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  1. 1. The Wurzel Insurance Agency eBook: Auto Insurance
  2. 2. 2 The Wurzel Insurance Agency On Auto Insurance 3 Auto Insurance CoveragesExplained 3 Liability Coverage 5 Personal Injury Protection 5 UninsuredMotoristCoverage 6 Medical PaymentsCoverage 8 Collision Coverage 9 ComprehensiveCoverage 10 Why State MinimumCoverageMayNotBeEnough 11 LosingEverythingDuetoInadequateAutoLiabilitycoverage 12 What is No-FaultAutoInsurance? 13 AreYou ProperlyProtectedAgainsttheUninsuredDriver? 14 AtWhatAmountShouldISetmyAutoInsuranceDeductible? 15 ShouldYourCollisionCoverageBeDropped? 17 AreYou at the Insurer’sMercyifYouTotalYourCar? 18 WhatYou NeedtoKnowAboutAutoInsuranceFraudandStagedAccidents 20 What Every ParentShouldKnowAboutTeenDriversandCarInsurance 22 SixTips of InsuringYoungDrivers 23 DebunkingSomePopularCarInsuranceFolklore 25 FactorsThat InfluenceYour CarInsuranceRates 26 Four RulesofThumb toFollowWhenPurchasing anAutoInsurancePolicy 28 Keys to SwitchingAutoInsuranceCarriers Table of Contents
  3. 3. 3The Wurzel Insurance Agency On Auto Insurance Liability Coverage Explained Liability coverage (often simply called “liability”) protects you from damage you do to others or to property in an accident. Some level of auto liability insurance coverage is required in all 50 states. Liability Coverage 101 Car insurance liability coverage is typically made up of 3 separate components wrapped up under the “liability coverage” heading: • Bodily injury, each person (for example, $100,000 maximum payment per person) • Bodily injury, each accident (for example, $300,000 maximum payable per accident) • Property damage (for example, $100,000) When shopping for or reviewing auto liability insurance coverage, you might see all 3 components lumped together, like this: $100,000/$300,000/$100,000. What’s most important is understanding what each liability component protects. It’s worth noting that you generally can’t buy just 1 or 2 liability coverage “pieces.”  Bodily injury liability coverage protects you if you’re responsible for an accident that hurts another person, covering their injuries and lost wages. Keep in mind, though, that liability car insurance is for injuries to other people - coverage doesn’t apply to your own injuries.  Property damage coverage covers damage you cause to somebody else’s property - things like their car or mailbox, or even their house or business. Again, it doesn’t apply to damage caused to your own property. 
  4. 4. 4 The Wurzel Insurance Agency On Auto Insurance Bodily Injury Liability Coverage If people are injured in an accident that’s your fault, Bodily Injury Liability coverage helps protect you from bills that can include: • Emergency aid at the scene • Medical expenses for bodily injury • Medical services for sickness or disease • Compensation for loss of income • Funeral expenses • Legal defense fees and/or bail bonds for anyone listed on your policy Property Damage Liability Coverage If another driver’s property is damaged in an accident that’s your fault, Property Damage can help pay for their: • Structural damage to homes, businesses, etc. • Repair or replacement costs for other stationary objects such as mailboxes, etc • Vehicle repair or replacement costs Property damage can also help keep your assets safe in the event of a lawsuit resulting from a covered accident. Liability Car Insurance: How Much Is Enough? Consider this: in a serious accident, your actual financial responsibility could far exceed your auto insurance coverage liability limits - leaving you on the hook for hundreds of thousands of dollars. That’s why it often makes sense to purchase the highest auto liability insurance coverage limits you can comfortably afford. While this coverage makes up a significant part of your total premium, it’s often money well spent if you’re ever in a serious accident.
  5. 5. 5The Wurzel Insurance Agency On Auto Insurance Personal Injury Protection Coverage (No-Fault Coverage) Explained Accidents happen. That’s why it’s important to make sure you have the right coverage to help pay for the cost of your medical expenses in case you get injured in one. Personal Injury Protection (PIP) coverage can help you pay for your medical bills if you get into an accident. Who Needs Personal Injury Protection Insurance? Personal Injury Protection is required by law on all Florida auto insurance policies. PIP pays for your personal medical expenses or for injuries sustained by your passengers—no matter who is at fault for the accident. Since PIP is required by law, Florida is known as a “no fault” accident state. This means that damages for injuries are paid for by a person’s own insurance regardless of who is at fault for the accident or whether or not the other person involved in the accident has insurance coverage. Limits, Deductibles, and Other Details PIP coverage limits are required by law to be at $10,000. PIP includes coverage for the following: • Medical Benefits - Coverage for the cost of treatment you receive from hospitals, doctors, and other medical providers. • Disability Benefits - Reimbursement for expenses related to your injuries - like lost wages or other expenses incurred if you are not able to return to work right away. • Death Benefits - Benefits payable if you are involved in a fatal accident. Depending on the insurance carrier, you may be able to purchase additional coverage above the required limit. Uninsured Motorist Coverage Explained Uninsured Coverage protects you financially if you’re in an accident with someone who’s found at fault and either has no insurance or insufficient insurance. Uninsured Motor Coverage 101 Even though most people lump uninsured and underinsured motorist coverage together, they actually do two separate things.  Uninsured Motorist insurance (UM) pays for injuries, such as medical expenses, that result from an accident caused by a driver who is uninsured. UM insurance also protects you and your passengers if struck by a hit-and-run driver. Underinsured Motorist insurance (UIM) pays for injuries, such as medical expenses, that result from an accident caused by a driver who has too little insurance to cover all of the injuries. Covered UM & UIM expenses for you and your passengers include: • Medical bills • Lost wages • Pain and suffering
  6. 6. 6 The Wurzel Insurance Agency On Auto Insurance What’s the Right Amount of Coverage to Carry? The short answer is that there’s no one perfect answer. Some drivers follow an easy rule of thumb and carry uninsured and underinsured motorist coverage equal to their bodily injury liability limit. But since coverage can range from $20,000 to $1 million or more, the “right amount” depends on your risk tolerance. It’s important to remember that your insurance company generally prohibits purchasing un- insured and underinsured motorist coverage in amounts higher than your liability coverage.  Another fact to consider is that three years ago, the Insurance Information Institute reported that about 24 percent of the vehicles in Florida were totally uninsured. Recently, the Florida Department of Financial Services published a report showing that 50.9 percent of all insured vehicles have bodily injury liability limits of $25,000 or less. Those two numbers added up says that about 75 percent of the cars driving on the road today carry $25,000 or less in cov- erage to pay for your loss, which means this coverage is a vital part of your insurance policy. Your auto insurance can help protect you in many different situations, but what about med- ical costs related to personal injuries as a result of an accident. Medical payments coverage helps pay for a wide variety of accident—or incident-related bills, no matter who’s at fault. Medical Payments Coverage 101 When you’re reviewing your auto insurance coverages and options, you may want to toss the Medical Payments piece into the mix. This optional coverage offers wide-ranging protection within a number of accident scenarios: an accident involving the insured vehicle; an accident when you’re traveling in another person’s vehicle; and even if the policyholder or a family member is hit by a car while walking. Here’s another important item to note: medical payments coverage protects your passen- gers, and any family members driving in the insured vehicle at the time of the accident. Many people assume they don’t need medical payments coverage within their auto insur- ance policy if they’re covered by an employer-sponsored health plan or other health plan coverage. But here’s something to think about: if your health plan carries a deductible, medi- cal payments coverage can help pay for your deductible—or even cover it completely. Remember, too, that your health plan’s coverage may not extend to your passengers at all.
