Auto Insurance Car Rental

Car Insurance: Understanding Liability Coverage

2010-01-06T19:32:00.002-08:00

Understanding how liability coverage works will help you make an informed decision when taking out your car insurance policy, which will save you a lot of money and aggravation in the future. Liability insurance essentially covers any costs associated with your legal defense and other expenses incurred as a result of a car accident, which cause the injury of any of the parties involved.

One of the most common issues when it comes to liability is that often people tend to either buy too little coverage or the limits they set are inconsistent. For example, they set a higher limit on their house than they do their car, which proves how little thought people give this issue. Compare the probability of someone seriously injuring themselves in your home versus you being involved in a car accident and you will better understand why you need to take out a car insurance policy that gives you a high level of liability coverage.

The injured party in a car accident will often be awarded medical expenses incurred as a result of the injury, pain and suffering, as well as lost wages for the period he is recovering. The amount all depends on what the person does for a living, ergo their yearly income. Therefore, if you hit a banker then you could end up owing at the very least $250,000 just for lost wages, let alone medical bills or pain and suffering. Your car insurance policy will cover whatever the limit you set and you will have to come up with the balance. So if you decided to take out liability of $100,000 on your car but have $300,000 on your home, then you may have a serious problem as you will have to cover the remaining $150,000.

The amount that the injured party will sue you for depends a lot on you, namely what you are worth. So, if you have a good income, with plenty of assets, or even if you just have a good potential income you will find that the amount goes up. The problem is that if the amount the injured party is awarded is higher than your liability coverage then there is a good chance you will be pursued personally to pay the balance, even if it means covering these costs from your future income. On the other hand if your car insurance policy has a higher level of liability coverage, which comes close to what the injured party is demanding then you will have a better chance of settling for that amount.

Raising your liability limit is often not as expensive as you may think and your return on investment will be worth it. For example, for an additional $150 per year you can raise your limit to approximately $500,000, which is a small amount if you consider the consequences. Of course, this amount is likely to vary from one car insurance policy to another, but the difference won’t be extreme.

Also, you will want to be careful if you decide to take out a split limit policy, which group liabilities into three main categories. These are injuries you cause to a single person, another for all injuries caused in an accident involving two or more people and another for any damage you may cause to property in a single accident. You may think this is an excellent idea because you will have one big umbrella per accident, but this is not the case because even if your accident limit is $300,000, if your limit per person is $100,000 that is all your policy will cover. If the jury awards the person $200,000 you will be personally responsible for the extra $100,000, therefore you are much better off taking out a single-limit coverage policy.

Even if you have never had a car accident in your life, using this to justify low liability coverage is like saying that you don’t need car insurance at all because you are a great driver. If one thing is certain in life is that nothing is ever certain and the question you need to ask yourself is whether or not you can afford to be short-sighted.

Car Insurance: Is it Worth Filing Small Claims?

2010-01-06T19:32:00.000-08:00

You wake up one morning and find you didn’t hear the alarm clock. You’re already late for work, so you jump out of bed, get ready, grab a sip of coffee on your way out the door and jump into your car. You quickly back out but you are in such a rush you forget the post that’s been there for the past three years and back straight into it. You sigh, wondering what else can go wrong and quickly brush the incident off because you have a car insurance policy that includes collision coverage. You can just file a claim later.

But should you? This is the all important question. You may have a nasty surprise that after you collect the money, your following premium comes with a surcharge for the next three years and you end up paying much more than you received in the claim. Yes, it is unfair, but this is the way car insurance companies recover their losses, or better said make a profit.

When you first get your car insurance policy you are grouped with other drivers with whom you will share losses. This is usually done according to age, location, car usage and driving record, which are all factors that contribute to the degree of risk you represent for the insurance company. In other words, the higher the risk you represent, the higher your premiums will be. That’s why your rates drop when you reach 25. It has nothing to do with you becoming a better driver, but with the fact that statistically speaking people have fewer accidents once they are over that age because they have more experience and are more responsible.

However, even something as small as hitting a post can have a detrimental effect on your insurance rates and catapult you into a different category that presents a higher risk to the insurance provider. You may find it better in the long run to pay the claim yourself. Therefore you should first determine exactly what impact filing a claim will have on your insurance rates because different companies have different policies. For example, if this is your first accident in which you are at fault, some companies may not charge you anything, while other companies won’t charge as long as the claim doesn’t exceed a certain set amount which is usually under $1,000. Your best option would be to consult with your agent as he or she can help you determine whether or not there will be any extra costs associated with filing the claim.

The problem is that this little incident alone may not affect your rates, but if your spouse got a speeding ticket two months ago, you may find your rates going up by $1,500 over the next three years, making a $900 dollar claim a lot more expensive than if you just paid for the work yourself. A good agent will study you car insurance policy as well as your family driving record to make sure there are no hidden problems that can come back and bite you later on.

If your family has a really bad driving record the insurance provider is likely to completely cancel your policy and force you to take out high risk car insurance which will end up costing you even double the rates you are paying now. If this is the case then you might consider completely dropping collision coverage, as you will be paying for something that you won’t be using anyway.

If, on the other hand, you are involved in a collision that is not your fault, it is often better to have you car insurance pay for the damage, especially if your vehicle is not drivable. In this case, your insurance provider will be responsible to recover the amounts spent from the other driver’s company and they usually attempt to get your deductible covered as well, saving you a lot of time and aggravation.

