The Simple Dollar Guide to Car Insurance

Welcome to Car Insurance 101, your primer and guidebook for understanding and navigating the exotic territory of automobile insurance. My aim is to explain everything you need to know about insuring your automobile, its occupants, and all objects in your path.

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Here’s how the guide is structured:

I. Introduction: Car Insurance 101

How It All Works

The basic concept of insurance is simple: You pay an insurance company money to guarantee that if your car is damaged or destroyed, your insurer will then pay to return it to its original condition, or else replace it. The same goes for coverage for physical injuries: The insurer guarantees that you will get the treatment you need to recover until you return to your original state of health.

If only it were that simple in the real world! Complexities can arise when you and the insurer try to assess the “fair market value” of your vehicle or when your health and well-being are called into question. When it comes to insurance coverage for yourself and your property, much is subjective, whether it’s the exact value of your lightly-used automobile or how much discomfort you’re feeling and how much your medical claim is really worth. These are just a few examples of the curveballs insurance companies might throw your way – this guide is designed to teach you how to handle these and many other situations; with this knowledge, you’ll save the most money and make the most effective use of your time.

When it comes to insurance coverage for yourself and your property, much is subjective

As far as parachutes and first aid kits go, you don’t know their true value until you have to use them. At the same time, you might not know the value of your insurance company until you have to make a claim (jump to dealing with claims). This guide will teach you what to watch out for and then how to choose your next car insurance company and the coverage that’s right for you.

II. Shopping Around

A. Ask Around

Check in with local doctors, body shops, and personal-injury lawyers to ask which insurers they recommend and which ones they say to avoid. Small businesses like these will have first-hand experience with good and bad insurers, and most will take a few minutes to make some recommendations. For body shops and doctors, ask a handful of basic questions:

  1. Is your business a “preferred provider” or do you have a contract with any insurance companies? (If they answer yes, you may as well hang up, as they’re unlikely to offer impartial advice if they have a contract with an insurer.)
  2. Which insurance companies do you recommend?
  3. Which are the cheapest, which are the most expensive?
  4. Which insurers have the best customer service?
  5. Which companies do you suggest I avoid?

Call three or four businesses out of each category, including chiropractors, physical therapists, and body shops that advertise “pro-consumer” values, and ask who they recommend. If they’re forthcoming with information and honest opinions on insurers, keep the names of these doctors and body shops just in case you’re involved in an accident and need good service providers later on.

Check in with local doctors, body shops, and personal-injury lawyers to ask which insurers they recommend and which ones they say to avoid

B. Get Advice from Experts, Not Friends or Family

A close friend or relative might tell you how positive their insurance claim went and how they’ve been with their company for years, but that doesn’t mean their company will be best for your needs. Unless they’re a claims expert or personal injury attorney, chances are your favorite aunt or best friend haven’t taken time to read their own insurance policies in great detail, and they may be covered by a company that’ll eventually leave them in the dust.

C. Big Companies vs. Small Companies

keep an eye out for big insurers masquerading as small ones

Buying insurance from a major national insurer will usually get you the cheapest rates, but at the same time, you might be treated like just a number instead of a valued customer. A small insurer that covers your local region will often offer better service and treat you like a truly valuable customer – because for them, you really are. But keep an eye out for big insurers masquerading as small ones – ask the sales people and do some online research to determine if the “local” company is really just an extension of a major insurer with the same claims practices as the big corporations.

Standard & Poor’s outlines the corporate structure, subsidiaries, and ownership details of most major insurance companies. Use their search tool and simply type the name of the company, but leave out words like “insurance” or “company” from your search terms. Once you’ve found one, scroll down to the “related entities” section. For others not listed by S&P, try searching for companies with AM Best, Fitch Ratings, or Moody’s Investor Services, all of which offer ratings for major companies. If the company you’re researching is too small to be rated with any of these, go to the insurer’s website and read the “About” section, and look for the fine print at the bottom of the website to see if it is listed as a “product line” or subsidiary of a larger company.