  7. 7. 7The Wurzel Insurance Agency On Auto Insurance Medical payments coverage is typically available in several coverage levels, including $1,000, $5,000, $10,000, and possibly higher. And it’s typically one of the least expensive auto insurance options, adding only a few dollars to your monthly premium. What Exactly is Covered - and When? Medical payments coverage typically helps pay for: • Doctor visits • Hospital visits and/or stays • Surgery • X-rays • EMT & ambulance fees • Professional nursing service and care • Prostheses • Funeral costs As for who’s covered, it’s important to understand that if you choose the medical payments option within your policy, it generally covers medical expenses no matter who’s found to be at fault. It covers you, your passengers, and any family members driving the insured vehicle at the time of the accident. Also remember that this coverage may also cover policyholders and family members injured in someone else’s car—and can even pay for medical costs if you or a family member is hit by a car while out for a walk.
  8. 8. 8 The Wurzel Insurance Agency On Auto Insurance Collision Coverage Explained Collision coverage is the part of your auto insurance that typically pays for damages to your auto from accidents involving other cars or objects.  After an accident, you’ll pay your deductible, then insurance pays the rest up to the actual cash value of your car, which takes into account things like the purchase price, age and con- dition. Collision Coverage 101 - Your Deductible One of the most important factors to consider when choosing a deductible is how much you would be comfortable paying out if you had an accident. Deductibles can range anywhere from $0 to $1,000. And while a higher deductible helps you save money on your premiums, remember that you’ll have to pay more in the event of an accident.  Another thing to think about - if your car is old and worth close to or less than your deduct- ible, collision coverage may not be right for you. How Much Does Collision Coverage Cost? Since accidents are the most common kind of insurance claim, car insurance collision cov- erage is usually the priciest portion of your total premium cost. But as we mentioned above, an older car that isn’t worth much might not even need this coverage. If you’re still worried about paying too much every month, try increasing your deductible.
  9. 9. 9The Wurzel Insurance Agency On Auto Insurance Comprehensive Coverage Explained Comprehensive coverage (sometimes called “other than collision”) typically pays for damages on covered costs that aren’t caused by a collision. Comprehensive Coverage 101 It can be tempting to think of auto insurance as accident insurance or liability coverage. But the fact is that comprehensive insurance is also important, protecting you from things that can damage your car but aren’t accident-related. And that’s a pretty long list, things like: • Storms and natural disasters like tornadoes, hurricanes, and earthquakes • Vandalism and theft • Broken/shattered windows and windshield • Animal damage • Falling objects Finding the Right Comprehensive Coverage Probably the most important thing to consider when choosing your deductible is your wallet. If you wake up one morning to find out that a giant tree limb crushed your car’s roof or your car has been stolen, how much are you comfortable paying out of pocket? Fortunately, the range of deductibles you can choose is extremely wide—all the way from $0 to over $1000.  Remember that a higher comprehensive deductible will lower your overall premium, but those savings potentially come at a cost. Ask yourself how much you’re able or willing to pay out of pocket, and adjust your comprehensive deductible to fit your appetite for risk. When thinking about your deductible, remember this: the maximum amount comprehensive coverage pays out is the actual cash value of your car at the time of damage. So if your car’s cash value is close to your deductible (maybe it’s pretty old or beat up), comprehensive coverage may not be right for you. Even if that giant tree limb totals your car or the police don’t recover your vehicle, the amount the insurance company will pay (the car’s actual cash value) won’t be much. Comprehensive Coverage is a Part of Your Premium Since vehicle damage is one of the most common insurance claims, comprehensive coverage is typically a key portion of your premium. To gain the greatest control over your premium costs, focus on finding your deductible sweet spot, discussing your coverage options thoroughly, and aligning your comfort level for potential out-of-pocket expenses with your policy’s actual premium.
