AUTO INSURANCE ADVICE - COVERAGE AND COST
BY ALAN PLAFKER, President & CEO
MEMBER BROKERAGE SERVICE LLC
A MELROSE CREDIT UNION SERVICE ORGANIZATION
Do I have any control over my auto insurance premiums?
In today's market, where affordable personal auto insurance seems less and less available, you may wonder if there's any way to control rising premiums. One step available to you that you may have already taken is choosing an independent insurance agent.
Representing multiple companies, they can give you the right insurance to fit your needs. Besides choosing the right insurance company, there are some other tips to help you control the rates you pay for auto insurance.
• Driving record
An operator's driving history affects rates and could predict future claims activity. Obeying the rules of the road and driving defensively are your best ways to lower premiums.
• Type of vehicle
A major factor in the rating of your physical damage insurance (i.e., comprehensive or other-than-collision and collision insurance) is the type of vehicle you own. In assigning a rate, most insurance companies begin with the cost of the vehicle and the model year. Generally, the higher the cost of the vehicle and the newer it is the higher the rate.
However, further adjustments are made for the vehicle's weight, body type, engine performance, actual loss experience from past years for that model, etc. We can give you a rating comparison for vehicles you are considering purchasing or leasing which will give you some control over the cost of your insurance.
• Coverage
Some people prefer to assume more of the risk of loss on their autos and save on premiums. It may make sense for you to remove collision insurance, also known as physical damage, on older vehicles or increase your deductibles on newer vehicles. A common rule of thumb is that for vehicles more than 10 years old it may not be necessary to cover them for collision coverage. However, to obtain glass coverage on a vehicle you would have to maintain other-than-collision (comprehensive) coverage.
• Use and residence
Your employment opportunities and life style most likely will dictate the kind of use your vehicles get and the location at which they are garaged - two things that impact your premiums. However, there is a way you can gain some control over the rating of your vehicles.
You may want to consider driving the lowest rated vehicle, for example, an older vehicle without physical damage coverage, for activities that have the highest rate for use, for example, business use or long distance commuting to work.
• Timely premium payment
Always pay your premiums on time. Issuing cancellations, processing late payments and then issuing reinstatements add significant costs to the servicing of auto insurance policies. Some companies have a low tolerance for late payments under policies that are eligible for their preferred pricing.
• Credit management
Many insurance companies have established a link between a person's credit history and that person's probability of having an auto claim. As strange as this may sound, there appears to be an objective basis for using credit analysis known as insurance credit scores to predict which policy holders will have greater than average loss experience or less than average loss experience. Managing your credit and your credit report will help to lower rates on your auto insurance.
• Discounts
There are some standard discounts such as:
1. those for taking a driver training course, or
2. a defensive driving course,
3. qualifying as a good student,
4. insuring multiple vehicles on the same policy,
5. installing certain anti-theft devices,
6. maintaining certain safety equipment such as passive restraints, anti-lock brakes, and good student discounts.
Some insurance companies have developed their own discounts for such things as buying your homeowners policy from the same company. Your agency would like you to take advantage of every discount that is available to you so don't hesitate to call it for a discount review.
FIGHT FRAUD
Lawmakers are working on bills that would help prevent fraud. If you are concerned about your auto insurance costs be sure to contact your state legislators and urge them to reach agreement on reforms to drive the cost of fraud out of the state's auto insurance system.
WHAT TO CONSIDER BEFORE CHANGING AUTO INSURANCE COMPANIES
Some customers have been prompted by TV commercials or mass mail advertisers to consider switching their automobile insurance. Before saying "yes" to one of these propositions we hope you will consider the following:
• What do you know about this company?
Not all auto insurance companies are alike. Many support local, independent insurance agencies to help with all your insurance questions or problems. Others put their resources into advertising campaigns and are accessible to you only by an 800 number and chances are you will never deal with the same individual twice.
• Are they really offering you the same protection?
Probably not. It's easy for sales people to quote you a lower price if they don’t give you the same amount of coverage. We often find when looking at the details of these
quick-quote offers that the protection you and your family need is often compromised as a way of lowering your costs.
New York state drivers can pick from literally hundreds of policy combinations consisting of various coverage and limit options. For your own protection, please let your agency go over the details of any offer you receive before accepting it. Your insurance agency can offer this beneficial analysis at absolutely no cost to you.
• Who will go to bat for you if you have a claim?
An Agent will. Customers who have had a claim against their auto policy know that Independent insurance Agents pride themselves on providing personal attention during this stressful time. They make sure you get the quickest, most convenient service, answer all your questions, and also make sure you get every penny that's coming to you. In short, they stand behind the coverage sold and the companies they represent.
Are you sure you would get the same level of personal contact and concern from a mass market insurer?
