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7 Deadly Sins of Buying Car Insurance - What are You Using Your Vehicle for? PDF Print E-mail
Articles - Commercial Auto Insurance
Article Index
7 Deadly Sins of Buying Car Insurance
What are the Various Options for These Different Coverages?
What are You Using Your Vehicle for?
Do you need it?
What if You Damage Another Vehicle When You're Renting a Car?
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Important Question: What are You Using Your Vehicle for?

You can get sideways with your contractors auto insurance company because you haven't been upfront about how you are using your vehicle. For example, do you drive your car to work? If so, you will pay more for auto insurance than if you take mass transit. In fact, the further you have to drive to work, the more you will pay.

* Tip. If you drive to work and tell your contractors auto insurance company you don't, you have basically committed fraud. Resist this common temptation, even if it will save you a few dollars.

* Example. Say you have an accident on the way to work. Say, also, that you have told your insurance company you don't drive to work. Your insurer could technically argue that it is not obligated to provide coverage. It is unlikely, however, that this will happen. Why? Because the insurer would have a difficult time proving that you drove every day. Perhaps this was a one-time thing, or a fairly rare event. In any case, by lying about driving to work, you've given your insurance company a good reason to cancel your policy.

Honesty is the best policy when it comes to a contractors insurance auto policy. Insurance fraud is a huge problem in this country. Claims are frequently padded with nonexistent damages. Accidents are staged. Injuries are faked.

* Fact. It is estimated that fraud accounts for as much as 25 cents to 30 cents of every auto insurance premium dollar. Think about that. If even half the auto insurance fraud in this country were wiped out in the next year, you would pay 12% to 15% less for your next policy.

Personal Car for Business, Company Car for Personal Use Do you use your personal car for business? Do you have access to a company car? If the answer to either question is yes, you could have potential coverage gaps.

* Example. Let's say you use your personal car for business. It's possible your employer is providing some coverage for you through your employer's commercial auto insurance policy. Some coverage. For the most part, the coverage is for liability only, and often this commercial auto insurance policy doesn't even apply until the limits on your personal auto policy are exhausted. (This is what insurance people call "excess" coverage.)

* Tip. You should talk to your employer about what, if any, coverage is available to you through the company's commercial auto insurance policy. That way, if you have an accident while on company business, you know who (or which insurance company) to call.

If you use your personal car for regular business purposes — trips, visiting clients, etc. — your personal auto policy probably provides enough coverage for these activities. (Assuming you have "enough" coverage to begin with.)

But what if your car is actually a source of revenue? You make deliveries, for example. In that case, you likely need a commercial auto insurance policy as well.

* Note. In fact, if you have an accident while delivering a product or using your car as a taxi, your personal auto insurer may well deny your claim. Talk to your agent to make sure you have coverage for all the business activities for which you use your car.

What about company cars? Well, they can be an insurance problem, if you use the company car for business and pleasure, and particularly if you don't have a car of your own. If you don't have a car, you probably don't have a personal auto policy. If you don't have a car (or personal auto coverage), but use a company vehicle for pleasure, you are inviting disaster if you have an accident during a pleasure trip.

* Tip. If you are in this situation, you should have what is called a non-owned personal auto policy. Such a policy can also come in handy if you don't have a car and you rent a vehicle on a trip. Your non-owned auto policy will cover you and your rental car if you have an accident. Otherwise, you would probably need to buy coverage from the rental car company, coverage that is very, very expensive.

* Tip. You can have coverage gaps even if you have a personal auto policy and use a company car for pleasure. Or if your spouse and/or children use the company car for pleasure. Find out from your employer the extent of coverage that is available for your corporate car. Once you know the extent, talk to your insurance agent about what additional coverage you might need.

How Do You Get the Most for Your Money? 11 Ways to Save Money on Your Car Insurance...

So you're shopping around for auto insurance. What do you need to know? Well, there are lots of ways — at least 11 — that you can save money. Many of these money-saving ideas may apply to you.

  1. One Insurer, Multiple Policies — Do you have a homeowners or renters insurance policy? If so, is it with the same insurance company that provides your auto insurance? If the answer is no, you're paying too much —for both policies. Almost every insurance company that sells auto insurance wants its policyholders to also buy homeowners or renters insurance from that company.

    These insurers offer so-called multi-policy discounts. Usually, these discounts are at least 10% and some insurers apply the discounts to both the auto and the homeowners/renters policy.

    * Tip. Talk to your agent about multi-policy discounts.
  2. Good Driver, Good Price? — It's no secret that the better your driving record, the less you will pay for auto insurance. But did you know that most people qualify as "good drivers" and are eligible for discounted premiums? Some good drivers pay a lot more than others, however.

    Many auto insurers are actually a collection of several insurance companies in which each caters to a certain type of driver. The worst drivers go in one company, the best in another, and a lot of people wind up in one of the middle companies. These middle people pay less than the worst drivers, but more than the best. The thing is, many of these middle people have driving records that are just as good as those who are insured by the companies that offer the lowest rates. Yet these middle people are paying more. Why?