  10. 10. 10 The Wurzel Insurance Agency On Auto Insurance Why State Minimum Coverage May Not Be Enough No driver can afford to be without automobile insurance, but it can be difficult to know how much coverage you really need. These days most states require that all drivers purchase car insurance, and in states where coverage is mandated there is a minimum coverage threshold that must be met. Many drivers assume that this state minimum coverage is enough, but in many cases that level of protection is completely inadequate. It is therefore important for every driver to evaluate his or her own insurance needs in order to determine the best level of coverage for liability, property damage and other insurance categories. Why the Minimum When states pass laws mandating that every driver carry automobile insurance they need to consider a number of factors, but affordability is often near the top of the list If the state legislature is going to force people to purchase a product or service they need to make sure that product or service will be affordable. For this reason many states set the bar very low for car insurance coverage. This low bar makes policies more affordable, but it also leaves many drivers without the protection they really need. For that reason it is important to look at your own state’s minimum coverage levels and de- termine if those levels really provide adequate coverage. If for instance your state requires that you carry only $10,000 in property damage insurance, what happens if you total your neighbor’s brand new Porsche 911? If you do not have enough property damage insurance in place you could be on the hook for the rest of the damages. The same is true of personal injury - it is important to take a realistic look at the minimum coverage levels set by your state and determine whether or not they are truly adequate for your needs. The more you have to protect the more insurance coverage you will need. The Low Cost of Upgrading Many drivers simply assume that upgrading an existing car insurance policy from the state mandated minimum coverage levels to something more realistic will be prohibitively expen- sive, but that is not necessarily the case. In many cases drivers can upgrade from the mini- mum set by their state to $300,000 worth of coverage or more for only a small increase in their premium levels. Upgrading coverage can be extremely affordable for those considered to be good risks, but even those with a few black marks on their driving records are often surprised at just how affordable that extra coverage can be. Reviewing your car insurance coverage on a regular basis is the best way to make sure you are providing adequate protection for your car, your family and your personal property. By knowing the legally required coverage levels and adjusting those levels to suit your own needs you can save money on your premium without sacrificing the protection you need.
  11. 11. 11The Wurzel Insurance Agency On Auto Insurance Losing Everything Due to Inadequate Auto Liability Coverage While there are minimum legal requirements for auto coverage, this minimal coverage may not get you off the hook in many cases should you actually be involved in an accident. The state’s goal is to make the required insurance affordable, but in many cases this results in minimum coverage that is not adequate for most people to drive on the road and meet their true financial obligations. Even limits that are several tiers above the minimum may not be adequate for some drivers, because once those limits are exhausted, any remaining damag- es must be paid out of pocket. Bankruptcy is the first thought that comes to the mind of some, but bankruptcy does not come without problems. Bankruptcy will probably hurt or even eliminate your chances of getting credit in the future; even if credit can be obtained, it will cost you a lot more and come with conditions. In addition, many employment backgrounds checks include a credit check. Also, bankruptcy is not always an available option, especially if you have assets or own property. Because the costs and lost opportunities that result from bankruptcy are sig- nificant, it’s not an option most people want to or should choose. For that reason, this article discusses your obligations and how to minimize your risk of ever filing for bankruptcy, losing your home, or paying for damages that could be covered by higher liability limits. Let’s look at an example of how coverage applies. Suppose that you have $100,000 of cover- age, your car’s brakes fail, and you rear-end the car in front of you with very high impact, par- alyzing the driver. Do you think $100,000 would be sufficient to pay for a lifetime of medical care and lost wages? Would you settle for that amount if you were paralyzed? Chances are most would not. Accidents like this can happen to anyone, and planning in advance can help you to avoid serious trouble and serious financial consequences if an accident should occur. Once your limits have been paid by the insurance company, it becomes your obligation to pay for any further damages. In the example mentioned in the previous paragraph, if the injured party is justified in asking for $3 million, your insurance company would pay the $100 for which you are covered and you would then be expected to pay the remaining $2.9 million. Alternatively, the injured party could take you to court and this could easily cost you hundreds of thousands in legal fees in addition to any judgment granted to the plaintiff. Filing for bankruptcy would also be an option, or, if you have assets, you would have to pay what you have and possibly lose everything. Your wages also may be garnished to pay any judgment. In any case, not having adequate liability let alone minimum limits set by the State are not really a solution. Premiums in most cases are not significantly more, and also an umbrella policy available in increments of a million would cover liability for all the Cars in your house- hold for one low premium. With such options available, why risk damaging your future with a bankruptcy or, worse yet, losing everything you own because you did not plan in advance to set up coverages that would protect you? It does not cost you anything to discuss the options with your agent. You may also wish to consult with your attorney or a personal injury attorney who can point out the importance of making sure you properly address your liabili- ty limits.
  12. 12. 12 The Wurzel Insurance Agency On Auto Insurance What Is No-Fault Auto Insurance? No-fault auto insurance is usually referred to loosely to indicate any car insurance policy that lets holders collect from financial losses against their own company whether they are at fault or not. However, no-fault auto insurance in its strictest form only applies to state laws, which restrict the right to sue other parties and provide for first-party benefit payments on a no- fault basis. The policyholder’s coverage is also known as personal injury protection, but it is more commonly abbreviated as PIP. With the current laws set in place for no-fault auto insurance, motorists may be able to sue for pain and suffering or severe injuries if the case meets various conditions. Also known as thresholds, these conditions only relate to injury severity. Verbal terms are often used to express them, and they may also be written in dollar amounts of medical bills. There are also some laws that include minimum requirements for the number of days a disability occurred after an accident. Due to higher thresholds for no-fault systems restricting litigation, claim payments are usually delayed. They also tend to lower the costs of paying claims. With verbal thresholds, incentives to inflate claims with dollar targets for medical purposes are eliminated. Verbal thresholds have changed in some states over time to include a broad ju- dicial interpretation. In addition to this, PIP coverage has been abused. Dishonest clinics and medical professionals have committed fraud by charging patients for expensive and unnec- essary medical care. When this happens, the costs increase for everyone. There are more than 10 states with no-fault auto insurance laws, and Puerto Rico also has them. Some states have choice no-fault laws, and motorists in some states may reject lawsuit thresholds in order to sue for injuries. To learn about state-specific laws and information, dis- cuss concerns with an agent. There are four different categories for state auto liability laws. These include no-fault liability, tort liability, choice no-fault liability and add-on liability. The biggest differences exist in whether the policyholder’s insurer covers benefits for first parties and whether there are restrictions on the right to sue. As regulators, consumers and insurers have looked for ways to reduce costs and make compensation delivery faster, these systems have continued to change and evolve. The no-fault system is meant to lower the cost of auto coverage by removing small claims from courts. Every insurer must compensate policyholders or first parties for minor injuries whether the policyholder was to blame or not. The third party is the other injured party, and the second party is the insurer.