D. Mutual Companies vs. Stock Companies

Just like big banks and smaller credit unions, insurers run the gamut from for-profit corporations to mutual companies that are owned by their customers instead of a board of investors. Mutual companies are owned by the policyholders; if the company profits over a given fiscal period, it can either add the money to its resource pool or distribute it back to the policyholders in the form of a dividend payment.

Shareholder-owned companies pay out profits to their investors, and, generally speaking, are under more pressure by investment boards to keep costs down and deliver record profits on a yearly basis. A 2008 article by Forbes magazine outlines the pitfalls that privately-held insurers suffered after the ’08 financial crash, as well as the pressures placed on those companies by their shareholders in the interest of profits.

In their book, “From Good Hands to Boxing Gloves,” authors David Bernardinelli and Michael Freeman detail how many large insurers have refocused their business models in recent years to emphasize profits over customers. With many stock-owned insurers, you may experience cheaper premiums in the short term, but risk a potentially nasty claims experience in the future if you sign on with a cheapskate company.

E. Ask Them to Step Up to the Plate

If one insurance company gives you a rate quote higher than the others, call in and talk to someone about it. In most cases they’ll give you a competitive price if you put them to the test – don’t just assume what you get in an online quote is the only answer you’ll get.

they’ll give you a competitive price if you put them to the test

III. Insurance Policies and Language

A. Choose Wisely and Read Carefully

Once you’ve picked out a few potential insurance companies, you’ll want to spend some time researching their policies so you can choose the best one. Don’t assume all insurance policies are created equal – you’ll want to make sure the insurance policy isn’t setting you up for a potentially difficult and costly claims experience in the future.

So for anyone who wants to be completely covered, remember: If you blindly sign up for a not-so-consumer-friendly policy, when it comes time to get reimbursed for your wrecked vehicle, you may have two choices:

  1. Accepting a settlement for thousands less than your car’s value, or
  2. Attempting to sue your insurance company to recover the difference

Instead of pursuing an arduous and costly lawsuit over months, maybe years, or getting short-changed by a few grand, wouldn’t you rather just spend a boring afternoon reading through your policies?

Don’t assume all insurance policies are created equal

If you’re just buying liability-only insurance, this section may not apply to you, since you’re just paying for the minimum-required coverage in your state, and in the event of an accident, your insurer won’t owe you anything. -For the rest of us, read on to learn what to look for in a good policy.

B. How to Read an Insurance Policy

Most major insurers offer competitive pricing on premiums, but some offer better and more consumer-friendly policies than others. Chances are you can find an insurer that offers low rates and a policy with good terms and conditions. You won’t want to buy insurance from a company that writes policy that almost exclusively favors themselves. Some policies contain language like “The Insurance Company reserves the right to hire its own expert to assess the value of your damaged property. Such an assessment will be binding.” That might be a slight exaggeration, but only slightly.

You would much rather have a policy that contains friendlier language and “Arbitration Clauses.” These clauses stipulate that if or when a dispute arises about the value of an item (typically the customer’s car), the customer and the insurer can each independently hire their own experts, and the experts will convene to establish an agreed-upon value. Such a measure is likely to produce a reasonable agreement, while also costing thousands less than hiring attorneys and going to court.

This is just one example of what to look for in a good insurance policy. To look for other examples and know with confidence whether a given policy is worth buying, here are some tips on how to go about reading and identifying a good insurance policy.

  • How to do it: Plan ahead. You might have to ask for a copy of an insurer’s policy a few days or a week in advance, as some of them only provide hard copies and only distribute them by mail, which can take several days.
    • Make sure to also ask for your state’s riders, substitutions, exclusions, and other supplemental policy documents, since the various laws governing insurance in each state will cause insurers to add state-specific additions to their policies. Most salespeople or agents won’t automatically include this stuff unless you specifically ask for it.
  • Where to look: You’re looking for a litmus test, so in most cases you don’t need to read the whole policy to know whether the insurer has a “consumer-friendly” policy or not – a few key sections should tell you enough.
    • Skim through the policy’s index, and find the sections on “Collision” and “Personal Injury” coverage. Within these sections, find subsections with headings like “Insuring Agreement, “Limit of Liability,” “Payment for Loss,” “Damages We (the insurance company) Will Pay For,” and “Determining Amount of Loss.”
    • Look for a paragraph or subsection that describes how the company will determine the “amount of loss” or how they will assess your car’s value.
  • What you’ll find: Make sure to read through the policy’s supplemental documents that pertain to your state.
    • Search for any phrases that appear to skew things heavily in the insurer’s favor, like language that adds too many clauses and exclusions. Typically, though, you’ll get a sense of whether a company is “consumer-friendly” or not by reading through the main sections of its policy.

