Monday, September 26, 2011

Common Car Insurance Myths

Common car insurance myths
There is a lot of incorrect information floating around about car insurance these days. Some of it goes back a  number of years while some of it has emerged with new technology. Where ever the information came from, it can cost you money (through increased premiums or lack of insurance coverage) if you are making decisions based on faulty information. So let's clear up some of the common car insurance myths once and for all.

1. The color of your car affects your insurance prices. NOT TRUE! Auto insurance companies base their rates on the safety features of a vehicle, the costs for repairs and other factors such as likelihood of theft. They also use driver information to determine rates, but they do not base rates on the color of the car. Most insurance companies don't even ask for the color of your car. Certain Makes and models generate more claims than others and therefor have higher insurance rates, but color is not one of the factors.

2. If I let someone borrow my car, they're responsible for any damage if they have an accident. NOT TRUE! In most situations, if you let someone borrow your car, your car insurance is going to extend to the person driving the car. In other words, car insurance typically follow the car, not the driver. So, if you let your friend borrow your car and they crash it into a tree, it will be your insurance company (and your deductible) paying for the claim! However, if your insurance gets maxed out, your friend's policy can be accessed for the additional costs.

3. My insurance company can cancel my policy or raise my rates at any time. NOT TRUE! In most states, insurance companies can only cancel your policy or raise your rates at the policy renewal (unless you are making changes to your policy that increase premiums such as buying a new car). Even if you have a couple of accidents, you will most likely not see the changes to your premium until the next renewal.

4. The laptop stolen from my car is covered under my auto insurance. NOT TRUE! Personal property (such as laptops) are not a part of your car and therefor not covered under your car insurance policy. All personal items are actually covered under your property insurance policy, like you home or renters insurance. Unless something is physically attached and a permanent part of the car, there is no coverage provided under your car insurance policy. Your home insurance, on the other hand, extends some coverage to items that are in your car or any where else outside of the home.

These are just a few of the common myths about car insurance. If you base your insurance decisions on these or other myths, you may find yourself not buying the proper coverage or buying coverage you don't necessarily need. Talk to a local, professional agent - like Robert Edgin, 719-685-8585 - about your personal situation and get the facts about car insurance.

Wednesday, September 21, 2011

Renting A Car On Vacation - Should You Buy The Rental Insurance?

Hooray, it's vacation time! Time to get away and enjoy some well deserved down time. You've made all of the arrangements - booked the flights and the hotel, reserved your rental car, arranged for a pet sitter - and now it's time to get out of town.

Off you go, getting to your destination was a breeze and now the last thing to do is sign the rental car paper work and then the rental car company hits you with the big question, "Are you going to buy the rental car insurance for a rediculiously expensive price (my words, not theirs) or risk your entire financial life (my words agani) by declining coverage?". Here's what you need to know about insurance to cover the rental car.

Does Your Car Insurance Extend To Rental Cars?
You'll need to check with your local, professional agent for answers specific to your policy, but in general, YES, your car insurance coverage will extend to a rental car. If you have good liability limits, comprehensive and collision on your policy than in most cases you will have the same coverage apply to a rental car that you are using for personal use. If you do NOT have comprehensive and collision on your auto insurance policy, you will NOT have it for the rental car either. So, full coverage on your car equals full coverage on the rental car.

What Is NOT Covered When Renting A Car?
Same disclaimer applies here, you'll need to check your specific policy but in general the loss of use is NOT covered by your personal insurance if you are in a rental car. Loss of use covers the amount of money the rental car company is losing by not being able to rent out a crashed car while it is being repaired or replaced. Here's an easy math example: You rent a car for $25 per day but crash it. It needs to be repaired for 10 days x $25 per day = $250 in loss of use. Your insurance policy will (most likely) not cover the $250 which means you will be responsible for paying it.

Is the loss of use coverage worth buying the rental car insurance? That depends on the math. If you are renting a car for 7 days and the insurance costs are an extra $22 per day that equals $152 in extra costs to cover the possible $250 in the example of 10 days of loss of use. However, if you're renting a car for 1 day, that's only $22 extra to cover the possible $250. Is it worth it? That is an answer you'll have to answer for yourself, but here's one more factor to consider; the rental car doesn't always charge for loss of use. If they have 10 more cars on the lot that could be rented instead of the one you crashed, do they suffer a loss of use? If they do not suffer a loss of use, will they try to recover the $250?

Two More BIG Considerations!
If you are a client of a company that offers some type of client reward for being claim free (like the 25% ANPAC refunds each year for being claim free*) you may want to consider paying for the rental car insurance so that any claim would be paid by the rental car insurance policy and NOT affect your reward. The chances of you crashing a rental car while on vacation are probably no greater than crashing your own car, but at least you would not lost your Cashback* reward if you are involved in an accident.

Most rental car insurance does NOT have a deductible. If you have a $1,000 deductible on your personal insurance policy, you would be responsible for the same $1,000 deductible if you crashed the rental car and your personal insurance was paying for the damages.

So, you've got some options when it comes to paying the extr costs associated with the rental car insurance. At least you know what you're facing the next time the rental car rep throws the paper work in front of you and stares at you intensely while you ponder whether or not the extra insurance is right for your personal situation.

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