Comprehensive coverage is one of two coverages available to repair your car if damage occurs. If you have this coverage on your vehicle, the insurance company will pay to repair your vehicle if damage is caused for things other than a collision such as damage from fire, theft, falling objects, contact with birds or animals, flood and windshield breakage. However, that is not an exhaustive list of what Comprehensive covers. If you have made modifications or customizations beyond what is factory installed to your vehicle you need to let us know so that we can add coverage for those items. Examples include but are not limited to installing an upgraded stereo system, wheelchair lifts or expensive rims.
If you have Comprehensive on at least one of your vehicles on your policy, then that coverage extends to any private passenger vehicle such as a Ford Escape, pickup such as a Ford 150, van or trailer that is not owned by you or any resident family member while in your custody or being operated by you or any resident family member. However, this does not extend to any vehicle furnished or made available for the regular use of you or any resident family member. To clarify the distinction between these two sentences, let me illustrate. If my roommate regularly allows me to use his vehicle, or I use my mother’s vehicle 3 to 4 times a week, or my employer provides me with a vehicle that I can take home with me and I use it for personal use as well, that is considered being furnished a vehicle or a vehicle being made available for regular use and therefore my Comprehensive coverage on my policy would not extend to those vehicles in those situations. However, if I’m at a friend’s house and his car is blocking mine and I need to run to the store real quick so I borrow his car and hit a deer on the way, if he didn’t have Comprehensive coverage on his vehicle then my Comprehensive coverage on my policy would pick up that claim subject to my chosen deductible.
Another example of a non-owned vehicle that Comprehensive would extend to would be if you rented a vehicle from a rental car company. Rental car companies try to sell you the physical damage waiver on every vehicle they rent but if you have Comprehensive and Collision on at least one vehicle on your policy and you are merely renting a private passenger vehicle, pickup, van or trailer then you don’t need to purchase that physical damage waiver because your auto policy automatically provides that coverage. However, if you are renting a large moving truck, most carriers exclude the physical damage for those and in that case you would need to purchase the physical damage waiver.
Lastly, Comprehensive coverage does have a deductible that you have to choose. If damage occurs to your vehicle, you must first pay your deductible and then the insurance carrier would pay for anything in excess of your deductible. For example, if you had a $250 deductible on Comprehensive and the total damages to your vehicle was $1,500, you would pay $250 and the insurance carrier would pay $1,250. Typical deductibles on Comprehensive are $0, $50, $100, $250 and $500. Compared to Collision, Comprehensive is generally much cheaper and since it basically pays to repair your vehicle for damage caused for things out of your control, most people generally go with a lower deductible. It is rare that I see someone with a Comprehensive deductible higher than $250 and most people go with a $0 deductible whenever it is offered by the carrier. Not all carriers offer a $0 deductible. However, the higher the deductible the lower your premiums and the lower the deductible the higher your premiums. Anytime you are shopping insurance, I would always have them quote the lowest deductible available on Comprehensive first to see what the premium is and then have them quote a $500 deductible to see if there are any real savings. More times than not you will go with the lowest deductible available because the difference in premium will be insignificant.
Collision coverage is the other coverage available to repair your vehicle if damage occurs. If you have this coverage, the insurance company will pay to repair your vehicle if damage occurs as a result of collision with things other than a bird or animal such as running into another vehicle, a tree, a mailbox or hitting an ice patch and hitting a guardrail. Again, if you want coverage for any customizations to your vehicle, you need to make us aware so that we can add coverage for those items.
If you have Collision on at least one of your vehicles on your policy, then just like Comprehensive, it extends to any private passenger vehicle, pickup, van or trailer that is not owned by you or any resident family member while in your custody or being operated by you or any resident family member. And just like Comprehensive, it has the same exclusion for vehicles furnished or made available for the regular use of you or any resident family member. I’m not going to provide the same examples as before, but just know that if in my previous example of hitting a deer, I instead get into an accident with another vehicle that I’m at fault for, if my friend didn’t carry Collision on his policy then mine would pick up coverage assuming I had Collision on at least one vehicle on my policy.
Just like Comprehensive, a deductible applies to Collision. However, the premiums associated with Collision coverage are typically much higher than Comprehensive coverage so typical deductibles seen are $250, $500 or $1,000. I’ve never seen a carrier offer a $0 deductible on Collision and most don’t even offer anything below $250. Since a collision is typically within your control, most people feel comfortable going with a $500 deductible on this coverage since the higher the deductible the lower the premium.
