Most people would rather have invasive surgery than meet with their insurance agent, says Eustace Greaves, founder of Brooklyn, N.Y.-based Greaves Financial Services. But speaking with an agent or reviewing your policy only when you're filing a claim is a big mistake.
Failing to keep your policy up-to-date may mean you are paying more for auto insurance than you have to, or worse, you may not have enough coverage, which could mean you wind up being on the hook for repair or medical bills.
Here are 10 warning signs that your policy needs to be reviewed and updated:
There can be many changes in a person's life over the course of a year and a number of them could lower your insurance premiums. Chrissy Nigro, of the Nigro Insurance Agency in Philadelphia, points out just a few, "You may have gotten married, graduated from college or purchased a house. All of these things will drop your insurance costs."
According to insurance broker Jeffrey Wingate of Freeway Insurance, even simple changes could result in a discount. If you decide to receive your bills online and pay your bill through electronic transfers, you should notify your agent because you will likely qualify for a discount, says Wingate. "If your teen driver is now carrying a B average or recently took a defensive driving course, you could be due a discount."
There are many reasons why you should read your renewal declarations page, and some of them may end up lowering your premium. It's possible that you may be paying for coverage you no longer need, or you may need to add coverage.
Verify that all drivers are listed on the policy, and that you are getting every discount you are entitled to receive. Remember, things like a job change, joining a carpool, or your car getting a year older can affect your premium. Read your renewal declaration and then call your agent for a coverage review.
Life changes can lower (or raise) your premium and moving is a big one. Did you buy a house? Bundling homeowners and car insurance will often result in a big discount. Simply moving to a different part of town could affect your premium as well. Moving to a higher crime area could result in a spike while a safer neighborhood should lower your insurance costs.
Be sure to be truthful. Intentionally misleading your insurer about your address to save money on the premium could result in a cancelled policy or even jail time. "This would be misrepresentation, a form of insurance fraud." says Penny Gusner, consumer analyst with CarInsurance.com. "Penalties vary from state to state but typically include harsh fines and possible jail time."
This is not as uncommon as you would think. "Many people don't understand their coverage until they sit in front of an attorney and learn the consequences of their decisions." says Kevin Foley of New Brunswick, N.J.-based PFT&K Insurance Brokers. Being unaware of the amount and type of coverage you have is a huge mistake.
According to ISO, an insurance risk information service, roughly 20 percent of people who currently have car insurance only purchase the minimum liability coverage required by state law.
If you are at-fault in a serious car accident and are only carrying the minimum liability coverage, all of your personal assets could be at risk.Your car insurance agent can educate you on the various types of coverage available and make sure you are fully protected.
In addition to boosting your liability coverage for bodily injury and property damage you should also assess whether you need optional coverages. For instance, you may want to carry comprehensive, which pays for damages if your car is vandalized, flooded, hit by a fallen object, catches on fire or needs repair after colliding with an animal. Comprehensive also covers vehicle theft. Another optional coverage is collision, which pays for damage to your car when it hits, or is hit by, another vehicle, or another object.
While you may consider it an oversight, your insurer might consider it fraud. In addition, any claims involving your young driver may be denied.
All insurers have different policies but according to Wingate, "Most insurance carriers require any operators, whether they are licensed or simply have a driving permit, to be listed on the policy."
If your unlisted teen is involved in an accident, you may be on the hook. Some insurers will cover the accident but back-charge you for the premiums from when they were licensed. Other insurers may deny your claim and possibly drop you as a customer.
The less you drive, the lower your premium. If you changed jobs and your commute is significantly shorter, let your agent know and ask to recalculate your total annual mileage. In almost all cases your premium will drop.
Teen drivers will often double your premium but once they head off to college you may qualify for a discount. According to Greaves, "While it varies by insurer, if your child attends school at least 100 verifiable miles from home and does not have access to your car, you should be able to qualify for a serious discount."
Be careful about dropping college kids from your coverage. If they come home for any extended period of time -- for instance summer or holiday breaks -- break - you will need to add them back on your policy.
While that old jalopy is probably filled with memories, it usually makes no sense to carry full coverage on it because it will likely not be worth enough to repair. Nigro advises dropping collision and comprehensive, which are optional. "Liability will protect you if you hit someone but your own vehicle will not be repaired."
In this case you may still have time but your insurer will probably not be happy. Gusner explains, "There are time limits and typically it varies by the type of claim you are filing. Property damage claims tend to have a shorter period of time than bodily injury claims. The shortest period is usually a year."
Despite having a year or more to file, Gusner recommends not waiting, "It's always better to file as soon as you can. Remember, every insurer has its own reporting requirements so make sure you read your policy."
The legal landscape can be a bit different. According to K.C. Williams, a personal injury lawyer with Tampa, Fla.-based Williams Law Association, "The statute of limitations on filing a claim against the at-fault driver for personal injuries is usually measured in years. In Florida, as an example, victims have four years to file a claim against the at-fault driver."
If your rates keep going up despite a clean driving record and no claims, it's time to compare auto insurance rates from at least three companies and consider buying a new policy. "It's not always a rate increase that pushes a premium up." says Foley. "Sometimes insurance companies have old or outdated information."
If it turns out to be a rate increase, sit down with your agent and ask him or her to shop your coverage around. Industry experts advise shopping your car insurance on a yearly basis.
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