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Is there such a thing as full coverage?

Posted on October 23   By Des Toups

I hear the term full coverage all the time.  Is there really a full coverage auto policy I can buy?

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No, there is no such thing as a full coverage auto insurance policy. 

Full coverage is a term thrown out there by some agents and drivers -- and sometimes even by us -- but it doesn’t have an agreed-upon definition.  This leaves a lot of room for interpretation and ultimately for consumers to be easily confused.

Many refer to a full coverage policy as one that contains not only your state-required car insurance, such as your liability coverages, but also physical damage coverages of collision and comprehensive. That would mean you are covered if you hit someone else, up to your liability limits, and that your own car would be repaired, minus your deductible.

But to other hopeful motorists, full coverage means that they’ll have complete coverage for any incident or peril.  That type of “full coverage” policy doesn’t exist -- and if it did, it would cost a fortune.

In reality, car insurance coverages encompass a lot, but not every situation imaginable is covered.  If you load up on all available car insurance coverages, you’ll gain a great deal of protection for you and your vehicle, but there will still be gaps, exceptions and restrictions.

Instead of looking for a “full coverage” auto insurance policy, compare car insurance quotes for policies containing the coverages you need.  For instance, you may need collision and comprehensive coverage, but not rental reimbursement coverage because you have a spare car to use if one is being repaired after an auto accident.  Even if you buy rental reimbursement, it typically is capped on both per-day costs and for total outlay.

When in doubt if a coverage fits your needs, research it or ask a knowledgeable agent for advice instead of just adding it and potentially paying for coverage you don’t need -- or perhaps omitting coverage that you really should have. A good starting point is our "What Drivers Like  You Buy" tool, which shows you what drivers in your state -- married or single, homeowner or not, etc. -- most commonly choose for liability limits and deductibles.

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How do I leave my high-risk insurance company?

Posted on October 22   By Des Toups

I am with my current car insurance company because of legal problems years ago, I know I can get with a regular company now, but how do I get away from these people -- simply resign and get a new company or what?

Like many people, you’ve had some kind of violation or claim that pushed you toward nonstandard car insurance.

While standard and preferred car insurance policies tend to cover lower-risk drivers in a clearly defined, consistent set of circumstances, nonstandard policies allow insurance companies to tailor coverage to offset the increased risk that some drivers pose. That could mean limits on who can drive your car, whether you’re covered in a rental car, or how much you are paid after a claim. It changes from company to company and state to state.

Some drivers choose a nonstandard policy because it is cheaper for them, even though they have no black marks on their claims or driving records.

The good news is that nothing about a past nonstandard policy will keep you from getting a more traditional one, once the underlying claim or violation has aged off your record (usually three years).

But you do need to follow a plan: That is, you need to have a new policy in place before the old one expires, and you need to cancel the old policy in writing. (Here’s a step-by-step guide to switching insurance companies.)

Need we say we think you should compare car insurance quotes from as many companies as possible?

If you are 25 or older, have no major violations or claims on your record and have decent credit, you should find standard policies that fit your needs. You may also find that companies that offer them tend to offer a wider array of discounts as well.

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Should I lie and say I was driving?

Posted on October 15   By Des Toups

I let my girlfriend take my car to pick us up lunch. She ran into the curb and messed up my front right rim, tire, alignment and probably more. My collision deductible is $500. Should I tell my insurance company that she was driving or I was?

Don’t lie. It won’t save you any money.

When you lend your car to anyone, you are lending your insurance coverage as well. Anything that happens while that permissive driver is behind the wheel ultimately is your problem. The claim goes against your own claims history no matter who was driving.

The bigger issue is the claim itself. Your deductible covers the first $500 in damage and you apparently intend to file a claim for the amount over that. You might reconsider whether to file a claim at all.

Depending on your insurance company and your state, you could face increased premiums for even a small claim. Some companies will forgive the first accident claim, or do so for longtime customers.

Thresholds vary quite a bit. For example, we can compare auto insurance quotes for a 30-year-old single male insuring a 2012 Mazda CX-9 in Reno, Nevada, for comprehensive, collision and 50/100/50 liability.

With a clean record, we found quotes from two insurers that were quite close: $1,806 (Company A) and $1,819 a year (Company B).

But adding a single $500 claim, Company A raised its rates to $2,660 a year. Company B didn’t raise its rates at all.

Suppose this was your second claim in the recent past – something most insurers would begin to pay attention to. We added a second claim for just $750. Company A rose to $3,446. Company B didn’t budge.

But if we made that earlier claim more than just a fender-bender, with total damage of $10,000, Company B takes notice, raising its quote to $2,382.

Claims history                                   A             B

Clean record                                      $1,806   $1,819

$500 claim                                           $2,660   $1,819

$500 claim and $750 claim             $3,446   $1,819

$500 claim and $10,000 claim       $3,446   $2,382

Every company will have its own practices regarding claims. You can ask the company for a copy of its surcharge schedule so you can see them spelled out.

Over the long haul, you will pay less for insurance if you reserve it for the big things, and not small claims.

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Do I fix the truck or spend the money?

Posted on October 10   By Des Toups

A commercial vehicle ran into my truck while it was parked. I had three estimates done on the truck, and the company’s insurance company is sending me a check for the damage. Do I have to use the money toward the repair? Will the check be made out directly to me?

If the check is coming from a third party – the at-fault driver’s insurance company – it should be made out to you alone, and you are free to repair your truck or not.

Even if the check is from your own insurance company, the choice to repair your car is yours alone as long as you own your vehicle outright.

Having a loan complicates your decision.

If you still have a loan on your vehicle, you have agreed to maintain the bank’s collateral as part of your agreement. Your lender is your co-owner and will be listed as a loss payee on your insurance. It’s very likely that any claim you make against your own insurance would be settled with a check payable to both you and a body shop (if the vehicle needs repair) or to you and your lender (if the vehicle is a total loss).

A third-party settlement check – like the one coming your way – will probably be made out to you alone. Your lender may never even find out that the car was damaged. But it might.

If you had a leased vehicle, you would definitely want to make the repairs no matter whose insurance company is paying for them.

Lastly, if you make a claim against your own coverage and don’t make the repairs, you may find that the existing damage is deducted from any future claim you might make. The company won’t cover the same damage twice. It may even require that you drop your physical damages coverages of comprehensive and collision because the car is already damaged.

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