Liability is for the “other guy”. It pays for bodily injury or property damage caused by your vehicle as a result of an accident if you or your driver are at fault. On personal auto policies this is typically broken up into two parts, Bodily Injury Liability and Property Damage Liability. Bodily Injury Liability is typically listed in a format like 50/100 or 100/300. The first number is the most in thousands that the insurance company will pay for bodily injury to one person. This includes medical bills, lost wages and pain and suffering. The second number is the most the insurance company will pay for bodily injury to all individuals that sustained bodily injury as a result of the accident. So in my example of 50/100, what it means is that the limits available to pay for bodily injury are $50,000 per person up to $100,000 per accident regardless of how many people were injured. Property Damage Liability pays to repair anything that your vehicle causes damage to. That could be another vehicle, a house or a mailbox. It may be expressed in a similar format as Bodily Injury and may just be listed as “50” which would mean that you have a $50,000 limit for property damage to repair anything that you hit. One last way that these limits may be expressed would be 50/100/50. In this case, the first two numbers are the Bodily Injury limits and the last number is the Property Damage limit. Each state has their own minimum limits required by law that you must carry. In the state of Virginia, those limits are $25,000 per person up to $50,000 per accident for Bodily Injury and $20,000 for Property Damage Liability. However, these minimum requirements are outdated and those that carry these limits find themselves quite frequently with insufficient limits if they get into a bad car accident. With rising medical care costs, rising car values and being in such a litigious society, the minimum we recommend regardless of your situation is 50/100/50 limits. Just think about how many vehicles today are selling for $50,000 or more. If you were to get into an accident and total another vehicle worth $50,000 but only had the state minimum requirements of $20,000 then the other $30,000 would have to come out of your pocket, possibly through wage garnishment or a lien against you. The cost to increase your limits from the state minimum to 50/100/50 can sometimes be just a few dollars a month and well worth it for that added protection. Also, when determining your Property Damage liability, don’t just take into consideration the cost of the vehicle you may hit. You could possibly cause a tractor trailer worth $80,000 to overturn that is carrying $50,000 of furniture. That alone would be $130,000 in property damage. And when it comes to Bodily Injury, what if you pulled out in front of a 15 passenger van full of people? The state minimum of $25,000 per person and $50,000 per person isn’t going to be sufficient and you could have a lien against you for the rest of your life trying to pay that off. For just a few extra dollars per month you can guard against this type of financial disaster.
The question I get asked most is if I give permission to someone to drive my vehicle will there be coverage? The answer is as long as it is reasonable to believe that the person is entitled to do so then there is coverage. So if you gave them permission to drive your vehicle, then yes, whatever coverages (liability, comprehensive, collision etc) you have on that vehicle would apply to any accident they are in.
Just like Comprehensive and Collision, Liability does not extend to vehicles that are furnished or made available for regular use to you or a resident family member. However, Extended Non-owned coverage can be purchased to buy this coverage back for Liability, Medical Expense and Loss of Income which I will discuss further below.
It does however provide Liability for those vehicles we discussed under Comprehensive and Collision such as renting a vehicle from a car rental agency or borrowing someone else’s car like in my example where a friend had me blocked in so I took his vehicle to the store. Unlike Comprehensive and Collision, though, it would provide liability coverage for those large moving trucks such as a U-Haul so if you caused bodily injury to someone or property damage to another vehicle with the U-Haul, you would have liability coverage for that equal to the limits on your auto policy.
The last thing I’ll address with respect to Liability coverage is medical emergencies. Insurance companies don’t pay liability for medical emergencies. What that means is that if someone is driving a vehicle and they suffer a heart attack or something similar and hit your vehicle, their insurance company will not pay to repair your vehicle. You would need to have collision on your vehicle for the repairs to be made.
Uninsured Motorist coverage in the state of Virginia pays for bodily injury sustained by you or any family member who is a resident of your household, and/or property damage sustained to your vehicle, property in your vehicle or any other tangible property owned by you located in Virginia if the vehicle that caused bodily injury to you or your resident family members, or caused property damage was not insured. It also pays for bodily injury to you or your resident family members, and for property damage if caused by a vehicle that did not have high enough liability limits to pay for all of your damages. However, there is a $200 deductible for property damage as a result of an uninsured vehicle when the owner or operator of the uninsured vehicle is unknown. Additionally, it pays for bodily injury sustained by occupants of your vehicle, other than just you or any family member who is a resident of your household, if damage was caused by an uninsured or underinsured vehicle.
