Saving Money on Car Insurance

Most people are looking for ways to save money these days. Car insurance is a major expense for most households. If you have a teenage driver, you are probably paying some of the highest rates to insure your vehicles. While it is important to lower costs, it is also crucial to understand what you are purchasing.

Here is a dirty little secret that insurance companies don't want you to know - auto insurance is much easier and interchangeable than any other type of policy. That doesn't mean, however, that all policies or companies are equal, or that there are not significant differences between offerings.

Comparing multiple quotes

Most people know enough to examine the 5 major coverages on an auto policy and determine if the coverage dollar amounts are the same as their present policy. However, I have yet to have a customer ask me about policy language or specific provisions. I will highlight a few features of the actual policy contract that can make a big difference in how your coverage performs.

OEM Parts

One of the biggest differences in auto contracts is how the company handles claims situations involving your vehicle. Many policies define the insurance company's obligation to fix your car with "like kind and quality." What that means in English - the company will pay for the cheapest possible repairs. One major factor is whether or not your company will authorize the use of Original Equipment Manufactured parts (OEM for short). Now, to be fair, often the aftermarket parts are just as good and can be far cheaper than OEM parts. On occasion however, OEM parts may have certain limitations. For example, some aftermarket items may fit slightly different, be made with cheaper materials, or may have higher defect rates than OEM equipment. When comparing policies, find out if the new company offers an endorsement that will require the company to use OEM parts for your repairs. The decrease in the cost of the policy is generally due to provisions like this that most consumers aren't aware of until after they have a loss. If this is not important to you, then by all means take a cheaper policy.

Permissive Use

When you lend your vehicle to another driver, whether it's Uncle Joe who is visiting from out of town, or your neighbor whose car broke down and needs to get to work, you should be acutely aware of how your policy covers guest drivers. Many policies that offer lower rates do so in part because they restrict the payouts to protect guest drivers. Some policies may even exclude coverage altogether. This provision sometimes referred to as a "cut-back" endorsement, will limit coverage for the guest operator to the state minimums. That doesn't mean that you are less protected, but could leave Uncle Joe or your neighbor with a huge exposure that their policy may or may not be able to fill. At worst, it can make for a very unpleasant thanksgiving dinner.

Customizing equipment

Most policies have exclusions for customizing equipment. If you go to best buy and have your new Escalade outfitted with all the latest entertainment gadgets, you may be shocked to learn that none of the items will be replaced if it is stolen. Some companies offer an endorsement to cover these items. Remember to factor this in when you compare prices.

Personal property

This is another provision that drives customers crazy. For example, let's say you walk out to your car after work only to find your window broken and your stereo removed. In addition, your laptop, Garmin navigation system, and hundreds of CDs are also missing. Most auto insurance companies will not cover the cds, laptop, or non-permanently installed navigation system. Some companies include a small amount of coverage for these items. Most companies will only cover these items on a homeowners or renters policy - and will charge you a separate deductible which means you may not recover anything for these personal items in your vehicle that were stolen.

These are some of the major differences in policy provisions that can anger customers at the time of a loss. Some of these things may not be important to you, but you should at least be made aware of these limitations before you decide on a cheaper policy. Most often, if you are being quoted a cheaper price for exactly the same coverage, you are more than likely agreeing to some or all of these limitations. Take the time to ask specific questions about what matters to you and always get the answers to your important questions in writing. I have seen many cases where a customer tells me "my agent said it would be covered" to things I later point out are restricted in the actual contract. My office is in San Ramon, Ca and I'm always available to do a review or help with any questions you may have, free of charge!

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[San Ramon Dentist]

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