  13. 13. 13The Wurzel Insurance Agency On Auto Insurance Are You Properly Protected Against the Uninsured Driver? The chances of being hit and injured by either an uninsured or an underinsured driver are significant. Either of these situations can create a significant burden for you: 1. 1. If the driver is uninsured, this means that any damage to your car and any injuries will not be covered by the liable party. 2. 2. If the driver is underinsured, his or her policy may not be sufficient to cover the damage of injury caused to you. This possibility is often overlooked due to the assumption that insured drivers are fully “covered.” However, policies have their limits, most especially when a driver has minimal coverage. In the event that the driver at fault is totally uninsured, your insurance will cover you if you have the right uninsured coverages in place to protect you. If you have physical damage coverage, this means that your car is covered, thus taking care of the property part of the equation. However, the property costs may be minimal compared to possible bodily injury costs. Injuries can be devastating; a bad enough injury can potentially put you out of work for the rest of your life. This is why it’s very important to be familiar with your Uninsured Motorist Bodily Injury coverage. There are a number of different coverage limits that you can purchase, however the maximum you can purchase is equal to the same amount of liability coverage you purchase. While it’s always a good idea to get the maximum available liability limits, it’s an even better idea to max out on your uninsured motorist limit, because, unlike liability, this covers you by acting as the other party’s insurance in the event that they do not have the coverage. Uninsured motorist coverage works in a very similar way. As an example, if you did not have uninsured/underinsured motorist coverage and you were in an accident in which the at-fault driver seriously injured you but only had 50k in coverage, 50k is the most that you could receive. However, if you had 500k in uninsured/underinsured motorist coverage, your policy would cover the difference. Many drivers on the road, especially younger drivers, have minimum liability coverage, and these are also the drivers that get into the most accidents. Many of the same people also have nothing to their name that you could sue them for, which is another reason they might not be concerned with ensuring that they have good liability coverage. Of course, even 500k is not enough to cover wages and disability costs over a lifetime. There are two ways you can address this potential problem. One way is to get an umbrella policy that includes uninsured motorists, and the other is to get a disability policy. While you may think this is not necessary, it is important to remember that many who thought “it could never happen to them” have been permanently disabled as a result of accidents. Also, as our Federal Government is forced to manage its record-level debt, it will have no choice but to make cuts. Social Security disability has been spending more than it receives in revenue for a number of years and will eventually exhaust its trust fund. This is why it is extremely important to look at your options rather than to count on insurance others may not really have.
  14. 14. 14 The Wurzel Insurance Agency On Auto Insurance At What Amount Should I Set my Auto Insurance Deductible? While almost everyone would like to save on their auto insurance, it can be a big mistake to be penny smart, dollar-foolish. The dollar amount you set your comprehensive and collision deductibles at will be one of the most important decisions you make during the purchase of auto insurance. In tum, the deductible amounts you set will be one of the main determining factors in the amount of your monthly premium. Any insurance policy covering comprehensive and/or collision will contain a deductible. Most deductibles are $1,000, $500, $250, or $100 dollars; but deductible amounts do vary by state and company. Deductibles are the cost you will pay out-of-pocket during an insurance claim. For example, let’s say that your deductible is $500 and you’re involved in an auto accident that causes $4,000 dollars in damage to your vehicle. You will be responsible for paying the initial $500 and the insurance company will then pay the remaining $3,500. On the other hand, if your deductible is $100, then you will only pay $100 before the insurance company pays the remaining $3,900. As you can see, a higher deductible means you pay more out-of-pocket and a lower deductible means you pay less out-of-pocket after an accident. As a general rule, lower premiums are associated with higher deductibles and higher premiums are associated with lower deduct/bias. It can be difficult to weigh what premium amount you’re willing to pay now against what deductible amount you’ll be willing to pay for any future claim. Be sure to take into account your comfort level; income, savings, and credit lines; driving history; and your vehicle’s value as you make your decision on the deductible amount. Choosing a high deductible/ low premium or low deductible/high premium will greatly depend on what you can reasonably afford. Imagine that you had an auto accident today - would you have funds from your household Income, credit lines, and/or savings to use as your deductible? If so, what financial impact would using funds from these sources have on your family and how much would you be comfortable using to pay the deductible? If the deductible you have in mind (or already in place) is higher than what you have available or feel comfortable using, then it should be lowered. On the other hand, if you have the funds easily available to pay a higher deductible amount, then you can raise the deductible and save money on your premiums.