Uninsured/Underinsured Motorist Bodily Injury
If you, your resident spouse or any resident family member of your household who is related by blood, marriage or adoption (including ward or foster child) were hit by a vehicle that is uninsured (no coverage) or underinsured (not enough coverage) then this policy will pay for your bodily injury. You could be in your vehicle you have insured with us, in a friend’s vehicle or could be walking across the street. As long as you are hit by an uninsured or underinsured vehicle then your auto policy will pay for your bodily injury damages.
Uninsured/Underinsured Bodily Injury will also pay for the bodily injury damages that anyone else sustains while in your vehicle. So while it will pay for you, your resident spouse or any resident family member of your household regardless of if you are in your vehicle, someone else’s vehicle or just walking across the street, it will only apply to people who are not you, your resident spouse or resident family members of your household if they are in your insured vehicle.
Uninsured/Underinsured Motorist Property Damage
To further explain Uninsured/Underinsured Motorist Property Damage I’ll have to provide several examples to illustrate.
The first thing I’d like to point out is that it says it will pay for property damage to your vehicle that is insured with us, tangible property in your vehicle insured with us or any other tangible property (other than vehicles) located in Virginia, sustained because of an uninsured (no coverage) or underinsured (not enough coverage) vehicle.
Basically what this means with respect to vehicles is that Uninsured/Underinsured Motorist Property Damage coverage only applies to vehicles that you have insured with us and they would be subject to whatever limit of Uninsured/Underinsured Motorist Property Damage you chose for that vehicle. So if you have a vehicle sitting in your driveway that you don’t have any insurance on and an uninsured or underinsured vehicle causes damage to it, you can’t have your insurance policy that covers other vehicles pay for the damage to that vehicle that was sitting in your driveway with no insurance on it.
Coverage also applies to any tangible property that is located in your vehicle that you have insured with us. So if you have a laptop, or your phone or any other personal possessions in your vehicle that is damaged, those items would be covered if you are hit by an uninsured or underinsured motorist.
You will notice that it says it applies to any other tangible property located in Virginia. This could mean someone took out your mailbox, hit your house or a shed located at your home as long as it is located in Virginia and coverage would apply. So if in the middle of the night someone hit your house with their vehicle and they didn’t have insurance or didn’t have enough insurance to pay for the damages, instead of filing a homeowner’s claim you could actually file an auto claim under your Uninsured/Underinsured Motorist Property Damage coverage. Whether or not you would want to do this is up to you because typically auto policies are only responsible for paying Actual Cash Value meaning they depreciate items where a Homeowner’s policy typically pays Replacement Cost which means what it would cost to repair or replace with like kind and quality. However, depending on how much damage occurred and the age of the property damaged it may be beneficial to file this under this coverage.
The last thing to note about Uninsured Motorist Property Damage is that if the vehicle owner or operator is unknown, basically meaning a hit and run, then there is a $200 deductible that applies. However, if you are able to identify who the owner or operator of the vehicle that caused damages is, then the $200 deductible does not apply.
Medical Expense on an auto policy pays for all reasonable and necessary expenses for medical, hospital, chiropractic, x-ray, emergency medical services, funeral expenses etc as a result of an auto accident.
The limit for Medical Expense that you have on your auto policy applies to:
You or a resident family member while occupying a vehicle or while not occupying a vehicle.
Anyone else while in your vehicle, or while in another vehicle not owned by you or resident family member, that is being operated by you or your resident family members or while in a substitute vehicle, you do not own, for one of your insured vehicles while broken down, being repaired, serviced or out of commission because of loss or destruction of the vehicle.
However, it should be noted that your Medical Expense limit does not apply to any vehicles that you own if not on the same policy or for vehicles that are provided for your regular use, such as a company provided vehicle.
You have a 2015 Jeep Grand Cherokee insured with Company A on policy number ABC123 that has $2,000 in Medical Expense coverage.
Coverage would apply in the following situations:
You get into an auto accident while driving the 2015 Jeep Grand Cherokee regardless of who is at fault for the accident. The $2,000 Medical Expense limit would be available to you, your resident family members and anyone else occupying the vehicle at that time.
You are in your friend’s vehicle that they are driving and they get into an auto accident. Regardless of who was at fault for the accident, your Medical Expense limit of $2,000 would be available to you and your resident family members if in the vehicle as well. However, your Medical Expense limit would not be available to your friend who was driving.
You are driving your friend’s vehicle which is not available to you for regular use and you get into an auto accident. Regardless of who was at fault for the accident, your Medical Expense limit of $2,000 would be available to you, your resident family members and anyone else occupying the vehicle at the time of the accident.