Compare a few policies and you’ll see how some companies use their language to skew things heavily in their favor. Sometimes it’s as simple as identifying policies that are written in a plain, easy-to-follow manner; as if a reasonable person wrote it instead of a think-tank full of lawyers and adjusters.

So remember to favor readable policies! You should be wary of any writing that’s dragged down by complex language and opaque phrasing. If “payment for loss” is qualified and described with too many caveats, conditions, and “only if the insurance company says so” type phrasing, you might want to move on to the next policy.

Compare a few policies and you’ll see how some companies use their language to skew things heavily in their favor

C. Don’t Take Their Word for It

Most sales people and agents at insurance companies are not experts on reading or interpreting insurance policies. If you call and ask your insurer’s call center employees or its sales staff about the specifics of a policy, don’t expect to get a very detailed answer. So, instead just request the company’s policy in advance and read through it as described above. Doing this will give you both peace of mind and a better perspective on how the policy will work if you need to file a claim.

IV. Assessing Your Own Risk

A. What Your Car and Your Driving Say About You

According to the Insurance Information Institute, a variety of demographic factors impact the price of your insurance premiums, including age, gender, education level, income, credit score, driving habits, where you park, where you live, what type of vehicle you drive, and driving history. Every insurer on the market assesses these factors to determine the risk you pose of causing an accident or opening a claim – Section VI.A for steps to follow at the scene of an accident.

Overall Losses and Raised Car Premiums

This graph shows the average rates of overall loss for different vehicle types; luxury cars, for instance, have higher overall losses than station wagons, which means higher payments per claim. Click image to enlarge.

The National Highway Traffic Safety Administration NHTSA also reports that, within each vehicle category, different models pose higher or lower costs of repairs, depending on the varying prices of parts between manufacturers. Typically, German cars have the most expensive parts and are often slightly more expensive to insure than their Japanese and American counterparts. If you’re shopping for your next car, review the NHTSA report to see which models pose lower costs of repairs, and you’ll likely get better insurance rates by choosing from those models. Trent points out 6 other reasons that you could be paying even more for your luxury vehicle than you ever imagined.

When you obtain rate quotes from various insurers, most will ask you to answer detailed questions about these categories. It’s best to answer as honestly as possible, but where you’re unsure, you’ll likely get a better rate quote if you fall on the conservative side. Will you be driving more or less than 3,000 miles per year? Will you use your vehicle primarily for pleasure, weekend-only driving, or will you use it for your daily commute and weekend errands? Do you plan to keep it in your garage or park it on the street? The answers to these questions will affect your rates. If and when you do end up filing a claim, your insurer will document your car’s mileage, see if it compares with what you’ve reported, and adjust your rates accordingly.

If you’re shopping for your next car, review the NHTSA report to see which models pose lower costs of repairs

While your insurance company might check up on you and adjust your rates based on your driving habits, you should check up on your insurer if your demographic changes. Ask for a rate review or shop around for better rates if you just completed a college degree, stopped using your vehicle for regular commuting purposes, recently moved into a residence with garage parking, or moved to a new neighborhood.

B. Choose Your Next Car Based On Insurance Expectations

Obviously your next vehicle purchase will likely be a long-term investment, so make sure you do some research on how it will affect your pocketbook. As discussed in section 2.I, insurance rates vary drastically depending on what vehicle you drive. Even if your current vehicle has plenty of life left in it, it might be worth it to sell your current car and buy something newer that offers you lower long-term insurance rates (think transitioning from a sporty 2-seater to a fuel-efficient four-door model). The rate difference per month might surprise you, so don’t think that such an option is out of the question.