  15. 15. 15The Wurzel Insurance Agency On Auto Insurance You also need to ask yourself how much risk you are willing to assume. Will you continue to be prepared to cover the deductible amount you set? If not, are you willing to risk having a high deductible and bet on not getting into an accident? How often you expect to make a claim on your insurance is another factor to consider. While accidents are unpredictable and no driver wants to think they’re a bad driver, your driving history speaks for itself. If you’ve had a history of frequent fender-benders or accidents, then it could be best for you to opt for the higher premium/lower deductible option. On the other hand, the lower premium/higher deductible could be a better option if your driving record is excellent or only has a few infrequent driving incidents. You might also consult your insurance agent on what the average deductible is for your driving experience and the age of your vehicle. Don’t forget to review your auto insurance deductible at least once a year. Ask yourself if your financial situation has changed since the deductible was set and if the deductible amount is still something you could comfortably pay if you had an auto accident today. The bottom line is this: don’t let purchasing car insurance confuse or overwhelm you. Take your time to assess your finances and circumstances to figure out what you feel comfortable with paying on both a monthly basis and at any given lime an accident should occur. If you have any questions or concerns, don’t hesitate to consult your auto insurance agent. Should Your Collision Coverage Be Dropped? If you are like most new car owners, then you probably paid the extra money to include the protection offered by collision coverage in your insurance policy. However, as your vehicle has now begun to age and depreciate, you’ve likely started to ponder if and when you should drop the pricey collision coverage that’s running up your insurance bill. There’s not a one-size-fits-all answer to this question. After all, everyone won’t have the same comfort level on risk or the same insurance needs and wants. However, there are some factors that you can consider to help you determine if and when you should drop your collision coverage: 1. 1. Determine the value of your vehicle. The first thing you should do when deciding if you should drop your collision insurance is determine approximately how much your car is worth. There are several ways to go about this, but one of the best methods is by getting an actual cash value (ACV) estimate. Kelley Blue Book and NADA guides are excellent sources. However, you might want to call your insurance agent to find out which ACV source is used by their claims department, as ACV figures will often vary slightly from source to source. Do remember to factor in the wear and tear on your vehicle. Dents, scratches, upholstery holes or tears, and fading or chipping paint are just a few of the factors that can tower your vehicle’s ACV.
  16. 16. 16 The Wurzel Insurance Agency On Auto Insurance 2. Although your collision coverage premiums win generally decrease slightly as your vehicle ages, you still need to make sure that the cost of your collision coverage remains a worthy expense to cover damage that may or may not occur to your vehicle. Weigh what you’re paying every year for collision coverage against the potential risk of not having it. The ACV of your vehicle should also be a factor in your decision process. For example, the new car you bought several years ago may only be worth $3000 dollars today, and it you’re paying $600 per year for your collision coverage, then you’re paying 20% of what your car is worth for just this one coverage. 3. What’s your deductible? Your deductible is another important factor to consider. Most drivers usually select a collision coverage deductible between $250 and $1 000 dollars. You might have even selected a higher deductible to keep your premiums lower. In any case, you need to remember that your deductible is the amount of money you’ve agreed to pay out-of-pocket before your insurance coverage takes effect. You need to decide if the combination of your collision coverage premiums and the deductible amount you’d pay after an accident are still reasonable costs for the value of your vehicle. For example, you’d be looking at a $1600 out-of-pocket cost for the year for your damaged vehicle if you have a $1000 deductible and you’re paying $600 for your annual collision premiums. If your vehicle’s value is anywhere close to what you’d pay out-of-pocket, then you can see where you’re likely wasting your insurance dollars. On the other hand. If your vehicle would cost a great deal more to replace or repair than what you pay out- of-pocket with your collision coverage, then it’s likely worth the expense. 4. Can you live without the perks of your collision coverage policy? You’ll need to decide how valuable the perks of your collision coverage policy are to you. For example, your collision coverage policy might offer a free rental following an accident. Without the collision coverage providing this, could you rent a car on your own or find alternative transportation? The bottom line is that there’s no cut-and-dried answer about dropping your collision insurance. Consider the above points and how they apply to your unique situation before making your own decision. You can always schedule an appointment with your insurance agent if you have any doubts, concerns, or questions during your decision process.
  17. 17. 17The Wurzel Insurance Agency On Auto Insurance Are You at the Insurer’s Mercy if You Total Your Car? You treat your car like you would a child. You take care of it inside and out and no one could ever tell it recently celebrated its tenth birthday. Over those ten years, you and your auto have had some great times together, but now the unthinkable has happened and your car has been “totaled.” Does that mean that the two of you have to say goodbye? Totaling your car means that you have wrecked it badly, so much so that it is up to your insurer to decide if it is worth fixing. The insurer’s decision is based on the car’s worth. Minor damage to a very old auto could result in your carrier deciding to total it while major damage to a brand new one might not. Auto insurance claims adjusters typically determine a car’s cash value through their company’s proprietary database of prices. The decision to total a car varies with insurers. Some companies will total a vehicle if after the accident it is only worth 51 percent of its cash value. Others will decide to total the car at 80 percent. The insurance company pays you the car’s actual cash value less any deductible and your car is sent to a salvage yard to be auctioned off. The end results is usually an auction bidder buying the car for parts. The insurance company keeps the auction money, which offsets any costs over the amount they have collected in premiums. If you feel your car has been unjustly condemned to salvage, do you have any way to protest the decision? You do have some rights, but they are limited. You enter into a contract with your insurance company when you buy car insurance. That contract states that you can’t coerce your insurer to payout more than your car is actually worth. However, your carrier is obliged to ensure that you are “made whole.” That means the company is required to put you in the same condition you were in before the accident happened. If your car has been wrecked but you want to have it repaired, you should be able to do so. Tell your claims adjuster right away that you want to keep the car. Keep in mind that you will have to pay for the repairs yourself, but your insurer still has to pay you the cars actual cash value, less the deductible and less whatever the car would have brought at auction.