You or a resident family member are walking across the street and get struck by a vehicle. The $2,000 Medical Expense Limit would be available to you or your resident family member.
Coverage would not apply in the following situations:
- You also own a 1990 Honda Acord that is not insured and get into an auto accident in that vehicle.
- You also own a 1990 Honda Acord insured with Company B on policy number LMN456 and get into an auto accident in that vehicle.
- You own a 1990 Honda Acord insured with Company A on policy number ZYX987 and get into an auto accident in that vehicle.
Either way, the $2,000 Medical Expense limit on the 2015 Jeep Grand Cherokee would not be available for any of the three above situations if you, a resident family member or anyone else were injured in the 1990 Honda Acord because it is not insured with Company A on policy ABC123. The 1990 Honda Acord would have to have its own Medical Expense limit, if insured on another policy, for any Medical Expense coverage to apply.
Additional Scenarios Where Medical Expense Would Not Apply:
Your mother, friend, employer or whoever provides you with a vehicle to use for regular use and you get into an auto accident. Regardless of who was at fault, since this vehicle is provided to you for regular use, the $2,000 Medical Expense on your 2015 Jeep Grand Cherokee would not be available to you, your resident family members or anyone else in the vehicle.
What happens if you were to rent a vehicle? Would coverage apply?
If the 2015 Jeep Grand Cherokee is broken down, being repaired, serviced, out of use due to loss or destruction and you rent a vehicle as a temporary substitute for 2015 Jeep Grand Cherokee, then you, your resident family members and anyone else occupying that vehicle at the time of an accident would be covered for the $2,000 Medical Expense regardless of who was driving the vehicle at the time of the accident. It could be you, your family member or a friend driving the vehicle and coverage would still apply.
If you just rent a vehicle for personal use but the 2015 Jeep Grand Cherokee isn’t out of use due to one of the aforementioned reasons, if you or your resident family member is driving the vehicle at the time of the accident then the $2,000 Medical Expense coverage on the 2015 Jeep Grand Cherokee would apply to all persons in the vehicle at the time of the accident regardless of who was at fault for the accident.
However, if you just rent a vehicle for personal use but the 2015 Jeep Grand Cherokee isn’t out of use due to one of the aforementioned reasons, if someone other than you or your resident family member is driving the vehicle at the time of the accident then the $2,000 Medical Expense coverage would only apply to you or your resident family members if in the vehicle at the time of the accident regardless of who was at fault. The $2,000 Medical Expense would not apply to anyone who is not you or a resident family member.
If you have multiple vehicles on the same policy, Medical Expense coverage only applies to those vehicles for which you have chosen it. So if you had the 2015 Jeep Grand Cherokee and the 1990 Honda Acord on the same policy and the 2015 Jeep Grand Cherokee had $2,000 Medical Expense but you decided not to have any Medical Expense on the 1990 Honda Acord, if you, a resident family member or anyone else were injured in the 1990 Honda Acord then Medical Expense would not apply.
Also, if you had $2,000 of Medical Expense coverage on your 2015 Jeep Grand Cherokee and were in a vehicle owned by a resident family member, the $2,000 Medical Expense on the 2015 Jeep Grand Cherokee would apply to you as excess coverage but not to the resident family member because their Medical Expense limit on their vehicle, if chosen, would be the primary limit that would apply to both of you and if they didn’t have Medical Expense then they would have no coverage and your $2,000 limit would apply to you.
If you have four or less vehicles insured on the same policy, your available Medical Expense per person per accident is actually the sum of all of the available limits. However, keep in mind that a vehicle would have to have Medical Expense listed for Medical Expense to apply if involved in an accident while in that vehicle. For instance, if you had four vehicles, three of which had $2,000 Medical Expense and a fourth vehicle with $1,000 Medical Expense, the total limit available for Medical Expense to any one person in your vehicle for one accident would be $7,000. Now let’s say that vehicles A, B and C each have $2,000 and vehicle D doesn’t have Medical Expense. Vehicle A, B and C would have $6,000 available to any one person involved in an accident in those vehicles but vehicle D would have $0 available.
If more than four vehicles are insured on the same policy, then the sum of the four highest limits are available per person for any one accident as a Medical Expense limit.
However, you need to keep in mind that this aggregation is only available if they are on the same policy. For instance, if you have $2,000 Medical Expense on vehicles A, B and C insured on policy PQR123 with company M and $2,000 Medical Expense on vehicle D insured on policy ZYX987 with the same company, vehicles A, B and C have $6,000 Medical Expense coverage per person for any one accident and vehicle D would only have $2,000 Medical Expense per person for any one accident.