Relative Auto Insurance Claim Severities

This graph notes the claim frequency of 2- and 4-door cars, pickup trucks, SUVs, and other automobiles frequently seen on the road. Click image to enlarge.

C. Add-Ons and Extras You’ll Need

Specialty-line insurance is offered by most major insurers for a variety of reasons. The most common types include:

Uninsured or Underinsured Motorist Coverage (UM or UIM)
This type of coverage applies when a driver with no insurance coverage causes an accident, and in most policies it covers “phantom” or hit-and-run drivers. Not having it could force you to file such a claim on your Collision Coverage, which could raise your rates.

“GAP” Coverage for Loans
If you have a loan on your car, this coverage is a must. Most companies refer to it as Guaranteed Auto Protection, and it covers the difference – the “gap” – between the amount you owe on your loan and the value of your vehicle. Imagine you’ve just bought a brand new $20,000 vehicle. After you’ve put two-thousand miles on it in the first six months, the car has devalued to about $18,000, but you still likely owe at least $19,000 on the loan. If your car is destroyed, without this coverage your insurer will only pay you the $18,000 and you’ll be left to pay off the extra $1,000 out of pocket. GAP coverage will require the insurer pay whatever amount is left owing on the loan, and it’s almost always worth the money just in case.

Custom or Specialty Equipment Coverage
In most insurance policies, this type of coverage generally applies to aftermarket radios, GPS units, and upgrades or modifications that are attached to the vehicle. Think of it as coverage for things that would be desirable for thieves to steal out of your car, like a nice stereo system or custom wheels. Without it, your insurer will only cover the cost of the vehicle’s stock equipment and features. You should call your insurance agent or salesperson for details in these areas.

V. Choosing the Right Coverage with the Right Price

A. To Bundle or Not to Bundle?

Most insurers offer “multiple-line discounts”, where you’ll save money on all coverage when buying home or renter’s insurance along with your auto, motorcycle coverage, life insurance, or other types from the same company. If you have multiple assets and need various types of insurance, ask your insurer what sort of discounts they will offer if you bundle multiple types of coverage.

B. Higher Deductibles, Lower Premiums

Another way to save money while maintaining coverage for your own mistakes is to sign up for high deductibles. Instead of $250 or $500, you might pay $1,000 or more when your car needs a repair, but you’ll also pay lower rates. If you’re an avid reader of this site and can expect to have more than $1,000 ready at a moment’s notice, then you should definitely sign up for this option.

C. Paying in Advance vs. Paying Monthly

Most insurers offer the option to pay for 6-months or a year’s worth of coverage all at once or paid on a monthly basis. You’ll often get a discounted price for paying all at once instead of by the month.

D. Ask About Discounts

Many insurers offer various discounts for students, good drivers with clean records, lower rates for families, or for people with advanced education degrees. According to the Insurance Information Institute, discounts may be offered for factors like anti-theft devices, defensive driving courses, good credit record, low annual mileage, being a long-time customer, insuring multiple vehicles, no accidents in three years, no moving violations in three years, being a student drivers with good grades, among others. After you’ve gotten your quotes online, spend a few minutes on the phone with a salesperson to get the details on possible discounts they haven’t mentioned yet.

insurers offer various discounts for students, good drivers with clean records, lower rates for families, or for people with advanced education degrees

E. Bare Minimums: A Saver’s Strategy

First, A Note on Personal Injury Protection:
As noted in section 5.III.B of this guide, it’s best to have some form of Personal Injury Protection or medical coverage in the event of a car crash, even if you only want to pay for bare minimum coverage. And even if you’re the safest driver on the road, another driver without insurance could come plowing into your car at any moment. If you sustained injuries without having coverage for treatment, you would be forced to pay thousands of dollars out of pocket for treatment and attempt to sue them later for reimbursement. You can earn money back, but it’s much harder to earn back your health without proper treatment immediately following an accident.