    The usual reason is that they don't know any better. No one told them which insurance company in the group had the best prices. And, probably, no one told them there was even a group of insurance companies. If you have a spotless driving record, there's no reason you shouldn't be paying the lowest price a group of insurance companies has to offer.

    * Tip. Make sure you're getting the best discount for your driving record. Talk to your agent. And remember, be a safe driver. It will save you money.
  3. The Beauty of the Bus (or Other Mass Transit) — Do you drive to and from work? If you do, you are literally paying a premium to do so. Insurance companies charge you significantly higher premiums if you drive to work And, the longer your commute (in miles, not minutes), the higher the premium.

    * Tip. Some drivers should consider mass transit. Yes, there's a price there, too. But you will reap the savings of gas and lower insurance costs.
  4. Low Mileage, Low Price — On average, people drive 1,000 to 1,250 miles a month. That is what insurance companies consider average use. * Tip. If you drive less than the average, you could be eligible for low-mileage discounts, which some insurers offer.
  5. High - Profile, High-Cost — The type of car you drive is a major factor in what you pay for insurance. Is your vehicle a magnet for thieves? Is it more expensive to repair than most cars? If the answer to either of the last two questions is yes, you're paying more than the average car owner for insurance.

    * Note. To get detailed information on your vehicle(s) — or a vehicle you're thinking of buying — write to the Insurance Institute for Highway Safety at 1005 North Glebe Rd., Arlington, VA 22201 and ask for the "Highway Loss Data Chart."
  6. Raise Your Deductible — The deductible is the amount you pay before insurance kicks in if you have a claim. For example, if you have a $250 deductible and you have an accident in which your car sustains $1,000 in damage, you pay the first $250 and your insurer pays the balance, $750. The lower the deductible you choose, the more you pay. If you have assets, you can probably afford to absorb at least $250 and probably $500 if you have a claim. * Tip. If it's been years since you've had an accident, you may be better off raising your deductible and paying less each year for insurance.
  7. Drop Unnecessary Coverages — Let's say you have an older car, one not worth very much. There's really little point in having collision and comprehensive coverages. You don't have much to protect. Remember, too, that you have to subtract your deductible from any potential payout you might get.

    * Tip. As a general rule, any car worth less than $1,000 shouldn't have collision and comprehensive coverage. Between the deductible and the extra expense of these coverages, the cost is probably greater than the benefit. How much is your car worth? An auto d6aler can tell you, or there are plenty of books that have values of vehicles going back many, many years.
  8. Discounts, Discounts, Discounts — Auto insurance companies offer several discounts for a variety of reasons. The car has automatic seat beats, air bags, anti-lock brakes, anti-theft devices, etc. The driver is a good student, which is especially valuable if you have teenage children who will be on your policy.

    * Tip. Make sure you are taking advantage of all the discounts available to you!
  9. Taking the Defensive — Many insurance companies also offer discounts to those who have taken defensive driving courses recently.
  10. Low-Cost and High-Cost Areas — Are you planning to move? If you are, you should take into account the cost of insurance. Generally, the more urban the area, the higher the premium. The costs can vary even within a community.

    * Fact. Rates can really vary from state to state. If you're living in New Jersey, Massachusetts or Hawaii, you're paying several times more, on average, than you would in North Dakota, South Dakota or Idaho.
  11. Credit Where Is (Or Is Not) Due — Is your credit record better than your driving record? If you have a good credit record, you could be eligible for discounted premiums from several auto insurance companies.

    * Fact. Many insurers now use your credit history as a major factor in determining what to charge you for auto insurance. In some cases, with some companies, you could save money by shifting your business to an insurer that uses credit as a rating factor — even if you have a so-so or poor driving record. There is another side to this coin. If you have a poor credit history, you could save money by moving your auto insurance to a company that does not use credit as a rating factor. Many insurers do not use credit as a factor.

    * Tip. Regardless of your credit status, you should talk to your agent to make sure you have the best situation given your credit record, good or bad.
Whatever your driving record or coverage needs, you should shop around, or let an experienced insurance professional shop around, for the best deal for you. There are literally thousands and thousands of coverage options from hundreds and hundreds of insurance companies.

In addition, not only should you try to get the best deal you can, you also need to make sure you have all the coverage you want/need. Using an Independent Insurance Agent is usually your best bet to get the most value for your auto insurance dollar.

STRAIGHT ANSWERS TO THE NAGGING QUESTIONS ABOUT RENTAL CAR INSURANCE

* Example. You've just started your vacation. You've arrived at your destination, collected your luggage, and are in the process of renting a car. You've given the person behind the counter your driver's license and credit card, and now you are being asked if you want to buy "coverage" from the rental car company.



 
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