Car Insurance and Risk Management

2010-01-06T19:29:00.000-08:00

Auto Insurance: Personal Injury Protection

2010-01-06T19:16:00.000-08:00

Most of the serious injuries you may suffer throughout your life will be, in all likelihood, owed to a car accident. If you do have the misfortune of being injured you will have three options from which to draw money to cover your medical bills and any lost income. The first is your personal health insurance, followed by the liability insurance of the other driver and last, but not least, is your own auto insurance policy.

The advantage to having coverage for your own injuries is that it can take months to collect from the other driver and in the meantime bills still have to be paid. Another problem you will encounter is that the other person does not have liability insurance or the limit doesn’t cover what you have been awarded. This way, your own auto insurance policy will cover either the whole amount or the outstanding balance.

There are two types of coverage for your own injuries that auto insurance policies offer, the first one being coverage for compensatory damages for injuries caused by under insured or uninsured drivers, and the second is coverage for medical bills no matter who is at fault. In the first case you will be covered for any amount that a court would award you for your injuries, including pain and suffering compensation as well as lost wages. The second will guarantee coverage for all your medical bills, even if you caused the accident.

You can clearly see the benefits of taking out such an auto insurance policy, especially if you end up involved in an accident where the other driver leaves the scene. In such a situation, the driver would simply be classified as uninsured and you would still get the full benefits, even if you can’t find the other person involved. In the case of an under-insured driver, you would first collect the amount his auto insurance policy allows for, say $100,000 as an example, and your own insurance would then cover the gap up to $350,000, the amount you were awarded by the court.

Considering that you will most likely buy an auto insurance policy with reasonable liability coverage, you should do the same for yourself because you are definitely worth just as much as a stranger. If you are still reticent, just think of the strain your family will be placed under if something does happen and you don’t have a comprehensive auto insurance policy.

However, personal injury coverage on your auto insurance policy should only be a complement to a major medical and long term disability insurance policy. The latter will provide coverage for medical bills and financial losses no matter the causes of your condition, therefore if you don’t already have one it may be a good idea to consider adding it to your insurance portfolio.

If you decide to take out an auto insurance policy with personal injury coverage there are three things you need to remember:

· Laws vary from state to state regarding coverage for medical bills and protection against personal injury;

· If you already have good medical and disability coverage through other policies, then only buy as much as the law requires you to. This will help keep your costs down;

· When buying additional medical coverage don’t make it specific only to car related injuries as that is like assuming you will only have medical expenses related to car accidents throughout your whole life.

Ideally, you will want to build yourself a comprehensive insurance portfolio that provides excellent coverage for both yourself as well as any liability you may incur. Researching all the insurance companies and the policies they offer is vital and this may take you a while but it is well worth it in the long run in both savings, by not overlapping policies, as well as support for life’s unexpected blows.

Auto Insurance and Car Rental

2010-01-05T07:15:00.001-08:00

Sometimes, vehicle risks fall into their own special category, which you probably don’t think much about until the time comes and something happens. One of these cases is car rental. You probably think very little of what you may or may not be liable for when renting a car, relying either on your personal auto insurance policy or on the one the car rental company issues. However, it is worth taking a closer look to make sure you understand exactly what you may be liable for.

When you rent a car, you may not realize that you can be subject to certain risks that your personal auto insurance policy does not cover. You will be liable for a number of things when renting a car such as:

- Direct liability for any injuries or damages you cause while driving the rental vehicle;

- You are also liable for any damage that the car sustains as a result of bad driving;

- Highly important is the fact that you will also be responsible for any damage to the car, even if you did not cause it. This is where it pays to read the fine print, because when you sign the contract you agree to be responsible for any damage the car may sustain;

- You will also be liable for any revenue loss the company incurs as a result of the vehicle being unavailable while it is being repaired.

Your personal auto insurance policy will cover you for any injuries or damages you cause while driving up to the liability limit you have taken out. In the case of damage to the car, you are only covered if your policy includes collision and comprehensive coverage for at least one of the vehicles insured under the same policy. If your policy doesn’t include these then you should consider buying the collision-damage waiver coverage straight from the car rental company. The situation is similar for damage caused to the car that is not your fault but you will have to check with your auto insurance company as well as the car rental agency to determine exactly how your policy applies because regulations vary from state to state.

For revenue that the car rental agency loses for the duration your auto insurance policy may cover a part of it, usually up to $50 per day, if you have loss-of-use coverage on one of the vehicles registered on the policy. You can also choose to by the coverage straight from the rental agency however, keep in mind that courts have ruled that rental agencies can only charge you for lost revenues if they have no other vehicles available for rent.

The coverage you can buy direct from the rental car company can be quite expensive, even if it doesn’t seem so, as it is around $10 per day. But multiply that by 365 days per year and suddenly you are looking at a huge $3,650 per year, compared to $500 for collision and comprehensive coverage on your personal auto insurance policy. You should also read the policy very carefully because often they are so full of restrictions that you may end up owing a lot of money because of a silly mistake. For example, unlisted drivers are excluded from the policy and you could end up liable for all the damages even after paying for the coverage just because you forgot to list your wife as a driver.

Of course, even if you do have a good personal auto insurance policy it may be worth taking out the extra coverage if you want to protect your rates, because if you file a claim for damage to a rental car your rates can go up by as much as 20 – 25%. If you already have a bad record then you may as well kiss your policy good-bye as chances are that your insurance provider will cancel it.