Before just blindly signing up for the minimum-required insurance coverage, check with a few insurers to determine how much more you would be paying to insure your car against your own mistakes, and to add some personal injury protection. If you use your car to commute to and from work, or otherwise spend a lot of time behind the wheel, the extra $10, $50, or even $100 per month for insurance coverage might be worth the peace of mind.

On the other hand, if your car is only worth a few thousand dollars or less, those extra dollars might be better put towards an emergency car fund. The benefits of switching to liability-only coverage and setting aside your own money to pay for repairs and accidents is twofold: First, knowing that your next car accident is coming directly out of your savings account is likely to keep you more alert and cautious on the road, and hopefully will keep you safer for longer. Secondly, by setting aside your own funds, you can put your money to better use in the event you don’t end up needing it for collision repairs: use the money to pay for mechanical maintenance, a down payment on a nicer car in a few years, or invest it elsewhere.

if your car is only worth a few thousand dollars or less, those extra dollars might be better put towards an emergency car fund

According to the NHTSA, the average driver will be involved in an accident once every seven years. If you’re going to risk going without full insurance coverage and plan to set aside an emergency fund instead, plan to to save enough to replace your car in half that time. So if your car is worth about $3,000, switch to liability-only coverage and set aside about $85 per month towards your emergency vehicle fund. For most drivers, this amount will come close to (or less than) the rate difference between full coverage and liability-only.

Auto Insurance Liability & Severity

This graph uses liability data from 2002-11 to note the relationship between claim severity (amount of damage in dollars) and claim frequency (rate of occurrence) in terms of both property damage and medical expenses related to bodily injury; while property damage claims occur more frequently, bodily injury claims are more severe. Click image to enlarge.

If your car is worth around $8,000 or $12,000, continue with your full coverage, and in the meantime set aside roughly $50 per month for an emergency car fund for the next several years. By the time your car has decreased in value to $5,000 or $6,000 (likely about four or five years from now) you’ll be halfway to having enough stocked up to replace it at a moment’s notice in the event of an accident. Once you’ve saved more than half your car’s value, switch to liability-only coverage and keep contributing to your emergency car fund while enjoying low premiums. Use the money for regular mechanical maintenance to keep your car in good shape and on the road longer to extend your savings.

VI. Claims

Filing and navigating a claim is a complex process, and getting it right can keep you safe from hundreds, if not thousands, of dollars of financial risk – not to mention the time you might spend fixing a scenario that gets out of control. It also must be said that following your insurance company’s advice will not always result in the best financial outcome for you – it will probably result in the best financial outcome for them. Most insurers have “how to” guides and tips on how to manage a circumstance, but it’s best to get advice from independent professionals and guides who don’t have a financial stake in the outcome of the claim.

Follow these steps immediately following an accident and during the claims process to ensure your claim goes smoothly.

A. At the Scene of the Accident

Whole books and lengthy articles are written on what to do immediately following an accident, so we’ll keep this section brief. Following are a handful of basic principles to keep in mind when an accident happens. Copy down the main points of this list on a notecard to keep in your car’s glove compartment, so you can refer to it in the case of an accident.

1. Never Admit Fault!
Insurance adjusters and police will investigate and get to the bottom of it – no need for you to open your mouth early if you’re shaken up and unsure of everything that just happened.

2. Call the Police!
Never assume that an accident is too small to warrant a police report – in some cases, at-fault drivers will falsely claim that they don’t have insurance, in the hopes that you won’t bother to look into it, so they can avoid a claim. A police officer asking the questions will guarantee honesty on the at-fault driver’s part.

3. Exchange Information!
If you are a victim in an accident, and the other driver’s insurance company underpays your claim or outright denies payment, you might have to file a lawsuit against the at-fault driver to get reimbursed, and you need to know exactly who they are.

For the at-fault driver and other involved drivers:

  • Name
  • Address
  • Phone number
  • Driver’s license
  • License plate number
  • Insurance company name
  • Policy number
  • Phone number for insurance company

For EVERYONE ELSE (witnesses and passengers):

  • Name
  • Address
  • Phone number
  • Driver’s license number
  • License plate number

4. Take Photos!
Pretend you’re a crime scene investigator and you have to illustrate the scene for a full-scale investigation. Take dozens of photos showing all aspects of the scene, close-ups as well as wide-angle shots, to fully depict what happened.