  18. 18. 18 The Wurzel Insurance Agency On Auto Insurance Before you decide what to do with the car, think it through. If you give up your car but later change your mind, it will be difficult to buy it back when auctioned. In most cases you cannot attend the auction without an auto salvage or auto dealer’s license. Newer model cars bring higher prices at auctions because their parts are highly desirable. That amount is probably more than what the company paid for your claim, so don’t be surprised if your carrier decides to send it to salvage in spite of your objections. Remember, if you keep the car and it is seriously damaged, you will only have a small part of the money needed to repair it. If it isn’t repairable, you will be left with having to dispose of the vehicle. If you go ahead with repairs, be sure the car is completely repaired. When the insurer deemed your car to be totaled, your state’s department of motor vehicles (DMV) was notified. That’s because your policy expired with the loss of the vehicle. Insurers can refuse to completely underwrite a car that’s been totaled and repaired if the vehicle doesn’t pass a DMV inspection. As long as it passes, however, you should have no problem buying liability insurance, although buying comprehensive and collision insurance may be more difficult. Keep in mind, some insurers won’t provide this type of coverage for a previously totaled car. What You Need to Know about Auto Insurance Fraud and Staged Accidents Experts warn drivers to look out for staged auto collisions while they are on the road. More than half of the fraud referrals in the insurance industry are for auto insurance fraud. These crashes are usually planned by organized crime groups. Perpetrators target vehicles with high values and also those owned by counties or cities. The reason they target such vehicles is because they know these types almost always have insurance coverage. Experts say they have been successful in lowering the fraud rates and have been bringing more perpetrators to justice. This helps prevent millions of dollars from being wasted on auto fraud claims. When drivers are forced into crashing by perpetrators, they may only see minor dents or other damages. However, the crooks will always appear to be injured and make immediate complaints of pain. There are several popular methods they use.
  19. 19. 19The Wurzel Insurance Agency On Auto Insurance Swoop and Squat With this method, a perpetrator swoops in front of the victim’s car, slams on the brakes and causes a rear-end crash. In most cases, the perpetrator has other passengers in his or her vehicle, and they will all fake immediate injuries. After this, the perpetrator and the passengers will make inflated claims against the victim’s insurance policy. Sideswipe People who are driving on the inner side of a duel left-turn lane when approaching a busy intersection should be extra careful. If a person drifts into the outer lane while making a turn, a crook may purposely hit that individual’s vehicle. Drive Down This method is used when a person is trying to merge into traffic. A crook will slow down and wave at the person trying to merge. When the trusting driver attempts to merge, the crook will hit that person’s vehicle. At the time a police report is filed, the driver will deny waving the victim over into traffic. This same tactic may be used in parking spaces as well as on the road. Shady Helpers Following a crash, a stranger may approach a victim or phone that person. This individual will try to tell the victim to seek treatment at a specific medical facility or take the damaged vehicle to a certain shop for repairs. He or she may also insist on the services of a certain lawyer. In many cases, these may be attempts to set a person up tor fraudulent medical treatment, repairs or legal help. It is best to discuss any concerns with an agent and ask for reliable referrals.
  20. 20. 20 The Wurzel Insurance Agency On Auto Insurance When these scams happen, the victim’s record can be blemished and life is disrupted for a while. Victims also face costly claims against their insurance policies, which means their premiums will subsequently rise. In some cases, this could be hundreds of dollars every year. In other cases, a person’s policy may not even be renewable. Some victims have been killed or terrorized by perpetrators during or after these incidents. When cars are hit too hard, the passengers may sustain permanent disabilities or die. Dealing with endless car repairs, police reports, claim settlements, lawsuits and other problems can be a nightmare and cause a great deal of stress. It is important to fight back and prevent these incidents. There are several things a person can do while on the road, which include the following: • Always follow at a safe distance behind a vehicle. • Look past the car in front while driving to watch for brake lights. • If a collision happens, count the passengers in the other vehicle or vehicles involved. • Take photos or videos of the damaged vehicles and injured passengers. • Call the police immediately after an accident occurs. • Take note of how the passengers behave after a collision. • Witnesses should always get involved and watch for signs of scams. • After an accident, contact an agent if fraud is suspected. • Visit lawyers, doctors and repair shops that are trustworthy. • Keep detailed records of medical treatments, repairs and legal info. • Verify credentials of lawyers and doctors. What Every Parent Should Know About Teen Drivers and Car Insurance If a teen driver does not chip in for insurance, the parents may wind up paying a large amount of money to add the teen to their policy. This is because many insurers consider anyone under the age of 25 a risk. These tips will help minimize the impact of adding a teen driver to an insurance policy. Know the facts about accidents. According to the American Academy of Pediatrics, more than 33 percent of deaths among people between the ages of 16 and 20 resulted from auto accidents. Although this is a grim statistic, it is a good incentive to enforce the idea that teen driving is a privilege. Set and enforce rules. Although parents cannot control the cost of insuring a teen driver, they can control how well a teen respects the privilege of driving. It is important to set some rules for teens to follow before they get behind the wheel. The following are some examples of rule topics: • When the teen is allowed to drive or when driving is prohibited. • How many friends are allowed in the vehicle at one time. • The number of miles allowed per week. • In a big city, the areas of the city to avoid.
  21. 21. 21The Wurzel Insurance Agency On Auto Insurance When teens are new drivers, limit their passenger allowance to one person. Distracted driving is a major cause of auto accidents for teens. Consider drafting a contract for the teen to sign. If the teen breaks the he or she loses driving privileges for a specific amount of time. Also, parents should consider installing an app that disables or limits a teen’s mobile phone capabilities while the vehicle is running. Compare costs of adding a driver or buying a vehicle. While not all parents want to buy a vehicle for a teen driver, it may be cheaper on a long-term basis. Adding a teen driver to a policy can be very costly. In some cases, it may be easier and less expensive to buy an economy car. Always consider options before paying a large sum to add a teen driver. Provide detailed information tor a quote. To receive an accurate insurance quote, be sure to provide complete information. The year, make and model of vehicle will affect the premium. For parents who plan to purchase a car for a teen, it is good to research economical vehicles that cost less to insure. Ask about discounts. Some insurance companies offer different discounts. However, not all companies offer the same type of discounts or the same terms. Some companies offer discounts for taking a driver’s education course, honor roll credentials, multiple cars on a policy, additional bundled insurance products and certain vehicle safety features. Look for coverage modifications. This should be a last resort for parents who decide not to buy their teen an older economical vehicle and are facing the cost of adding the teen to their own policy. Those who have high coverage limits may lower them, and increasing the deductible will lower the premium. Parents should not skimp on coverage. Keep in mind that a state’s minimum coverage requirements will not always cover the cost of hospital care for other drivers and passengers if the teen is responsible for an accident. For example, a limit of $50,000 for bodily injury with a maximum of $25,000 per person will not be enough if four passengers with bills exceeding $25,000 each for extended hospital stays. The key idea to remember is to revise coverage wisely and only if it is absolutely necessary. With these simple tips, parents can make this confusing process easier and avoid some costly mistakes. To learn more about teen drivers and auto insurance, discuss concerns with an agent.
