentral.Com(http://www.settlementcentral.com), the online resource for self-help do-it-yourself personal injury claims.
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