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Insurance

2006-11-01 11:31:00

Ask the insurance man - series

ANSWER: You are correct. Buying the right limits of auto insurance is serious business. It should be more than responding to a commercial or a tip from a friend. But, like most things, information serves us all well in making the process more simple and feeling good about the decisions we make. In regards to how much liability protection you need, always keep in mind, even the most careful driver can make a mistake and cause an accident. The next time you get in your auto, it's possible you could be involved in an accident in which someone else is seriously injured. You don't even have to be 100% at fault in the accident to face financial liability. You are buying Bodily Injury coverage to protect your assets (and assuming you don't wish to file bankruptcy, protecting even your future assets) in the event of a judgment against you. Your per person Bodily Injury limit should be at least as large if not larger than the value of the sum of the following assets: • Equity in your home (Market Value - Mortgage) • Cash Value of your vehicles • Stocks • Bonds • Bank Accounts • Value of your business • All other assets What most auto owners fail to think about is how inexpensive a Personal Liability Umbrella Policy can be. Most companies do not provide limits in excess of $500,000 on the auto policy. For very little money, you can increase this with an umbrella up to 1 to 10 Million dollars. Think about it! The umbrella also raises the limits for the Property damage liability. Consider just how much it would cost to replace one of those big 18 wheel tractor trailer rigs loaded with high-priced cargo if you made a little mistake and caused the accident. QUESTION: What is the difference between collision and comprehensive coverage? ANSWER: Comprehensive - This optional coverage pays for damage to your auto caused by perils other than a collision. This includes fire, theft, hail, vandalism, riots, damage caused by animals (deer jumps out in front of you), and glass breakage. There are various deductible options that you can select for this coverage. Keep in mind that not every non-collision related loss is covered under Comprehensive. For instance, your damages are not covered if they are caused by wear and tear, freezing, mechanical breakdown or road damage to tires by potholes. Also, certain property such as tapes and compact disks are not covered. Finally, make sure to notify your insurance company of any customization you do to your vehicle after it is purchased or it may not be covered. Note that sound equipment like CD players, AM/FM cassettes, and TV's are sometimes covered under your auto policy if they are permanently installed. Collision - This optional coverage will pay for damage to your auto regardless of who causes the accident including a hit/run occurrence if your car is legally parked. Collision Coverage applies if your auto is hit by another vehicle or if your auto hits other objects that cause damage to your vehicle. There are various deductible options, which you can select for this coverage. QUESTION: Do I Need Comprehensive & Collision Protection On My Automobile? ANSWER: Many people wonder if they should always purchase Comprehensive & Collision protection. In order to make the decision, you need to know the current value of your auto and the cost of coverage. Generally speaking, vehicles decline in value as they age. Only you can decide if physical damage coverage is necessary after considering whether the cost of insurance is more economical than the cost of repairing or replacing the car at your own expense. Nonetheless, here are some guidelines to help you make a decision that is best for you. • If your auto is leased or financed, you are probably required to maintain Collision as well as Comprehensive coverage. • If the value of your vehicle is only slightly higher than the deductible chosen, then it makes no sense to purchase Collision or Comprehensive coverage. QUESTION: Doesn't 'no-fault coverage' take the place of Comprehensive & Collision if the accident isn't my fault? ANSWER: This is a very common misconception about 'no-fault coverage' which was part of the law passed in Kansas many years ago affecting auto insurance. No-fault coverage only helps pay for medical injuries and related costs. It never pays for property damage to any of the damaged vehicles. QUESTION: If my friend drives my auto, is my auto insurance still going to pay? ANSWER: Whenever you give permission for a friend or associate to borrow your car, your auto insurance will still pay as though you were driving it. There could be coverage issues however if your friend gave permission to someone else to drive. Only you as the insured can give the permission to use the vehicle. QUESTION: Should I put my teenager on a separate policy with lower bodily injury limits to save money? ANSWER: Hopefully your agent will advise against doing this. It would be wise to have all children that you consider as dependents on your policy. An injured party will most likely go after the parents’ assets if the at fault minor child has insufficient insurance coverage. Also, bear in mind that inexperienced drivers have accidents at a much higher rate than experienced drivers do. QUESTION: What happens if I am a passenger in a friend's car and I'm injured as a result of an uninsured motorist? ANSWER: If you are a passenger in a friend’s auto and you are injured as a result of an accident, and if you also have an auto titled in your name and have liability insurance on that auto (as the state requires you to have), then you will receive medical benefits from your own insurance company. This is the basic principal of the 'no-fault coverage' discussed earlier. If you do not have an auto titled in your name and no personal auto insurance, then you will most likely be covered by your friend’s auto insurance (assuming he/she is not part of the many uninsured motorists in Kansas). That's all the space I've been given this month. More next month.