If more than one policy is available to be used for Medical Expense benefits, benefits will apply by looking first to the benefits payable under the policy of the owner of the vehicle that you, your resident family member or other persons were occupying at the time of the accident; then they will look to the policy of the operator of the motor vehicle that you, your resident family member or other person were occupying at the time of the accident; and lastly they will look to the policy for yours, your resident family members or the other person’s who were in the vehicle. To illustrate, let’s assume that your friend Dave was driving his friend Sally’s vehicle and you were in the vehicle as well. First they would look to Sally’s policy for Medical Expense benefits, then Dave’s policy and then yours. As the limits of Medical Expense are exhausted on each policy, they would then look to the next policy for benefits.
Lastly, Medical Expense benefits are not available if Workers Compensation benefits are available.
Loss of Income
Loss of Income does exactly what it sounds like. It pays income loss benefits to an insured who sustains bodily injury caused by an accident who can not work as a result. Typically you will see a limit of $100 per week per person. Loss of Income applies just as Medical Expense does above in all of the scenarios provided. Due to the lengthy explanation above and so that I don’t bore you with the exact same scenarios, if you want examples, just read the explanation for Medical Expense and insert “Loss of Income” wherever the words “Medical Expense” appear. They will even aggregate the limits per vehicle listed up to $400 per week per person. So if three vehicles have a $100 limit per week per person limit and the fourth vehicle doesn’t have Loss of Income, then a $300 per week per person limit is available for those 3 vehicles that have the coverage and no coverage would be afforded under the fourth vehicle. If all four vehicles have a $100 limit then $400 per person per week would be available. If five or more vehicles are listed on the same policy, each with a $100 limit, $400 is still the maximum per person per week limit that would apply.
Rental, also known as Transportation Expense, provides you with a rental vehicle if you are involved in an accident that is covered by Comprehensive or Collision coverage that you have on that vehicle. If your vehicle is inoperable due to the accident, coverage would begin immediately. However, if you are able to still drive the vehicle then coverage would not begin until it is taken to a repair shop. Typical limits are seen as $600, $900 and $1,500. Most people go with just the typical $600, however, due to rising costs for rental vehicles and possible delays in getting parts we are seeing that a lot of times that isn’t enough coverage to provide a rental vehicle while the car is being repaired. If you use one of the insurance company’s preferred vendors, they typically get discounts on rental vehicles due to the high volume. They also try and put you in a vehicle comparable to the one that was damaged. However, even at $50 per day for a rental vehicle, a $600 limit would only provide a rental for 12 days. If there were delays in getting your parts or there was significant enough damage to your vehicle, 12 days might not be enough. Or if you are driving a luxury vehicle and the cost per day was more like $75 per day that would only provide 8 days of coverage. We always recommend a minimum of $900 in rental coverage but certainly favor $1,500 just to be safe. The difference in cost is minimal and you don’t want to find yourself without a car to get back and forth to work or to take the kids to school.
Another part of this coverage that some carriers provide as another option is “Expenses incurred as a result of loss to a non-owed auto”. To illustrate this coverage, let’s assume you had a covered claim for Comprehensive or Collision and while you were in your rental vehicle you got into another accident that you were at fault for. You Collision coverage on your vehicle that was in the repair shop will take care of the damages to the rental vehicle, however, what if the rental car company now sues you for the lost income for their rental vehicle while their car is being repaired. This added coverage will reimburse the rental car company their lost income instead of you having to come out of pocket for it. This is a really cheap coverage and should be added on if you purchase Rental coverage.
Roadside Assistance or Towing and Labor
Some Roadside Assistance or Towing and Labor coverages follow the vehicle and some follow the driver. Which one it follows is carrier specific. However, regardless of whether it follows the driver or the vehicle, Roadside Assistance or Towing and Labor pays for emergency roadside assistance such as having your vehicle towed, having someone come out and change a flat tire, bringing gas out to your car if you ran out of gas, unlocking your vehicle or having someone come jump your car because your battery died. Also, some endorsements actually will provide for hotel and meals if you are broken down more than a specific number of miles away from your home, for example being more than 100 miles away from home. Also, there are sometimes options to choose from for how much the carrier is willing to pay for towing. It could be a specific limit such as $75 or $150 or it could be up to a specific mileage such as 75 miles or 300 miles. It’s always a good idea to check on these limits and to see if higher limits are available, especially given how cheap this coverage is.
