Tuesday, November 3, 2009

Saving 15% On Your Car Insurance Could Cost You More Than You Think

“15 minutes could save you 15%.”  It’s catchy, and obviously a good slogan; after all, who wouldn’t want to save 15% on their car insurance? But what do you get for your 15% savings, that’s the real question. The insurance companies advertising on TV these days focus on one thing and one thing only, cheap insurance. Cheap insurance is great, but so is protecting your assets!

Insurance was originally intended to build you a new house if yours burns down, fix your car if it is damaged in an accident, and keep you from being sued and losing your assets if you run into someone. Most insurance companies forgot their mission, duties, and responsibilities to their clients and now only know how to say two words – cheap insurance.

Geico’s goal is to save you 15% in 15 minutes; Progressive wants you to name your own price. Even Allstate and State Farm have taken the “we’re only here to save you money” approach. I’m not suggesting you should pay more than you need to for insurance. I am, however, suggesting that auto, home, and life insurance are MORE than just necessary evils. Insurance is MORE than just shopping around for price and completely ignoring your coverage. As the old saying goes, you get what you pay for!

When shopping around for the best price, try to get someone on the other end of the phone that knows more than just their company slogan. Try to find someone that’s interested in protecting your assets JUST IN CASE you have a teenage driver that makes a mistake and wipes out an SUV with a family of four inside. Spend 15 minutes deciding what the PROPER coverage is for your family before you spend 15 minutes comparing prices. After all, you’re paying a company to put your financial life back together if something breaks it into pieces.

A while back we came across a family insured with an 800# company that carried enough insurance to pay the first $50,000 for any injuries they caused others, and $25,000 to repair anyone’s cars that they may damage. The family made a good living and had some assets, so their protection was raised to $1.5 million to make sure they were properly protected. 6 months later, their son was killed in an accident on a way home from a ski trip. The accident was his fault. The accident also killed the driver of the other vehicle, and put 6 more people in the hospital. Total medical bills, lost wages of survivors, car repairs, lawsuit settlements, etc.: $1,200,000. Total out of pocket expense for the grieving mom and dad dealing with the loss of their son: $1,000. The total out of pocket with their old insurance company would have been $1,175,000, or bankruptcy and garnished wages in order to satisfy lawsuit awards.

These types of costs and lawsuits are NOT uncommon. According to a drivers.com report the NHTSA estimates the economic cost of a critically injured survivor is $1.1 million dollars. Your insurance company will pay up to the contracted limits of your policy, but if it goes above that you’re on your own for the rest.

No one wants to pay too much for their car insurance, but sometimes paying to little now costs you everything in the end.

Starting with the proper coverage BEFORE shopping for price…now that’s progressive. Price is important, and saving money is always a good thing, but it’s not the only thing. Look instead for the best VALUE – the proper protection for your family at the best possible price.

This is part one of a four part series on PROPER INSURANCE PROTECTION

By Robert Edgin

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