Why You Hate Car Insurance – Regardless of Your Carrier
Because there are so many components to car insurance, most consumers don’t understand what they are buying. That leads to buying the lowest value or opting out of something you probably should have gotten. Many consumers involved in a car accident are usually frustrated with the claims process and ultimately the results.
Car insurance has to be one of the biggest frustrations of the Industrial Age. We can make cars on assembly lines and have them even drive themselves. Yet we can’t figure out how to make car insurance easy-to-understand.
Buying Auto Insurance Legal Requirements
When buying car insurance, start with what you need before you worry about price. Cost of auto insurance is contingent on the year, make and model of your car. Rates are also affected by driving record and coverage options. Understand the requirements before you spend a dime.
What Affects My Car Insurance Rate
Your car insurance rate starts with the type of car you have. Newer cars tend to have loans or leases and are more valuable than older cars. Bigger automobiles like trucks and SUVs can also inflict more damage and injuries in an accident. Your car insurance agent will need this information to start a quote.
He will then need the driver’s information. A person with fewer years driving experience is a higher risk and this more expensive than someone driving for years. Take note that it isn’t really the age but the years driving. So someone who starts driving at age 25 has the same experience as someone starting at age 16. Rates are higher until you get more experience.
Accidents and tickets also increase rates because they indicate higher risk. A driver not following the rules endangers others.
Understanding the Auto Claims Process
You did your research and feel you made a great choice about the auto insurance company you chose (I feel like I’m about to recite a Liberty Mutual commercial.) good driving record and then it happens….
You see where this is going. Its a bad day just being in a car accident. Even a minor one can have your heart racing and freaking out. Crazy as it sounds, even as an insurance agent, when I’ve been in an accident I’ve immediately wondered if I was paid up and if I had enough insurance coverage.
Crazy since my bills are on autopay and why wouldn’t I have the proper coverage? But crazy things happen in life.
What Happens After Auto Accident
Right after the accident, you want to make sure everyone is okay and determine if the cars are operable. Make necessary calls to emergency personnel and tow trucks. Then make the claim with your insurance company either using the popular apps available or calling your agent.
Claim Confusion #1: Why Isn’t My Agent Handling My Claim
You aren’t at fault so your own agent is telling you to call the other guys insurance. Huh? I know you’re thinking; don’t I pay this guy to handle my needs?
Yes, you do. And yes, you can have your own insurance company handle the claim. Here’s where it gets dicey – not that I agree with how this works, just telling you how it is – if the other party delays in filing a claim, your insurance company will fix your car and handle the claim. True!
But, in the process, you will pay your deductible to the repair shop. Sucks! The insurance company does what is called subrogation (remember that term) to get their money and your deductible back. Okay, maybe not so bad? Subrogation can take a long time – like months!
Claim Confusion #2: Why Do I Pay A Deductible If It Wasn’t My Fault
If the other party disputes the claim at all, your insurance will evaluate the cost to fight the other party and win or just settle for paying the claim. Sounds stupid but it’s often cheaper to do so. If you paid your deductible, you might have a hard time getting that back if the insurance company doesn’t gets its money back. Sucks!
Keep in mind, your insurance company could decide to do all this and still not have the claim count against you – which is good. If you aren’t at fault, your premium shouldn’t go up.
Claim Confusion #3: Your Car is Totaled Out
This has to be one of the most frustrating things in auto claims for consumers. It was a fender bender. Nothing else. And that leads to you otherwise perfectly maintained car to be totaled out. Totally sucks!
What’s going on here? Again, don’t get mad at me. I just want you to understand the process so you can decide if that deductible is worth it.
Two things are merging together in this problem:
- Cars are designed to crumple as part of people protection, thus small impacts tend to leave bigger damage zones
- Car parts are more expensive. And even slightly older car parts get pricey because of quantity.
This goes back to what is in the best financial interest of the insurance company – if it costs more than the residual value of the car to fix it, chances are you’re getting a check. I’m sorry. I really am.
Claim Confusion #4: Getting the Check
Totaling out a car means title needs to be signed over, keys delivered in exchange for the check. There are some official documents that need to be notarized and you are handed the check. Not totally horrible – just bothersome.
Until you realize that there was still a lien for three more payments on the car and the check is made payable to both parties. That’s right:
Can you just keep cash from a car insurance payment and not fix your car?
Claim Confusion #5: Thought You Had Full Coverage
Full coverage can mean a lot of different things to different people. For some, it means the minimum state requirement. For others, it means high liability limits, comprehensive and collisions. For yet others, it means also having extras like roadside assistance and towing.
Car Insurance FAQs
What is the Best Way to Save on Car Insurance?
Shop around for the best rate and always check with your existing carrier to make sure you are getting all possible discounts. When buying a new car, look at different options and get quotes before you buy; the difference could be significant. Keep good credit and always try to bundle with other cars or policy types like homeowners or renters insurance.
Carriers know it is hard to be the lowest rate all the time yet they continue to advertise auto insurance based on low rates. Most carriers don’t want to be the cheapest, they want to be the most effective. Consider the difference of what you get for an extra buck or two every month.
Don’t yell at me if you discount fell off. Simple little things like not reporting your mileage could lead to higher renewal rates. If you suddenly aren’t driving 10,000 miles more a year, you should be okay to get the discount reapplied. This goes for other discounts as well. Just check, everyone is human except the computers that should be properly tracking it. But they are given info by humans, so we will leave it at that.
We talked about older cars and coverage. If you have an older car, specifically one that is paid off, check out the value online. Determine the difference between carrying comprehensive and collision on your car.
Why Did My Car Insurance Go Up for No Reason?
Rates can go up for drivers who have the same (a year older) car, no accidents and didn’t move. Auto premium rates are constantly changing with carriers for a variety of reasons, the least of which might be your consistent driving record. Car safety ratings change, an area’s accident history and overall state insurance commissioner rating requirements can all increase your rate.
This is extremely frustrating especially for loyal customers who remain with the same company for years. It doesn’t make sense that an older, depreciating car becomes more expensive to insure over the year. Especially if a person has one more year of good driving history and hasn’t made any geographic changes.
The best solution is to talk to your agent or shop around. Make sure if you shop around, you compare the policy coverage options line item by line item between carriers. You don’t want to change policies and realize you have half the coverage that you thought.