Questions About Auto Insurance
- What is “Full Coverage” Auto Insurance?
- What is Totaled Vehicle Value Insurance and the New Car Replacement Option?
- What is the Rental Coverage and Towing (Roadside) Insurance Option?
- I’ve Just Been in an Auto Accident. What Do I Do Next?
- What affects my auto insurance rates? Part 1
- What affects my auto insurance rates? Part 2
Questions About Auto Insurance
Auto Insurance and News Updates
Why You Need Good Auto Insurance
According to the Texas Department of Transportation last year 1 person was killed in an auto accident every 2 hours and 20 minutes. 1 person was injured every 1 minute 59 seconds. 1 reportable crash occurred every 57 seconds. In 2016 over a quarter million people were injured in auto accidents; 265,076 to be exact. The numbers are sobering to say the least. For me, these aren’t just statistics. I know some of these cases intimately. Last year our family lost lifelong friends in an auto accident that they had absolutely no control over.
People think, “I’m a careful driver. I watch the people around me. I don’t drive when the weather is bad so it’s not going to happen to me.” It’s great to be careful and cautious. You’re probably not going to cause an accident and that’s great. But in reality, what can you really do to avoid an accident someone else causes? All the defensive driving in the world isn’t going to save you from someone else. In fact that’s exactly what I hear from people who have been in accidents. The number one thing I hear is, “There was nothing I could do. There was no time to react. They just plowed right into me!”
Look I know how frustrating it can be to pay your insurance premiums year after year. It can seem like a scam because premiums just go up and you can’t see any value in it. If you’ve never had a big claim there’s nothing tangible but a bill and no one likes to pay bills!
On the other hand the right auto insurance can literally save you from financial catastrophe; and it only takes one instance! I’ve seen single incident claims paid out for hundreds of thousands of dollars. Every time I see a big claim paid out I think, “man I’m so glad they had the right insurance because what would they do now without it?” That’s what good insurance does for you. It helps you manage the right risks. That’s what insurance is…a transfer of risk. It’s a financial wall of protection that keeps accidents and catastrophes from sacking the rest of your life.
The key to this whole process is you have to know what you are buying…and what you are not. I tell people almost every day I will sell you the exact coverage you want but I’m also going to be honest with you about what you’re getting. Insurance is like anything else; you get what you pay for. If you want cheap insurance premiums then you are going to give up coverage. It doesn’t matter what company you’re with better insurance costs more money. The decision for you is what risk do you want to transfer and what risk do you want to hold on to? So let’s walk through some basics concerning auto insurance and let me break it down for you so you can make the right choices.
What is Auto Insurance?
You heard me say before that insurance is a transfer of risk, which it is. It’s a transfer of risk through the medium of a binding contract. That’s why you have to sign so many things when you sign up for insurance. When you buy auto insurance you’re entering into a legally binding contract with the insurance company. To bind the contact you pay auto premiums and the insurance company promises to pay up to the policy contract limits. EVERY, and I mean every, auto insurance contract has exclusions and limits. That’s why I said you get what you pay for. The higher the limits the higher your premiums and vice versa.
Most auto policies are either 6 months or 1 year policies. You have the option to pay it in full or break it up into monthly payments. During your contract the only way your premiums change is if you make changes to your policy. Things like adding a driver, adding a car, adding coverage options will all make your premiums increase during the policy contact. Conversely anything you remove will make the premiums go down. If you’re on a monthly they’ll adjust accordingly for the remainder of the policy term and if you’ve paid in full they’ll issue you a bill or a refund. When it’s time for you to renew your insurance company will notify you of the renewal. It’s at this time that the insurance company might adjust the premiums depending on certain factors. We won’t go into these here, but you can check out the questions at the top of this page for a discussion on those factors.
If you choose more than liability only auto insurance your auto policy will also include a deductible(s). A deductible is the part of the risk you are choosing to hang onto. You get to choose the size of the deductible but just so you know deductibles and premiums have an inverse relationship. The lower the deductible, the higher the premium and vice versa. Typically if you choose multiple optional coverages you’ll have different deductibles for each. For instance, comprehensive, collision and uninsured motorist coverage usually all have different deductibles. So here’s an example of how it works: let’s say you accidentally ran off the road and hit a tree totaling your 2015 GMC Yukon. You would make a claim under the collision coverage of your policy and your deductible is $500.00. The Yukon is a total loss and the vehicle is valued at $35,500. The first $500.00 is your deductible so that’s your portion of the risk to cover but your insurance company would write you a check for $35,000 to pay to replace the remainder of the vehicle.