Never admit fault! Call the Police! Exchange Information! Take Photos!

B. Navigating the Claim

Several useful guides can be found online with detailed steps on how to navigate medical claims and insurance claims, and whole books have been written on the subject. The logistics and basic steps are easy enough to follow when it comes time to make a claim, but here are a handful of basic principles to give you perspective on the theories behind managing a claim.

Auto Insurance Claims Compared

This graph notes claim severity and frequency for both comprehensive and collision-only insurance policies. Click image to enlarge.

1. You Can Use Your Own Coverage – Even if You’re the Victim

You can use your own policy to pay for damages caused by another driver. Most people are worried their rates will go up if they do this, but if you weren’t at-fault for the accident, your rates should not be affected. – This is a great option because you’ll often get better customer service (and save more time) by working with your own company, especially if they know they can go recover their payments from the other driver and their insurance later on. If your company’s adjusters or call-center employees attempt at first to steer you back to the other insurance company, make a demand that they step up and handle the claim -you’ll get better service with your company from that point forward.

2. Ask the Right Questions

What is getting covered? Is anything getting left out? If so, why? Ask the claims adjuster, body shop staff, rental car clerk, and doctor’s office staff about things like brand-new replacement parts for your car, rental coverage, out-of-pocket medical expenses, and similar items that you might otherwise assume are being fully covered. The last thing you need is to get a bill in the mail a week after the fact.

3. Get It In Writing

Ask for every communication via email and/or written letter and you’ll have a record of their commitments and promises.

4. Keep Your Distance

For many people, insurance claims are stressful and confusing, and some insurance adjusters will prey on this and pressure claimants and customers to accept lower settlements or give up claims entirely just to avoid disputing or pursuing a claim. To avoid falling prey to these tactics, pretend you’re playing a game where you manage someone else’s claim -strategize like it’s a game instead of your life. Keeping a clear mind will let you make the best decisions without getting emotionally distraught. If you find yourself getting worked up, take out the stressful energy through exercise, games, or other methods, but don’t let it get in the way of making a good decision.

some adjusters pressure claimants and customers to accept lower settlements or give up claims entirely to avoid disputing or pursuing a claim

5. All About the Money

Let’s not kid ourselves: The main point of concern for an insurance adjuster is not how much your claim is actually worth, but how much you are willing to accept.

Many adjusters will take steps to offer you conservative settlement amounts, even with the knowledge that your claim may be worth more money. It’s up to you to navigate this territory to make sure you’re not receiving an unfair settlement.

6. Navigating and Negotiating

You never want to give away your position or tell an insurance adjuster how much you’re willing to accept until you’ve done your research and consulted with experts and/or attorneys -this could seriously hurt your chances for a settlement later on, because you may not realize that your claim is legitimately worth thousands more while you’re only asking them to pay a few hundred dollars.

Furthermore, never accept a settlement in the same conversation as the offer is made -give yourself at least a day to consider it, do your own research, and consult with experts and attorneys before accepting a settlement for anything. Also keep in mind that their first offer will often be somewhat less than they can actually pay, and that with some smart presentation of facts, negotiation tactics, or by hiring an attorney, you will likely be able to increase their offer.

To keep expenses low, many insurers will attempt to undervalue your claim by at least a few hundred (or thousand) dollars and convince you that it makes sense. In Edmunds.com’s 2010 article, “Confessions of an Insurance Adjuster”, a former adjuster discusses the claims handling methods, negotiation tactics, and lines he used to convince customers to accept settlements from a big insurance company. Watch out for adjusters who try to explain their reasoning or convince you too much while attempting to offer you small settlements – this sort of behavior can indicate they are able to pay more, but are attempting to get you to accept less early on.

