According to statistics, in 2016, there was approximately 7.3 million police-reported vehicle crashes in the United States alone. Thus, it is imperative to have an auto insurance policy in place that provides optimal coverage.
However, the majority of people do not have a complete grasp on how their auto insurance works. Mainly because it involves a number of complex policies, guidelines, and documentation, that can be overwhelming and frustrating to understand.
Moreover, insurance companies are also often more concerned about protecting their finances and bottom line than they are in paying you your claim. Consequently, there are various loopholes in the car insurance sector that can hinder your efforts to reclaim your money in case of an accident.
Following is a list of five things no auto insurance company will tell you:
Your crashed car can be declared a total loss
If your car was in an accident and suffered damage, you may consider deeming your vehicle a total loss. Having your car declared totaled by the insurance agent may seem like the best option. However, the compensation you receive from the insurance company might be less than what your car is worth. Consequently, the amount your recover will not be sufficient to buy a new vehicle.
On the other hand, the insurance company will benefit from totaling your vehicle, as it is often cheaper to do that as compared to paying for all the repair work.
The criteria that determine whether your car is a total loss vary for different auto insurance companies and depend on the state law as well. In general, the agency compares the cost of repair to your car’s value, to calculate the total loss “threshold” to check if your vehicle is totaled or not.
You can lose your coverage or have your claim denied
Insurance companies can cancel your policy under certain circumstances such as failing to pay your premium on time or losing your license to suspension. When an agency drops you as a client, they are responsible for notifying you in writing, along with a valid reason for doing so, promptly. If they fail to provide you with a relevant reason or treat you unfairly, you can approach your state’s department of insurance for a legal recourse.
Similarly, your insurance claim can be denied, for example, if your car is damaged intentionally, in road racing, or due to wear and tear. The insurer can also discredit your claim if you lie in your application, for example, if you told the insurance you are the only driver even though other members of the household use the car too.
Your rates can go up when you claim insurance
The way an insurance company sets its premium rates is often shrouded in mystery. Moreover, you may be unaware of the fact that the insurers can increase your rates after a claim. The formula that calculates the applied surcharge can be very complicated even if you have a document with your auto insurer’s surcharge schedule.
The process can be even more complex if it is your second accident in recent times. However, this should not deter you from reporting an accident and filing a claim with your auto insurance agency. It can be risky as a damage or injury you deem irreverent might escalate into something more serious.
Most useful coverage might be cheaper than you think
Your car insurance company might be aware of ways you can save on your premium. You can get a discount if you take a driver improvement course, you renew earlier than the due date, or your car has particular safety features.
You can also secure reasonable rates if you buy bundled plans, such as property and auto insurance, from the same company.
Car insurance does not cover your personal property
Even the most comprehensive auto insurance policy does not cover the personal belongings you carry in your car. If you had valuable items in your car that got damaged in a road accident or stolen along with the vehicle, insurers do not consider them when deciding on the insurance amount you are eligible to receive. Therefore, it is best to avoid carrying items of value in your car or have them insured separately.
The best auto insurance company is the one that provides you with comprehensive details about the technicalities of car insurance and is upfront in their dealings. Furthermore, you should also read your insurance policy thoroughly, so you are aware of the extent of your coverage. This ensures that there are minimum hurdles when you file for a claim.