Car insurance advertising is flooded with messages about saving money. And of course, Brightway Insurance Agents dig deep to make sure our customers get all the discounts and savings they’ve earned.
However, truly providing service to customers means going a step beyond just helping them save a few bucks. It means getting them to think about the balancing act between price and a level of coverage that provides financial security. It means getting them to think about value.
If you were to walk into a Brightway office and ask about Car insurance, an Agent would tick through a virtual checklist of considerations. Each of these considerations is intended to help you understand the balancing act, and be confident you’re getting the best possible policy for your money.
- Consider liability coverage limits beyond the minimum
Your policy has two main liability coverages: Bodily Injury (BI) and Property Damage (PD). These form the core of your policy. If you’re responsible for a crash involving another driver, your liability coverages ensure your insurance company will pay—up to a limit you’ve chosen when you bought the policy—for the other person’s medical bills, repair shop fees and other expenses related to their injuries or damage. Each state has required minimum liability limits. Higher limits cost more money and provide more coverage.
Fact is, those minimum limits are much lower than the likely cost of a crash. The insurance company would pay until it meets your policy’s limits—then it’s done. Any excess costs would fall to the person legally responsible for the crash—you. That could leave you personally liable for tens, or even hundreds, of thousands of dollars.
So when you buy a policy, the limits you choose ought to at least match the value of your personal assets, including money in bank accounts, retirement and college savings, and the equity in your home. These assets could be vulnerable if you’re responsible for an accident, you’re sued and you don’t have adequate liability limits.
- Consider Umbrella coverage if your assets exceed your policy’s maximum available limits
On the other hand, say your assets are greater than your policy’s maximum available liability limit. The maximum varies by company, but it’s typically around $500,000 for combined BI and PD. Then it’s time to think about Umbrella coverage.
Umbrella is supplemental liability coverage, usually with limits ranging from $1 million to $5 million. So, if you’re responsible for a crash causing $1 million worth of injuries and damage, your Car insurance policy would cover the first $500,000, and the Umbrella policy would cover the rest. Your assets would remain safe.
Many—though not all—Auto insurance companies offer Umbrella policies. An independent agent can help you decide if this coverage is right for you, and can provide some options for getting it.
- Consider Collision and Comprehensive coverages for newer cars
Collision and Comprehensive help pay to repair damage to your own vehicle—damage that you’re responsible for. Also, if you are leasing or financing your vehicle, it may be a requirement of the loan or leasing agreement, along with a specific deductible amount.
Unlike Liability, these coverages don’t come with limits. They do, however, come with deductibles. A deductible is your dollar-amount share of the costs to get your car repaired. You choose from a range of deductible options when you buy your policy. The lower your deductible, the less your policy costs.
So, say you’ve chosen a $500 deductible, and the cost to repair your car after an accident is $5,000.
You’d pay the repair shop $500, and the insurance company would pay the remaining $4,500.
Again, unlike liability, Collision and Comprehensive are completely optional. If your car holds minimal value, Comprehensive and Collision coverage may not be beneficial to you. This is especially true when a large deductible is involved. For instance, if your car is worth $2,000 and your policy has a deductible of $1,000, your insurer is only able to pay out up to $1,000 on a Collision claim.
- Consider Gap coverage if you’re financing
Another optional coverage, Gap, is important if you owe more on your car than it’s worth. This is quite common for newer cars that can depreciate in value faster than the rate at which the loan is paid off.
Say you owe $25,000 on your car, but the car is currently worth $20,000. Then, the car is stolen, not recovered and declared a “total loss” by the insurance company. The comprehensive claim would only pay for the value of the vehicle—$20,000. Gap would pay the additional $5,000, ensuring you have enough money to pay back the bank.
Most banks require you to have Gap as a condition of a car loan. Some finance companies even offer it as part of the loan, so be sure to confirm this with your finance company before adding it to your insurance. Once you’ve paid off the loan, it makes no sense to keep the coverage. So you can then drop it to save some money.
- Consider a variety of other coverage options
Beyond these coverages, you’ll find most Car insurance policies offer a variety of additional options. These include Rental Reimbursement, Med Pay, Personal Injury Protection (which is required in some states) and even Roadside Assistance. Each of these coverages adds additional cost to your policy, so discuss them with your Agent, understand what each offers and choose wisely.
Getting proper Car insurance is a matter of balancing cost and coverage levels. Your Brightway Agent can help you understand that balancing act and put together a policy that’s right for you. If you don’t have a Brightway Agent, click here and enter your zip code to find the closest Agency near you.