• What could their offer cost you?
There could be hidden costs to you that the company won't disclose until it's too late. For example, you currently may be receiving a discount on your homeowners policy
if it’s from the same company as your auto insurance. By switching, you can lose that discount.
An even greater danger these companies won't tell you about is their right to cancel your coverage within the first 60 days even if you have accepted their offer and paid the premium.
Mass market companies tend to take your money first, then check your driving, claims and credit history later. If they see something they don't like they may cancel your policy. A cancellation on your record can make it harder and more expensive to get coverage from another insurance company.
• Who knows you best?
Your Agent takes the time to get to know customers. Your current auto insurance coverage should have been crafted with your complete financial picture, your driving and claims history and your family circumstances in mind. There's no way a stranger can reach that level of understanding from a brief phone call or impersonal application form. If you receive an offer that's "too good to be true," it just might be. Before you say yes let your agent look over the fine print.
New York state Supplementary Uninsured/ UNDERinsured motorists coverage
Why doesn't everyone have the higher liability limits that I have on my policy?
You may have had an altruistic concern for people injured by your auto when you chose your liability limits, but most people choose limits based upon the following two considerations:
1. their perceived need for financial security when sued by someone else; and
2. the cost of increasing their limits.
What New York state law requires of motorists
Provided that New York state insurance applies to an at-fault person's vehicle, you can anticipate compensation for your injuries up to the following statutory minimum amounts:
- $25,000 for one person injured; and $50,000 in aggregate for all persons injured.
- $50,000 for one person killed; and $100,000 in aggregate for all persons killed.
One out of four vehicles insured in New York State will have these minimum limits. The other 75 percent may or may not maintain limits comparable to yours. In fact, some of these vehicles have no insurance at all.
What is SUM?
Supplementary Uninsured/Underinsured Motorists coverage pays what you should have been able to collect from the motorist(s) responsible for the injuries you suffer in an automobile accident.
You can select a SUM limit that gives you the financial security for which you are looking. The limit you choose, which cannot be higher than your own liability limit, is your maximum benefit. Up to this limit your policy will pay your damages that exceed the amount received from at-fault motorists and/or their insurance companies.
Subject to your own liability limit, your insurance company must offer you SUM limits as high as $250,000 for one person injured, and $500,000 in aggregate for all persons injured in the accident; or alternatively, a single $500,000 limit payable regardless of the number of persons injured.
In order to activate SUM coverage, any one of the following six conditions must pertain to the insurance of the motorist who is responsible for your injuries:
- no insurance exists;
- the owner and operator of the vehicle are unknown (hit and run);
- insurance exists, but its liability limits are lower than your liability limits;
- insurance exists, but its limits have been used up to pay others injured in the accident;
- insurance exists, but it is unavailable because the claim was denied by the insurance company;
- insurance exists, but it is unavailable because the insurance company is insolvent.
Example
Let's assume you purchased a per person SUM limit of $100,000 on your policy. Later, you were injured by a motorist having a minimum limit liability policy making $25,000 the most you could collect for your injuries. Now, if your damages are $60,000, then:
- you could collect $25,000 from the motorist at fault and $35,000 under SUM coverage from your insurance company;
- if the negligent motorist had no insurance then your SUM coverage would pay all $60,000 in damages;
- had your damages been higher, an additional $40,000 would have been available before using up your entire SUM limit.
Why not just make everyone buy higher limits?
Unfortunately, there will always be some motorists that defy the law and drive without insurance regardless of the cost. However, there are many more motorists that could not afford the higher premiums imposed if statutory limits were raised for all motorists. Legislators reasoned that it is better to have under insured motorists on the road than to have an increase in uninsured motorists. Also, they felt the financial burden should be placed on those motorists who desire greater protection and have the means to pay for it.
Protect yourself
If you desire more protection for yourself and your family and can afford a reasonable increase in premium, then don't leave your financial welfare to chance when an accident is caused by an uninsured or underinsured motorist. After all, you should be compensated to the same extent that a person you injure is compensated. Your professional insurance agent can remove the gamble and put you in control of your
own protection.
Your Professional Insurance Agent …
We want you to know about the insurance you’re buying.
For more information, please contact the author of this article.
Alan Plafker, CIPA
- Certified Professional Insurance Agent and licensed Insurance Broker
- President/CEO of Member Brokerage Service LLC, a Melrose Credit Union Service Organization
- President Elect on the Board of Directors the PIANY (Professional Insurance Agents Association of NY)
- Member of CIBGNY (Council of Insurance Brokers of Greater NY)
- Treasurer for the New York Independent Livery Driver Benefit Fund Board of Directors.
His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of PERSONAL and COMMERCIAL insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 Ext. 1082, or visit the website at: www.MemberBrokerage.com
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