For most property-only claims, and for very small medical claims where you recover in a short period of time and an attorney won’t be needed, you should be able to negotiate a good settlement on your own. As noted in the opening of section 5.II, one can spend hours reading highly-detailed guides on how to navigate insurance claims, so in the interest of brevity, here are some simple tips to keep in mind:

  • As noted in section 5.II.C, be sure to communicate everything in writing.
  • If the insurance company has made an offer that’s less than fair, send them a written letter or an email demanding they pay a certain amount, and include facts, photos, evidence, and your reasoning as to why you think that’s fair.
  • Again, don’t give away your whole argument all at once, since too much explaining or rationalizing can make you seem desperate.
  • Finally, be sure to demand about 25% more than you hope to get in the end -they’ll likely raise their offer if you lower yours, so leave room for negotiating.

7. Don’t Forget Your Leverage as a Customer

If your insurance adjuster is making things difficult, it may be worth it to remind them that you can take your business elsewhere.

8. Escalate if Needed

If your negotiation tactics aren’t working, ask to speak with the adjuster’s manager, or their manager’s manager, and so on. In many cases, elevating the claim to senior-level adjusters will increase the amount of their offer.

If you find yourself getting the runaround, or if the adjuster tells you plainly that they “will not” or “cannot” pay more for your claim, your next option might only be to take legal action. Contact a few attorneys in your area to discuss your claim to see if it will be worth pursuing with legal action. Just be sure you don’t let stereotypes about attorneys sway your decision -your claim may be more important than you initially think. In many cases, personal injury attorneys can help you navigate a claim and do the bulk of the administration and management, which will save you time in handling the claim. Additionally, most attorneys will take a case on a contingency basis, meaning they don’t charge you for their time and only get paid if a settlement is generated.

As noted in section 5.I.3, if you are the victim of an accident, any legal action you take will be against the at-fault driver, and their insurer will be obligated to hire an attorney to defend them. In the event that the insurance company has offered an amount fairly close to your desired settlement, it may be worth it to notify them that you intend to hire an attorney, and give them one last chance to increase their offer.

don’t let stereotypes about attorneys sway your decision -your claim may be more important than you initially think

If you are at fault but your insurance company is offering you an unfair settlement or treating you unfairly, you may be able to pursue legal action against them. As noted before, contact an attorney to discuss your claim and your options further.

VII. Stay On Your Toes

A. Continue to Shop

Shop around every few years – or ask your current company for a rate review. If you provide them with a quote from another insurer, they might just lower your rates, while keeping intact any discounts you may have earned for being a long-time customer. Keep in mind that most insurers raise their customers’ rates by a little bit each year, so in a few years you might land a great introductory rate with another company, or at least use a competitor’s quote to get your company’s rates back down.

B. Read Your Updated Policy

Most companies revise their policies at least every few years to adapt to new laws, regulations, or precedents set by cases and claims that have gone to trial. When a copy of your updated policy shows up in the mail every six months or year, take a couple of hours to read through it. Not only will you maintain your working knowledge of your insurance company, you’ll stay on top of any crucial developments in your company’s methodology that you may want to avoid, or recommend to friends!

C. Don’t Lapse!

One of the most common mistakes drivers make is allowing their insurance to lapse, forgetting to renew coverage, or failing to make a payment on time and voiding their coverage. If you buy a new vehicle, also make sure to declare it to your insurance company immediately so they know that it must be added to your coverage, and likewise remove any vehicles that you’ve sold or don’t drive any more. Setup automatic online billing and other fail-safes to ensure you don’t find yourself in a tough spot with no insurance coverage.

VIII. In Closing

Now that you’re an expert policy-reader, accident-manager, and claims-navigator, spread the word! There are few worse things in the world than seeing a friend or relative in a difficult situation that could have been avoided with a little preparation. It’s not the most exciting topic for conversation at a party, but as with any serious business, it’s worth bringing up. If your friends or relatives are insured with a company you know to be difficult or tough on consumers, encourage them to shop around and sign up with a new company. By using the tips in this guide, they might just get a better rate than they ever thought possible.

you’re an expert policy-reader, accident-manager, and claims-navigator, spread the word!

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