To illustrate how this coverage works comparing when it follows the vehicle as opposed to following the driver, assume you have a 2015 Jeep Grand Cherokee and a 1990 Honda Acord insured on your policy. If the coverage follows the driver, you or anyone listed on your policy as a driver could be in the 2015 Jeep Grand Cherokee, the 1990 Honda Acord or even in a friends vehicle that they have their own insurance elsewhere on that requires someone to come out and change a tire and you would have coverage. But if the coverage follows the vehicle and you have this coverage on the 2015 Jeep Grand Cherokee and not the 1990 Honda Acord, if the 2015 Jeep Grand Cherokee needed someone to jump the battery you would have coverage but if the 1990 Honda Acord, or maybe you are possibly in a friend’s vehicle, needed the same assistance there would be no coverage.
Minor Violation Forgiveness
1 in 5 people get a speeding ticket every year. That doesn’t even count the number of people who get a failure to yield, texting while driving, failure to obey a traffic sign or failure to wear a seat belt tickets which are all chargeable violations by the insurance carrier, and the list goes on. Once you get a minor violation, it is chargeable by the insurance carrier for 3 years. One speeding ticket could mean your insurance premiums can go up by 20% to 30% every year for 3 years. In other words, if you currently pay $100 per month ($1,200 per year) that means an extra $240 to $360 per year in insurance from 1 speeding ticket. Minor Violation Forgiveness is a great way to prevent that from happening. With this coverage added to your policy, each driver listed will be forgiven for their first minor violation that occurs after this coverage is added. If you had a clean driving record prior to adding this coverage and then got a speeding ticket, the only difference you should see in your rate would be losing a Safe Driver discount which is typically around 5% meaning that you are saving $180 to $300 per year for 3 years. This coverage is typically minimal in cost to add on and well worth it.
Accident Forgiveness works similar to Minor Violation Forgiveness except that instead of allowing each driver to have an accident forgiven, only one new accident per policy is forgiven. So whoever gets into the first at-fault accident after this endorsement is added on gets the accident forgiven. You can expect any additional accidents to be charged beyond the one allowed per policy. However, the savings from this endorsement can be more than the savings from a forgiven minor violation. Accidents can cost you anywhere from an additional 30% to 40% a year in insurance premiums and are again chargeable for 3 years. Assuming you are currently paying $1,200 per year in premiums, that means an at-fault accident could cost you an extra $360 to $480 per year for 3 years. If you do get into an accident that is forgiven, the only difference in premium on your renewal should be the removal of the Accident Free discount which is usually around 5%. So even if you do have Accident Forgiveness on your policy and you get into an accident that is forgiven, you should still expect the premiums to go up slightly just from the removal of the Accident Free discount of about 5% but not the 30% to 40% increase from a chargeable accident. Like the Minor Violation Forgiveness endorsement, the additional premium for this coverage is typically minimal.
Vanishing Deductible is only available if you have Comprehensive and/or Collision on at least one vehicle on your policy. The reason is that those are the only two coverages that have deductibles applied to them (except Uninsured Motorist Property Damage in the case of a hit and run if you don’t know who the owner or operator was of the vehicle). Essentially how it works is that whatever deductible you choose, i.e. $250, $500 or $1,000, your deductible will be reduced by $100 for every year you are accident and major violation (i.e. DUI, Reckless Driving etc) free. Some carriers will actually go ahead and apply a $100 credit to your deductible 30 days after you add this endorsement. For instance, if you choose a $500 deductible on Comprehensive and Collision, 30 days after you add this endorsement on your deductible becomes $400. Then on your one year anniversary of adding the coverage on your deductible becomes $300 and your deductible will continue to be reduced by $100 for each year you continue to be accident and major violation free. You can’t get a negative deductible. Once it gets to $0 that is the lowest you can get so the insurance carrier isn’t going to pay you if you earned enough credits to have a negative deductible.
Total Loss Deductible Waiver
If you have Comprehensive and/or Collision on at least one vehicle you can add this endorsement on to your policy. What it does is that in the event your vehicle is deemed a total loss from a covered Comprehensive or Collision claim, your entire deductible is waived. So if you had a $1,000 deductible and your vehicle is deemed a total loss, the insurance company will not reduce the payment to you by your $1,000 deductible. You would instead get the full Actual Cash Value of your vehicle.