What Does Auto Insurance Do For Me?
Auto insurance can do a lot for you. It can cover your vehicle, you, people in your vehicle as well as property damage and injury you accidentally caused to others outside your vehicle. It can also pay for rehabilitation, lost wages, rental cars, roadside breakdowns even funeral expenses. Your auto insurance can cover a lot of things if you want it to. The questions I ask a lot of my clients after we’ve talked about the various coverage options is, “how do you want your auto insurance to work?” So, let’s finish up by discussing some coverage options you can add to your policy so your auto insurance works the way you want it to!
Auto Insurance Coverage Options
Liability (Bodily Injury).
This is part of the required insurance coverage in the state of Texas. This coverage covers other people you might hurt in the event that you caused an accident. It pays for hospital, doctors, other medical bills, rehabilitation. It can also pay for the legal costs to defend you in the event that you are sued as well as pain and suffering, lost wages and funeral expenses.
Liability (Property Damage).
This is the second part of the required insurance in the state of Texas. This coverage pays for damage to other people’s property that you caused in an accident. It covers vehicles, structures and in some cases improvements.
This covers to repair or replace your car (up to the totaled value) if you are in an accident and it’s your fault. NOTE: if you don’t carry collision and you cause an accident there is no coverage to repair or replace your vehicle. So think carefully before skipping this coverage. Do you have enough saved up to replace your car? Could you squeeze another car payment into your budget? If not you should seriously consider collision coverage. Plus, collision coverage can also help you in the event that you are hit by someone who doesn’t have insurance or doesn’t have enough insurance. There is a separate coverage called “Uninsured Motorist” that you can purchase for your policy. Uninsured Motorist works better for a variety of reasons but in a pinch you can claim the accident on your collision, pay the deductible and get your car repaired. There could be rate increases that you face down the road as a result but in certain instances it still makes more sense to make the claim on your own insurance than be forced to pay out of pocket for the repairs.
“Other Than Collision” or “Comprehensive” offers a lot of important coverage options that are excluded from liability and collision coverage. Comprehensive covers things like hail damage, flood damage, fire damage, damage from hitting an animal and theft. Yes you read that right. You are not covered for the theft of your car unless you carry comprehensive on your insurance. This is a big gap that most people don’t realize is in their insurance without Comprehensive. The coverage works the same way as collision when it comes to the payout. You pay your deductible and then your insurance company will cover the rest up to the totaled vehicle value. As a side note: if you’re planning on financing your next car purchase be prepared to add both comprehensive and collision to your auto insurance policy if you don’t carry them already. Most auto financing companies require you to carry both until the car is paid off.
This coverage protects you in the even you get into an accident, it’s not your fault AND the person at fault doesn’t have insurance or doesn’t carry enough insurance to pay for the damages. Current statistics show that 14-25% of drivers on the road today are uninsured or underinsured drivers. That means for every 10 cars you pass on the way home today from work at least one of them doesn’t have enough insurance if you were to get into a wreck with them. It covers you, your family members, passengers in your vehicle, and anybody driving your vehicle with your permission. It can pay medical expenses, funeral expenses, car repairs, car rental, and the replacement of damaged contents. In the state of Texas there is a $250.00 deductible that you will pay but if your insurance company can subrogate with the person or their insurance company you can be reimbursed for the $250.00 deductible. By law in the state of Texas you must be given the opportunity to buy insurance coverage for both uninsured and underinsured motorists. Even though the coverage is optional, your insurance company must offer you the opportunity to purchase it, and your refusal to purchase it must be in writing. Now here’s where it can get interesting: if you’re recently purchased auto insurance and you don’t have Uninsured coverage that means you’ve rejected it in writing. Don’t remember that? Well, one of the forms you signed in person or online was actually stating that you want to decline the coverage. Unfortunately some insurance agents/companies try to downplay this waiver because they’re more focused on making a sale based on price then on the right amount of coverage.
Please Don’t Do It Yourself
With all we’ve talked about here there are still more options we didn’t get to. Additionally, with each of these options I’ve mentioned there are several different limits you can choose. So how do you know what to get? That’s what I’m here for! I would love to sit down with you and talk through what you need. A short conversation with myself or one of my staff and you can have the exact coverage you want AND you’ll know how it works too!
See all types of Fort Worth insurance Cris provides.