  22. 22. 22 The Wurzel Insurance Agency On Auto Insurance Six Tips for Insuring Young Drivers Now that your blood pressure has recovered from giving your teenage driver her first driving lessons, it’s time to add him or her to your insurance policy. But teenage drivers and young adults are historically risky clients for insurance companies, and rates generally reflect that. What is the best way to manage the situation? Here are some things you and your new driver can do to keep premiums affordable. Tell Junior to Hit the Books Insurance actuaries, the bean counters who actually figure out the odds and set insurance rates, have long known that there is a correlation between good grades and good driving records. Kids who have the discipline and focus to do well in school statistically also have the judgment and impulse control not to get into a lot of accidents. Many insurance companies offer a discount to students with good report cards. If your youngster has a GPA of 3.0 or better, you may qualify for a discount on your insurance premiums. One idea: Compare the difference in premiums with and without the discount, and make junior pay the difference himself! Keep it in the Family Insurers like it when everyone in the family signs up. So much so, in fact, that many of them will discount premiums on family members. It is generally much more efficient to add a young driver to an existing policy than it is to get a separate policy. Use Multi-Line Discounts Many companies will offer a discount if you use them for multiple lines of insurance. For example, if you have your homeowners or renters insurance policy with a company, and your life insurance, consider placing your car insurance with the same carrier as well
  23. 23. 23The Wurzel Insurance Agency On Auto Insurance Get an Older Car Older cars are generally less expensive to replace than a new car. This means that if your young driver totals a 10 year old car, the insurance company has to pay less to replace the car than if she wrecks a brand new one. This translates to much lower insurance premiums if you carry collision coverage. Don’t skimp on safety, but don’t needlessly pay too much for a car for a young driver, either. Skip Collision Coverage You may want to consider skipping collision coverage altogether. For older cars, the bigger risk isn’t the cost of the car—it’s the covering your teenage or young adult driver against liability. You can recover from the cost of a single clunker. You can’t recover from a $100,000 judgment. If your family can afford to replace an old car, consider dropping collision altogether and adding to liability coverage. Avoid Tickets and Accidents The last part seems obvious to adults; it may not register yet with the kids. Impress on them the importance of maintaining a good driving record. Moving violations get recorded, and reported to the insurance industry. Even a single accident or moving violation can cause your premiums to skyrocket. And a single DUI conviction? Better invest in a bus pass, because those are the only wheels your kid will be taking for years. Coverage is nearly impossible or extremely expensive to find once a young driver gets a DUI. Debunking Some Popular Car Insurance Folklore You have probably heard at least one piece of urban folklore regarding some aspect of your daily life. Folklore is a bit of “wisdom” that gets repeated over and over as true, even though it usually has little or no basis in reality. It typically develops when people try to make sense out of a process they perceive as being complex, without bothering to investigate the facts. Even something as routine as buying car insurance comes with its own folklore. Here are some popular myths: Myth 1: The color of your car affects your insurance rate. This bit of folklore developed out of another popular myth, that people who drive red cars get more speeding rickets than other drivers. Insurance companies, in anticipation of this phenomenon, supposedly base a driver’s insurance rates on the color of the car they are driving, which is coded into the VIN number of your vehicle. Truth: Both myths are false. An insurer takes a number of factors into consideration when determining rates, but color isn’t one of them. Driving a red car isn’t necessarily a precursor to a speeding ticket and the VIN number doesn’t provide any information about a vehicle’s color.
  24. 24. 24 The Wurzel Insurance Agency On Auto Insurance Myth 1: It’s more expensive to insure a two-door car than a four-door one. Truth: It’s possible. Depending on the way companies classify cars when they analyze loss, injuries and claims, something as simple as the number of doors on your car could affect your insurance rates. Thus, one company may associate a relatively low history of claims with a particular model, while another company may have experienced nothing but trouble with the same vehicle. Myth 1: Parking tickets affect your rates. Truth: Parking tickets alone won’t affect your insurance rates. However, unpaid parking tickets could lead to license suspension which would affect your insurance rates. Myth 4: If I lend my car to a friend and they wreck ii, their insurance will cover the damage. Truth: Your car, your responsibility! And even though you weren’t in the car at the time of the accident, you will still receive a mark on your Insurance record and your premium could possibly increase.
  25. 25. 25The Wurzel Insurance Agency On Auto Insurance Factors That Influence Your Car Insurance Rates To drive legally all drivers in the United States must carry some form of car insurance. For many people, one of the most confusing aspects of car insurance is understanding how their rates are determined. The first factor that goes into determining your car insurance rate is the level of coverage you receive. In most states, liability car insurance is the only required form of insurance. However, this insurance does not cover you fully in the event that you are hit by an uninsured motorist, if your car is stolen, or if your car is vandalized. To have these incidents covered, you will need to have collision and comprehensive coverage. To have these levels of coverage, you will pay more than someone would pay if they only had liability. The second factor that goes into determining your rate is your driving history. For starters, records have shown that younger and inexperienced drivers are far more likely to be involved in an accident than more seasoned drivers. Because of this, drivers that are under the age of 25 will always have a higher rate than older drivers. For people of all ages, driving history also has a large impact on car insurance rates. An individual who has multiple at fault accidents, moving violations, or driving related arrests on their driving record will pay more for insurance than someone who has a clean record. Most negative marks on your driving record win clear up after about 5 years. Another factor that goes into determining your car insurance rate is the type of car that is being driven. All insurance carriers have information that shows the rate of accident, theft, and damage for every make and model of car. Cars that are more likely to be stolen or involved in accidents will result in higher insurance rates. Furthermore, cars that are worth more money and more expensive for the insurer to repair or replace will have higher rates. The location of your residence is another factor that goes into determining your rate. Cars that are stored in areas that have high rates of crime, accidents, or automobile theft will come with high rates. Furthermore, if your car is parked on the street or in an unsecured spot, your rate will be higher than if the car was parked in a secured garage. The location is also important because those who drive further to get to work will spend more time behind the wheel which increases their chance of having an accident Surprisingly, a driver’s credit score and marital status are also factors that go into determining a car insurance rate. Both of these factors have been historically correlated with higher rates of insurance claims being filed. People that are married or have better credit historically are cheaper to insure than single people with bad credit.
