By Madeline Klein
We’ve already mentioned that it’s a good idea to review your coverage every 6 months, or at least once a year. There are some big life events that can mean your coverage needs to be changed, or that you’re now eligible for new discounts. That yearly review can help make sure you don’t have to worry about missing out on extra cash in your pocket. Or it can mean you don’t have to sweat an accident because you know you’ve got the coverage you need.
Maybe you do want to stay on top of your car insurance, but when you sit down to review your coverage, you become a bit lost. Our goal is to keep things simple here at Say, but we completely understand that it’s still an undertaking to actually understand auto insurance. You’ll probably still have some questions about your policy, like how do you know what to look for when you review your coverage? Or what should your limits be? And what the heck is a deductible again?
We hear you. And we’re here for you! These are some key things you should look at when you’re reviewing your coverage.
1. Look at your deductibles
Oh, the auto insurance deductible. It can be a confusing thing, especially because it’s used pretty differently than the health insurance deductible.
Basically, your car insurance deductible is the amount you’d pay out of your pocket for a covered claim. This money is paid before any of your car insurance coverage steps in to help.
Let’s say you hit another car in a parking lot. Your car has $2,000 worth of damage. If the accident is covered with Collision Coverage and your deductible is $500, you’ll have to pay that $500 deductible and then your insurance should cover the remaining $1,500.
That $500 you’re responsible for would come out of your pocket, so deductibles are a really important number to pay attention to. Because rates can often be lower if you have higher deductibles, it’s tempting to increase your deductible and hope that you won’t get into an accident and have to pay it.
However, you should really plan your deductible based on what you could afford to pay out of pocket if you did get into a car accident. Some people save up the amount of their deductibles, so they’re prepared to pay them in emergency situations.
2. Review your coverage limits
Limits shouldn’t change all that often, but they are a good thing to review every time you look at your policy. You maybe started out with the state requirements for your limits. Because a coverage limit is the maximum amount a policy can cover on a claim, you’ll want to review your limits every so often to make sure you have the coverage you want and need.
For example, let’s say you get into an accident, you're at fault, and the other driver and passenger both get hurt. Luckily, you have the Missouri state minimum for Liability Coverage and the Bodily Injury portion is $25,000/$50,000. The first number shows your coverage limit per person, and the second shows the limit per accident. That means $25,000 is the most that can be paid to the driver and passenger individually, with the total payout for the accident maxing out at $50,000.
Now let’s pretend the driver’s damages come out to $30,000, and the passenger’s damages are at $25,000. Because you only have up to $25,000 of coverage for the driver and their damages came out to $30,000, you’d have to pay the remaining $5,000 out of pocket. All of their passenger’s damages would be covered because they fall within your limit.
While you never intend to get into an accident, your limits should reflect what you feel you’d be able to pay out of pocket if you did happen to get into one. The Wall Street Journal suggests looking at the total value of your assets when figuring out your limits. Bumping up your limits means you’d likely pay more in your monthly rate, but you’d pay less out of pocket in a covered accident.
3. Include all drivers in your household
Most providers require you note everyone in your household on your policy. This is important because if there are other driving-age household members that occasionally drive your car, your provider needs that information to accurately rate your premium.
If you’ve had anyone move in or out of your household, you’ll need to let your provider know because this could impact your rate. This also includes updating your provider if you had a child who just had their sweet sixteen and is getting ready to start driving. That kind of change might even require a bigger review of your coverage.
4. Check out your discount options
We don’t know about you, but we’re happy to save a buck wherever we can. Because things can change quickly from year to year, you’ll want to give your discount options a good once-over. You may be eligible for new car insurance discounts since your last policy review.
Did you get a brand new car? It most likely has an anti-theft device, and that’s a discount if you’re with Say. You just need to call and let us know and poof! You’re automatically saving money because of our anti-theft discount!
No matter which provider you have, give their list of discounts a review. Then see what you need to do to update your policy if you’re eligible for some new savings. Why spend more money car insurance when that money can be put towards your next beach vacation, or a movie night with your family?
5. Rethink your medical coverage
Changing jobs usually means a change in health insurance. Your yearly policy review is a good time to make sure you’ve got Medical Payments Coverage if you need it.
There’s some overlap with some health insurance and Medical Payments Coverage, so see what coverage you have with your health insurance and consider adding Med Pay if you feel you need some more protection.
6. Look at any perks
Some providers offer perks like Roadside Assistance in their policies. If you have that coverage and are also paying for AAA or another company like that, you’re paying double for the same service, and that’s a bummer.
Check out what is included in your policy and make sure you’re making the most of your money. For example, here at Say we include Roadside Assistance Coverage in every policy, so don’t hesitate to cancel any other similar services.
7. Compare your rate
So many people buy auto insurance and then forget about it. However, car insurance rates are a tricky thing. Maybe you got into an accident, and it raised your rate. Or maybe you had to add your newly-sixteen son, and your rate took a hit because of it.
So much can happen, so you don’t want to sit with one car insurance provider simply because you don’t want to shop around. Give your rate a review when you’re looking through the rest of your policy. It may be time to do some car insurance shopping to make sure you’re getting a competitive rate. You have an auto insurance soulmate out there, we promise, so don’t give up looking for them!
Keep your auto insurance up to date
We’re realistic. We know you probably aren’t going to be looking at your auto insurance every month to make changes. But hopefully, you’re giving it a glance every 6 or 12 months, and keeping it as up-to-date as possible. The more you know, the better grasp you’ll have on it whenever you need to use it.
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Posted March 19, 2019 in Insurance Know-How.