Buying insurance may on the surface seem simple, but is actually anything but.
Whether you are purchasing a new auto insurance policy for yourself, your family (especially if you have new-driver kids) or for your business’ sales force and your fleet of company vehicles, the act of obtaining effective, reliable auto insurance can be as complex as it is important to your bottom line.
Below are a few suggestions of things anyone should consider prior to purchasing an auto insurance policy.
ARE YOUR POLICY LIMITS RIGHT FOR YOU?
It is very important to have the proper/correct policy limits to protect your assets. You never want to be under-insured. You also do not want to be over-insured. Some might say that you can never be over-insured. However, for cost purposes, being over-insured can take a toll on the bottom line. Finding the balance is the key.
MAKE SURE YOU HAVE APPROPRIATE COVERAGE
It is key to differentiate between the coverages that you may never use compared to those that you will be much more likely to use. For example, roadside assistance may be best served by a yearly membership through the Auto Club. The key is to not pay for unnecessary coverages you simply don’t need. There are, however, many other kinds of coverage you may want to discuss with your agent/broker that could be important to you, such as rental, uninsured motorist and medical coverage, to name a few.
CHOOSE THE DEDUCTIBLE THAT BEST SUITS YOUR NEEDS
Deductible choice is and can be a very good cost saver when it comes to the premium you pay for any policy you have. It’s smart to understand the deductible system you are getting into and to discuss that with your agent/broker. Knowing when and how the deductible is used is something every policy owner should know.
TO WHAT EXTENT IS YOUR VEHICLE WORTH INSURING?
Finding the balance between covering your own vehicle so it will be fixed in the event of an accident and not covering it can be a little tricky. It really depends on a few factors: age, make and model of the vehicle, etc. Also, the overall cost to cover vs. not cover the vehicle is a factor that should be taken into consideration. If you believe you are a good driver and you have an older vehicle, there is a coverage you can buy that is significantly less expensive and will cover your vehicle up to $3,500 without paying a deductible. This coverage would come into effect in the event you are not at fault in an accident and the other person does not have any insurance. If the other person is at fault and they do have insurance, then their insurance company will cover repairs for your vehicle. With this coverage, the only way your vehicle won’t get repaired is if you are at fault.
CONSIDER WHO IS DRIVING THE VEHICLES YOU INSURE
Young drivers are expensive to insure. One factor many may not be aware of is that the longer a young driver waits to get his or her drivers license, the longer it takes to get a less expensive rate on the policy. Companies look at how long a driver has been licensed. So even if a young person doesn’t have an interest in driving, he or she should still acquire a driver’s license so the “experience clock” starts ticking in your favor.
AN UMBRELLA INSURANCE POLICY OFTEN MAKES SENSE
If you have assets, obtaining an umbrella policy is a very inexpensive way to secure them. When buying an auto policy, you may want to explore selecting a carrier that allows you to have your umbrella policy with them (even if you don’t have your home policy with that carrier).
BE CAUTIOUS WHEN PURCHASING POLICIES ONLINE
As long as you understand what you are buying, purchasing insurance over the internet or simply shopping for the best price can be okay. However, it is always better to speak with a knowledgeable insurance agent/broker if you have any doubts about anything when it comes to insurance coverage.
At the end of the day, virtually everyone is better off when they make a coverage purchase based upon the merits of the policy. You don’t have to spend exorbitant amounts to get the best coverage. My personal motto is “coverage over cost.”
Ron Reza has over 25 years experience in the insurance industry. After obtaining his degree in Security Administration, he became a senior claim adjuster with 20th Century Insurance Company. In the mid 90s, he served as a Criminal Investigator for the California Department of Insurance, Fraud Division. He also trained local and state law enforcement agencies to identify insurance and claim fraud. In 2000, he launched Proline Insurance Services, an insurance brokerage for more than 25 insurance companies. Reza currently oversees seven offices throughout Los Angeles, Orange County and the Inland Empire. For more information, contact Ron@prolineinsurance.com.
For reprint and licensing requests for this article, CLICK HERE.