Things to Know about Auto Insurance

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As the fall season brings foliage and an increase in road trips, there are many ways to ensure you have adequate car insurance and that your car is in good condition and well prepared for those long autumn road trips.

“Something there is about a tree,” wrote poet Joyce Kilmer in 1913, and he was spot on for thousands of people who will take to the road by car this season to see the multicolored autumn leaves in all their glory. New England is a prime example of states where people will enjoy the autumn countryside, compensate for that missed summer vacation, or both.

Cars have certainly improved since 1913, but as the fall season brings foliage and an increase in road trips, you can still benefit from ensuring you have adequate car insurance and that your car is in good condition and well prepared for those long autumn road trips. While there’s a lot to know when it comes to auto insurance and choosing the right policy, Myles Holley, an Executive Insurance Professional at Barnum Benefit Advisors, LLC, broke down some common misconceptions and important things to know. Read on for all the details.

The Purpose and Types of Auto Insurance

Many people don’t fully understand that auto insurance is designed largely to protect. “A lot of people think auto insurance is just meant to fix their car if they get into an accident,” says Myles. However, while available, that aspect of auto insurance is completely optional.

According to Justia, “Drivers are required by state law to buy certain types of auto insurance, while they have the option to buy additional coverage if they choose.” Liability coverage, which is in most cases mandatory, “will apply when someone is hurt or their property is damaged in an accident that you caused.” Collision coverage on the other hand is completely optional and “pays to repair your own car’s damage when you hite another vehicle or an object such as a lamppost or fence. It may also pay if another driver hits your car and doesn’t have enough insurance to pay for the damage,” according to NerdWallet.

So, if you don’t have collision coverage and get into an accident that damages your car, you may not be covered for repair or replacement, says Myles, something many people aren’t aware of.

Factors Impacting Your Premium

Believe it or not, red cars don’t cost more to insure, according to Myles – “First and foremost, color has nothing to do with insurance. It has no impact on it whatsoever.” Instead, insurance companies often consider driving history, credit score, tenure with other insurance carriers, billing history, and gaps in coverage.

When it comes to shopping around for a new quote, tenure is your friend. “One of the factors insurance companies look at is how long you have been with your current provider. If you are changing insurance companies regularly (every 6 to 12 months), then you are more likely to have a higher rate than someone who has been with the same insurance company for 3 to 5 years.” It pays off to stick with the same carrier.

And while accident and violation history does impact your rate, many people assume that their premium will take a hit immediately. However, that’s not the case, according to Myles. When it comes to claims and violations, the insurance carrier can only increase your rate as frequently as your policy renews. For example, if your policy renews semi-annually, your carrier can increase your rate twice a year. Keep in mind, though, that if you have a history of accidents or claims, it can be more difficult to find or continue coverage.

If you’re considering purchasing auto insurance, here are three things to keep in mind:

  1. To avoid surprises, run a C.L.U.E. report. According to Forbes, “A C.L.U.E. (Comprehensive Loss Underwriting Exchange) report provides a history of your property insurance claims for homes, rentals, and vehicles.” When you’re shopping around, try to have a C.L.U.E. report run because “it’s completely free for any insurance company to do, and it’s going to get you very close to a finalized quote,” says Myles.
  2. Honesty is the best policy. “A big question we get asked about a lot is, ‘I have a 16-year-old who just got their license. Do I have to add them onto the policy?’” says Myles. “A lot of people think that since the youthful driver has permission to use the vehicle and insurance will cover them if they are involved in a claim, the youthful driver does not need to be added to the policy. However, insurance is going to question why you didn’t add them onto the policy. That’s technically insurance fraud – withholding information to pay a lower premium. Insurance will still pay it, but odds are what will happen is that [your insurance carrier] will retroactively add [your 16-year-old] onto the policy. You could get a huge lump sum premium added onto what you have, and then [your carrier] could drop your coverage after the claim.”
  3. Cheap isn’t always better. “A lot of times people brag about how cheap their auto insurance is, and cheap is cheap for a reason. If it’s something like a state minimum coverage, there’s not a whole lot there that’s going to protect you in the event you need to use it,” explains Myles. According to Justia, “Just buying the minimum amount of insurance may not be a smart decision, especially if you have significant assets. If you are at fault in a serious accident, a victim could sue you in a personal injury lawsuit for damages beyond the coverage provided in your policy. Personal liability could create a substantial drain on your resources.”

Finally, if you do decide to take a weekend trip or longer excursion this season, you’ll want to take the rural roads for at least part of the time to view the foliage. Myles, who once drove from Connecticut to Key West with his wife, offered several tips for a safer, more enjoyable, and in some cases, more affordable trip. Here are some:

  • Make sure your ID card and registration are in your glove compartment and up to date. It can be easy to overlook renewing them.
  • Know your roadside assistance options. Your auto insurer may offer a reimbursement program or mileage cap, while others will have a robust roadside assistance program similar to AAA.
  • The tires are what get you there! Check both the tread and air pressure. If you don’t have a proper tire tread gauge, no problem – a penny will do the trick. And don’t forget to check the air pressure. The owner’s manual or a plate on the side of the door will provide correct pressure.
  • Carry a kit with reflectors, road flares, jumper cables, and first aid.
  • Have snacks and bottled water in case you’re stuck on the side of the road or in traffic for a long time.
  • If you’ll be on toll roads, have cash or an E-ZPass handy.

While there are certainly many aspects to auto insurance, understanding your options and what works best for your situation will ensure you’re ready to take on the open road this fall.