New Car Replacement
The Auto policy only pays the Actual Cash Value of your vehicle. Think of the value of your car in terms of what you would sell the vehicle for, not what you would pay a dealership for it. There are many on-line tools such as Kelly Blue Book that can give you a pretty good estimate of what your vehicle is worth. What you pull up on-line, however, isn’t a definitive value of what you could expect to get from the insurance company. They have their own tools to determine the value of the vehicle. However, with New Car Replacement, which is typically only available on vehicles purchased brand new within 6 months of adding this endorsement, the insurance company will pay the value of a brand new vehicle without reducing payment for depreciation if your vehicle is a total loss. To illustrate, we all know that when you purchase a brand new vehicle that the value of the vehicle drops considerably when you pull off of the lot. You can actually lose as much as 10% of the value in the first month. Let’s assume you purchase a $40,000 vehicle and 1 month later it is totaled in a car accident. The value of the vehicle may only be $36,000 at that time which is what the insurance carrier would pay you. However, with New Car Replacement the insurance carrier would instead pay you what it would cost to replace that identical vehicle with a brand new one so basically the $40,000. One thing to consider though, some insurance companies only pay for a brand new vehicle of like kind and quality for the first two years. After that they pay instead the value of a similar replacement vehicle in excellent condition without reduction for wear and tear as well as provide GAP coverage by way of this endorsement. So let’s say you purchase a brand new never before titled 2020 Ford Escape in October 2020 and then in July 2022 the vehicle is totaled. The insurance company will pay to replace it with a brand new 2022 Ford Escape. However, if instead the accident occurs in January 2023, the insurance company will then pay what it would cost to replace your vehicle with a 2020 Ford Escape at dealer retail value of an auto in excellent condition as well as any amount above the Actual Cash Value to pay off the loan of the totaled 2020 Ford Escape if there is one. Without this endorsement, they would have just paid the Actual Cash Value of the 2020 Ford Escape taking into account depreciation which most likely would have been well below the dealer retail price. They also would not pay the amount above the Actual Cash Value to pay off your loan on the damaged 2020 Ford Escape without this endorsement unless you have the GAP coverage mentioned below.
Auto Loan/Lease GAP
Auto Loan/Lease GAP insurance is something that a lot of people purchase directly from the car dealership. However, it is much cheaper to purchase on your auto policy and can save you hundreds of dollars in doing so. Having this coverage added will make it so that in the event of a total loss on your vehicle, if you owe more on the vehicle than what it is worth at the time of the accident the insurance carrier will pay the Actual Cash Value of the vehicle as well as difference between the balance owed on your vehicle and the Actual Cash Value. This saves you from still having a loan to pay on a totaled vehicle. To illustrate, if you still owe $20,000 on the vehicle and the Actual Cash Value of the vehicle is only $15,000, in the event of a total loss the insurance carrier will not only pay the $15,000 but pay the remaining $5,000 that is owed on the vehicle to finish paying off the loan. Without this endorsement the insurance carrier would only pay the $15,000 and you would still be left owing the bank $5,000.
Original Equipment Manufacturer Parts (OEM)
Insurance carriers try to lesson the cost of repairs as much as possible and one way they do this is by using what is called “aftermarket parts”. Aftermarket parts are parts for your vehicle that were not made by the original manufacturer. Typically there is no problem using these parts, however, in rare occasions they may not fit as well as parts that come directly from the original manufacturer. Adding OEM, or Original Equipment Manufacturer, to your policy provides a way for you to have parts installed on your vehicle that were made by the original manufacturer i.e. GM, Ford, Tesla etc.
This endorsement provides $200 of coverage for tapes, records, discs and other media if damaged during a covered claim in your vehicle.
Extended Non-Owned coverage provides coverage for liability, medical expense and loss of income benefits for vehicles that are furnished or available for regular use of the person that it is added on for. Previously we discussed how vehicles that were furnished or made available for regular use were excluded for liability, medical expense and loss of income purposes and with this endorsement you can buy that coverage back. I’ve seen it cost as little as $10 every 6 months to add it on. Examples of this would be employer provided vehicles that maybe you take home with you at night and use for personal use on the weekends, your mother let’s you use her vehicle on a regular basis, you have a roommate who let’s you use their vehicle on a regular basis, you are a caregiver who uses the vehicle for whom you take care of or maybe you work for the government and they provide you a vehicle. If you work for the government and are provided a vehicle it is important to make that distinction when discussing this coverage with us as the form differentiates between government use and all other.
For the most part, business use of a vehicle insured on a personal auto policy is prohibited and if you use your vehicle for business use and it is insured on a personal auto policy then the insurance carrier has the right to deny any claims that come in as a result of the use of the vehicle. Prohibited use examples would be taxis, delivery of food such as a pizza delivery person, contractors etc. Some professions such as realtors can have their policy endorsed as “Business Use” but for the most part, if you use your vehicle for business purposes as in my previous examples then you need a commercial auto policy. Depending on what your operations are and the type of vehicle used, sometimes a commercial policy can actually be cheaper especially for contractors.
