Know your facts while shopping for auto insurance

Though most people treat buying auto insurance as a tedious chore, there’s no idea buying

auto insurance if you cannot get the full benefit of it when you need it most. Here’s a list of

often missed facts that you ought to know before you start shopping for auto insurance.

Bluebook Value of your car: when you file a claim of your car, the blue book value is

taken into account. Bluebook value is simply an appraisal of how much a similar car (make

and model) with cost in your area. Insurance companies use this as a reference point to

settle your claims fairly when your car is totaled. Often people want their insurance

companies to reimburse them for the price they bought their car at, while insurance

companies take into account wear and tear and depreciation of the auto over the years.

Make sure you know the blue book value of your car when shopping for auto insurance.

Car parts OEM and aftermarket – Some companies pay body shops to replace damaged

parts of your car with OEM parts while others prefer aftermarket parts. Check with your

auto insurance company what their policy is, and then you will be able to understand one of

the reasons for the vast difference in auto insurance quotes among different insurance

companies. Make sure you know what is mentioned on your policy when shopping for auto

insurance.

Differentiate between your deductibles – Some auto insurance coverages are bought

with deductibles, which means that in case you ever make a claim against that coverage,

your claim amount will be minus the deductible which you’re supposed to pay. Let’s take a

scenario where your collision deductible is $500 while your comprehensive deductible is

$250. Before filing a claim, calculate if it’s really worth filing a claim for that amount after

paying a deductible. For example, your car gets damaged in a collision which will cost about

$550 to fix; don’t make the mistake of assuming your comprehensive deductible ($250) will

be used so you will only have to pay that amount while the rest will be borne by the auto

insurance company. In this case, your collision deductible will be used for this claim, so it

would make sense to pay of all the $550 from your pocket instead of using up a $500

deductible to gain only $50. If you’re not sure what coverages will be used to settle your

claim, ask your agent or company rep, but know your facts before you claim.

There’s no standard full coverage – If you think that buying collision and comprehensive

insurance coverages will fully cover your car against any damage or loss, you are sadly

mistaken. In the event, your car is stolen, your laptop, smart phone, leather jacket, cds or

iPod inside it will not be covered under your comprehensive coverage, these will probably be

covered under your home insurance policy. You are always covered only against the events

mentioned in your policy and nothing more. No coverage will guarantee that you will be

covered against any and every eventuality.

Two under rated but very useful coverages:

Gap insurance- This is a very crucial coverage that can potentially save you thousands of

dollars out of your own pocket if you still owe money on your car. True to its name, a gap

insurance policy is bought to bridge the gap between what you owe your car dealer and

what your insurance company reimburses you incase your car is totaled while its payments

are due. Your car insurance company will only reimburse you for the blue book value of

your car which may be significantly lower than what you have bought it for, since cars are

known to depreciate heavily within the first few years of being bought. If you have Gap

insurance, you will not have to make the balance payment from out of your own pocket and

can tap your gap insurance instead. Check if your insurance company also provides gap

insurance when shopping for auto insurance. However this coverage is of no use once

you’ve paid off most of your auto insurance installments.

Umbrella Insurance – Umbrella insurance is a good investment if you have built

significant assets in your name. This is a liability insurance policy that will protect your

future income and assets beyond the primary limits of your home and auto insurance

policies. In fact this policy is tapped to fill in any gaps between the coverages of your

underlying policies. If, for example, your car gets into an accident and causes a person

serious spine injuries where the treatment and loss of wages would cost thousands of

dollars, or someone gets into a major accident on your property and decides to sue you for

negligence, your umbrella insurance will cover all associated costs up to the policy limit, so

that your assets are not tapped. Typically umbrella insurance policies are bought in

multiples of $1 million and don’t cost too much, when you buy them from the same

company that does your home and auto insurance.

Since tailoring a sound insurance policy can be so stressful, make sure you do your

homework well to make life simpler for you in case you ever need to claim. Your aim should

be to work towards covering yourself against maximum eventualities at the same time

keeping costs under control while shopping for auto insurance.