6 Things to Watch Out For When Shopping For Auto Insurance

6 THINGS TO WATCH OUT FOR WHEN

SHOPPING FOR AUTO INSURANCE

    A recent article was posted on NBCnews.com talked about the possibility that some Auto Insurers may be gouging their customers based upon their status as blue-or-white-collar professionals or their level of education  (article found here). This article, whether true or not, attempts to shine the light on the inner workings of the auto insurance industry. Although millions of US citizens spend billions of dollars each year on auto insurance, many of them don't understand how these companies work, or really what they are purchasing. This can make it hard to know exactly what it is you are purchasing, and why you are giving them your money. 

   When shopping for a new auto insurance policy, it may be difficult to know what makes one insurer better for you than another. We have provided some tips to keep in mind while shopping for an auto insurance policy that fits your needs. While reading this, keep in mind what auto insurance is designed to do: protect you, your property, and your assets when accidents happen resulting in property damage or personal injury. While auto insurance is designed to protect you, each policy and each provider is different. Here are a few things to keep in mind when shopping for auto insurance:

     1.   HOW MUCH PROTECTION DO YOU NEED? This is different for each person. Your level of protection is reflected in the liability limits of your policy. The liability limits will tell you the maximum payout for an accident for personal injuries suffered by an individual or individuals and for property damage. To figure out how much liability coverage you need, first look to your State laws to determine if there is a State Minimum Liability Limit required for all drivers and vehicles (which can be found here). For example, in Illinois, the state minimum coverage is 20k/40k/15k. This means that, under a policy with the minimum limits, an individual who is injured in an auto accident can recover a maximum of $20,000.00, a group of individuals who are injured can recover a maximum of 40,000.00, and a maximum of $15,000.00 can be recovered for property damage. 

     For most individuals, it is advisable to have higher liability limits for a few reasons. First, if you yourself are injured in a car accident, you may be able to recover under your auto insurance policy, but you are subject to the same limits. Meaning if your medical bills exceed your $20,000.00 limits, you are going to be stuck paying the excess bills yourself. Second, if in the unfortunate yet common occurrence happens where you are at fault for a car collision resulting in personal injury, the injured party can recover from your auto insurance policy up to the policy limits. Again, if the injured individual's medical bills or injuries exceed your policy limits, the individual may seek to sue you personally to recover the excess value of their injuries. In general, the higher the policy limits, the more protection it provides. 

     2.   WHAT DOES YOUR DRIVING RECORD LOOK LIKE? Your driving record will reflect the rates you can get, and level of protection you require. In general, the more tickets, citations, and collisions you have on your record, the higher your premiums may be, and likely the higher level of protection you may need. Although it may not be true, the assumption is that the more accidents and tickets you have on your record, the more likely you are to be involved in a collision in the future. If you don't have your driving record with you, it can be obtained from most States' Department of Motor Vehicles. 

     3.   SHOP AROUND FOR COMPETITIVE RATES AND DISCOUNTS. Find something that you can afford. Different insurance companies charge different rates for similar policies, and many will provide discounts for safe driving, paperless billing, car safety features, or other situations. There is no point in paying more than you have to when there are cheaper rates or discounts available, provided you are getting the protection you need. When shopping for affordable rates, you have to remember that you are buying protection. Saving a few hundred dollars a year isn't worth it if you have to pay thousands out of pocket later in the event the unfortunate happens.

     4.   WHAT IS THE INSURANCE PROVIDER'S REPUTATION? When you purchase auto insurance, you are putting your trust in another entity. Every state and the federal government has passed extensive legislation governing the insurance industry to ensure that their customers' interests are protected, an insurer with a good reputation, and few complaints will be much easier to deal with. Vehicle collisions are stressful enough without adding the stress of dealing with difficult customer service from your insurer. Some things to look for include customer complaints, poor credit ratings, customer satisfaction ratings, and financial strength ratings. You can contact an independent insurance agent to find out this information, or you can find it at the National Association of Insurance Commissioners, A.M. Best, Consumer Reports, and JD Power and Associates.  Also don't forget to ask your friends and family who may have had some experience with those insurers.

    5.   HOW DOES YOUR INSURER DEAL WITH CLAIMS? In the event of a collision, this is something that will have a massive impact on your life. Does your insurer have a policy of honoring claims in good faith? Do they have a reputation of rejecting or fighting all claims? What are their standard requirements before claims are honored? While the vast majority of insurers will conduct independent investigations into most claims to ensure that the claim is covered, some will honor claims quicker and with less hassle than others. Less hassle means less money and time spent by you trying to recover.

    In the event that you are involved in a car accident and are injured, you may file a claim against your own policy. If your insurer has a reputation of honoring claims in good faith, this can be a quick, and even pleasant experience for you. These insurers will recognize when a claim falls under their policy, will recognize the value of the claim, and will pay out the applicable benefits quickly and painlessly. This is the same for these insurers for claims by other individuals who may have been injured in collisions for which you are at fault. Once this is done, the claim is over, and you can move on with your life.

    However, not all insurers treat claims this way, and many , it would seem, do not have your best interests at heart. For the insurers that have a reputation of fighting and denying most claims, these scenarios play out much different. If you are injured, are covered by one of these insurers, and file a claim with them, it can be months, even years, before any benefits are paid out. You may have to hire and pay an attorney, take hours out of your day to give repeated sworn statements and depositions, pay for arbitrators or court filing fees, and appear in court or arbitration before the insurer is willing to honor the otherwise legitimate claim and pay you your benefits. This plays out the same when others are injured by you in a collision. If your insurer is denying someone else's claim, this is usually when lawsuits get filed, and you have to spend your time in court. Further, in many states, insurers are required by law to negotiate on behalf of their insureds in good faith. In Illinois, if they deny an otherwise legitimate claim by someone, or fail to make a reasonable settlement offer, and the injured party obtains a verdict in excess of the policy limits at trial, they can come after your personal assets to satisfy the excess verdict. This is exactly what you are paying your insurer to protect you from. 

     6.  REVIEW YOUR CONTRACT AND ASK QUESTIONS. Finally, make sure you review your insurance contact before you sign. This should contain all the information about your policy and your requirements as an insured. If you have any questions, or if something seems unclear, ask questions, and if you are not satisfied with the answers, you can seek out the advice of an attorney.

*This is attorney advertising, and is not intended to be taken as legal advice, nor is it intended to create an attorney-client relationship. Any advice given in the preceding statement is given as general advice and is not intended to be relied upon as legal advice for any specific scenarios. For specific advice, or for answers to your questions, call Eckert & Smestad (312-789-4810) or call a qualified attorney licensed in your jurisdiction.