Customization of Your Vehicle
An Auto policy is only responsible for the vehicle the way it comes from the factory, however some carriers provide some coverage of $1,000 for stereo equipment permanently installed after it was originally manufactured. Any modifications or customizations to the vehicle beyond this would have to be added to the policy to provide coverage. Examples of this are expensive rims, permanently installed stereo equipment, wheelchair lifts, special carpeting, custom murals, paintings or other decals or graphics.
By adding the Telematics discount to your auto policy, some carriers will give you immediately a 10% discount. The way it works is you can either download the app or install a device that attaches just under the steering wheel and what the insurance carrier is doing is they are monitoring your driving and looking for hard brakes, rapid accelerations and time driven between 12AM and 5AM. They would only do this for the first 5 months or so and at the end of the monitoring period they would apply up to a 30% to 40% discount, depending on the carrier, based on your driving habits which you would receive that discount for the rest of your life as long as you have the same policy number with that carrier. After the 5 months is up you would either return the devices back to the insurance carrier or delete the app because they would no longer be monitoring your driving habits. The average discount applied after the monitoring period is typically just over 20% so most people are getting more than the immediate 10% discount that is applied just for trying this. Also, if your driving habits don’t qualify for a discount at the end of the period, there isn’t any penalty, they just remove the 10% discount that you initially received so they don’t use it as a way to surcharge, you can only save money by doing this. And if it ends up that you don’t qualify for a discount, at least you saved 10% for the one policy term.
The difference between using the app and the device that plugs into your car is that if you use the app, everyone in the family who is listed as a driver on the policy would need a smartphone and would have to download the app. Then every few days you would need to go in and tell the app if you were the driver or the passenger for the trips it logs. If you don’t tell it, it will just assume you were the driver so if you are a passenger frequently in other people’s cars it would be a good idea to go in every few days because you wouldn’t want someone else’s driving habits to show as yours. The app also tells you throughout the period what your estimated discount would be.
The device, on the other hand, gets mailed to you and you have to plug it in to your car just under the steering wheel. It is extremely easy to do but we install it for our customers that don’t feel comfortable doing it themselves. However, directions are typically included for the installation when they mail the device to you. The device will record every time the vehicle is driven. Also, you would need to mail the device back to the insurance carrier at the end of the period. If you have teenagers in the house who most likely won’t remember to log into the app and put if they were the driver or not, or if you are say a truck driver who drives a lot during the night time then the device would probably be the best option because you wouldn’t want it picking up those other driving times if you drove a company vehicle at night for work or if your teenager is in other friend’s cars constantly because the app would pick that up and if they don’t tell the app they were the passenger it will just assume they were the driver.
If you hate mail like I do then going paperless is a great way to cut down on your mail as well as save some money. Carriers are always looking for ways to cut their costs and they are passing their savings on to you by offering discounts that could save you $5 to $10 per month just by having your monthly statements and policy declaration pages emailed to you instead of regular mail. If you have an email address that you check often, this is the way to go to save money and help the environment.
EFT or Automatic Payments
Having your premiums automatically drafted out of a checking or savings account or charged to a card is a great way to make sure you never incur any late fees, have a policy cancel for non-payment as well as save money. Some carriers give discounts by having your premiums drafted out of a checking or savings account or even charged monthly to a debit or credit card. The savings could be as much as $10 per month. We typically advise customers to have it drafted from a checking or savings account as opposed to charging it to a card because cards expire which may result in the charge not going through and your policy accidentally cancelling for non-payment of premiums.
I’m sure you’ve heard the phrase “Bundle and Save”. Most insurance companies offer what is called a Multi-Policy discount meaning that if you have your auto insurance and either your home or renters insurance through them as well then you get additional savings. These savings can be as much as 40%. Not only does it make sense to have all of your policies with one carrier for the savings but it also gives your agent a better opportunity to make sure that there are no gaps in your insurance coverage along with the added convenience of only having one person to contact for all of your insurance needs.
Pay As You Drive
If you drive very few miles in your vehicle, some carriers are now offering a policy that you estimate the number of miles you put on your vehicle when you purchase the insurance and then you install a device in the vehicle that monitors how many miles you actually drive it. At the end of each month, the device reports back to the insurance carrier how many miles the vehicle was actually driven and then you pay your premiums based off of that. So essentially every month your premiums would be different. However, if you drive few miles in your vehicle there are some serious savings with this type of program.