  26. 26. 26 The Wurzel Insurance Agency On Auto Insurance Four Rules of Thumb to Follow When Purchasing an Auto Insurance Policy There probably aren’t very many, if any, drivers that look forward to buying auto insurance. If you’re like most people, you feel that you have an overwhelming task when it comes to sifting through dozens of companies and agents to find the ideal insurer for your vehicle and unique financial situation. The process can leave you feeling unrewarded and irritated as you think about writing a check for a policy that you hope you’ll never need to use. On the other hand, you know that having auto insurance is a necessity that can be the difference between a financial catastrophe and e nduring a minor inconvenience if you were to have an auto accident. Furthermore, there are steps you can take that make the act of buying insurance less painful and complicated. The following four rules of thumb can help you drastically simplify the process, while still getting the best auto insurance policy for your needs: 1. Don’t forget to consider the size and type of vehicle you drive when you choose your limits. Insurers will not sell you a policy that is less than the minimum requirements for your state. However, that doesn’t mean that you should mistakenly opt for auto insurance limits based on the minimum amount required. Depending on the size and type of vehicle you drive, the bare minimum may not be enough to fully cover you if you should have an auto accident. For example, let’s say that you’ve selected the $10,000 minimum property damage amount set by your state, you drive a SUV or large truck, and you hit and cause $22,000 in damage to a brand new Mercedes. Since you’re only covered for $10,000, you will pay the remaining $12,000 out of your pocket.
  27. 27. 27The Wurzel Insurance Agency On Auto Insurance 2. Be forthcoming and honest with Insurers. Even if you think it won’t be favorable on your premiums, it’s extremely important for you to just tell it like it is when you’re asked about your driving history. You can choose to be less than truthful regarding your moving Violations and auto accidents, but you won’t be given an accurate quote. This wastes both your time and the insurers, as all insurers will check your driving record themselves and make adjustments to the quote based on your actual driving record. Be honest from the start and you will save time by getting accurate quotes that you’ll be able to compare side-by-side, 3. Look at the whole picture. It’s tempting to opt for the insurer offering the lowest rate, but cheapest isn’t always the best deal. Know exactly what you’re getting for your insurance dollars and pay careful attention to the fine print in the contract. Unusually low rates have a catch. Would you rather pay low rates with an insurer offering substandard service, or slightly higher rates with an insurer offering an attractive package and reliable 24/7 customer service? Are options on repairs and parts an important option to have? Is it price or convenience that’s at the top of your priorities? These are questions only you can answer in choosing your insurer. 4. Don’t waste insurance dollars on duplicate coverage, Look at all your auto coverages and ensure options aren’t being paid for twice. For example, AAA members most likely have their towing costs already covered and wouldn’t need a policy with roadside assistance. Finding the best auto insurance policy isn’t always fun or easy. However, by following a few rules of thumb during the selection process, you can certainly save yourself a lot of money, frustration, time, and regret.
  28. 28. 28 The Wurzel Insurance Agency On Auto Insurance Keys to Switching Auto Insurance Carriers There are many reasons to consider a change in auto insurance carriers. You may be unhappy with the service provided by your current insurer, or you may have found another insurer that offers better rates or service. If you review your coverage annually, you can be sure you continue to receive the best bang for your premium dollar. It pays to shop around because in some states there can be a wide spread in the premium for the same coverage. That’s because insurers base premiums on the number of claims incurred from a particular coverage group. A coverage group can be drivers of the same age or who own the same type of vehicle. If the number of claims for your coverage group increases during a calendar year, your rates will also increase. If that happens, it makes sense to check with other carriers to see if better rates are available. Canceling your old policy is usually a matter of writing your carrier and specifying the date coverage should be terminated. In some states, your new insurance agent will notify your former carrier for you. You will receive a cancellation request form that you must sign and return to your former insurer. Some companies will also request that you return the policy with the cancellation form. Be sure that you cancel your coverage in writing. Otherwise, the insurer will assume that you are still covered and when you fail to pay your premium, it will terminate coverage and report this to your state’s Motor Vehicle Department and the credit bureaus. This can hurt your credit rating and your ability to obtain a new policy. Before you cancel your old policy, be sure you have a replacement. Since most states require drivers to carry a minimum level of coverage, your former carrier will require you to provide proof of insurance before canceling your existing policy. If you do plan to switch companies, the best time is when your old policy is up for renewal. In this way, you will avoid paying printing and start-up expenses associated with the renewal process. The renewal notice is typically sent out one month before the new policy period begins. Most states allow approximately one month after renewal to switch policies without penalty. However if you miss the deadline, you could be liable for a cancellation fee. Keep in mind that standard auto insurance policies have a provision that allows you to cancel at any time. If you plan to cancel before your policy is up for renewal, the best time is at the end of a payment period. In this way, you won’t have to concern yourself with recovering the unused portion of your premium.
  29. 29. The Wurzel Insurance Agency 1942 W CR 419 - Suite 1000 Oviedo, FL 32766 Robert Wurzel, Owner/Agent (407) 977-5700 Phone (407) 977-5755 Fax