Auto Costs
How can I lower the cost of my auto insurance?
- Take a higher deductible
- Drop collision damage on older cars
- Buy a low-profile car
- Pay premiums annually and take advantage of the paid-in-full discount
- Tell your agent about changes in your life-If you get a new job closer to home and are driving less, your premium could decrease.
- Purchase home and auto policies through the same company so that you’re eligible for multi-policy discounts
Why can my premium increase from one year to the next, even though I have the same vehicle?
Rising medical, legal and auto repair costs means that it costs insurance companies more money to pay claims. Premiums are raised to cover these costs. Rate increases are filed and approved by each state’s insurance department.
Does it make a difference whether I pay my insurance annually, semi-annually or monthly?
Although installment plans may be more convenient, they usually wind up costing you more money due to fees or interest charges. If you are able, you’re better off paying the entire premium at once.
Yes. Insurance rates vary from place to place. They are generally lowest in rural communities and highest in cities where there is more traffic, but rates also vary within particular areas based upon incidence of auto theft and damage. Call us to find out how a change of address could affect your premium.
Why are young driver rates so high?
Young drivers are inexperienced. They are involved in a disproportionate number of accidents compared to mature drivers, and those accidents are generally more severe. Together, these two factors equal higher insurance rates for young drivers.
My daughter just got her learner’s permit. Does she need to be added to my auto policy?
No. Your daughter doesn’t need to be added to your policy until she becomes a licensed driver.
Auto Terms
What is C.L.U.E?
The Comprehensive Loss Underwriting Examination, or C.L.U.E., reports claims for all members of a household. C.L.U.E. results help determine the cost of your premium.
What is comprehensive coverage?
Comprehensive coverage pays for any damage to your vehicle not caused by collision. These damages include-but are not limited to-fire, theft, glass breakage, vandalism and contacts with people or animals.
What claims fall under PIP coverage, and do I need it even though I have health insurance?
Personal Injury Protection, or PIP, is expanded coverage that pays for lost wages and medical bills after an auto accident. Though PIP might seem unnecessary if you have health insurance, still consider it-health insurance won’t cover your lost wages, but PIP will.
What is uninsured motorist coverage?
Uninsured motorist covers you if you’re involved in an accident with someone who doesn’t have auto insurance or doesn’t have enough insurance to cover the cost of the accident.
How much of a deductible should I take?
The deductible is the amount you agree to pay out-of-pocket before the insurance coverage starts. Raising the deductible on your policy reduces the price of your premium. To lower your insurance bill, get the highest deductible that you can afford.
What does road service cover?
Road service covers towing and labor at the sight of the disablement that the insurance company considers reasonable. Road service is optional and can only be purchased if you have comprehensive coverage.
Is it worth it to have collision coverage on older cars?
Collision coverage takes care of the cost of replacing or repairing your car when you’re in an accident. Why pay a premium for repairs on a vehicle that isn’t worth much anyway? Collision damage for an older car can cost more than the car is worth, so it’s not always cost effective to pay for this coverage. A general rule is to drop collision coverage if the collision premium equals 10% or more of your car’s market value.
Auto Coverages
If I let others borrow my car, are they covered?
As long as they are not excluded in your policy, others driving your car are covered. However, if an accident occurs, your insurance–not theirs–will have to cover the cost.
Does my current policy cover a rental car?
Generally, if you have at least one car on your policy with full coverage (comprehensive and collision), that coverage extends to any rental car in the United States, its territories and Canada. But, if you have a comprehensive or collision loss, you must have transportation expense coverage on your policy in order to be reimbursed for the rental car.
If your auto policy is with MAIF or AIC, you must purchase separate coverage to be reimbursed for your rental car. With MAIF, the additional coverage will pay up to $25 a day, or $750 per claim, for a rented automobile after a covered loss. If you’re an AIC policyholder, the coverage needed for reimbursement costs $20.
Should I purchase the insurance the rental company is selling me?
Generally, your personal auto coverage extends to a rental car. However, the rental coverage on your current policy does not cover damages to a rental car. This is where the additional rental insurance comes in. If you feel that you need more insurance on the rental car, you may want to opt for the rental company’s additional insurance. Make sure to review coverages before purchasing any additional insurance, and contact your agent with any questions about how your auto policy applies to rental vehicles.
If I’m driving to Canada, do I need special insurance?
You don’t need special insurance to enter Canada. But, if you’re involved in an accident there, you will need to show immediate proof of coverage. There is a special Canada card that shows this proof, so make sure you obtain one from American Insurance before going to Canada.
What is gap insurance, and do I need it?
Gap insurance, or loan/lease payoff coverage, covers the difference between what you owe on a car and what the car would be worth if it’s totaled in a covered loss. If you buy a new car and don’t put much of a down payment on it, gap insurance might be something to consider.
A situation where gap insurance would apply: You have just purchased a new car for $25,000 and still owe the lender $25,000 since you haven’t made a payment yet. About a week later, you’re driving home in the rain and lose control of the vehicle. You don’t sustain any injuries, but the car rolls and is significantly damaged. The work required to repair your car costs more than the car is worth. After the N.A.D.A. valuation, you determine that your car’s actual cash value is $21,000. Your auto insurance covers $20,500, and you pay the amount of your deductible—let’s say $500. But, since you purchased the car for $25,000, you still owe your lender the $4,500 difference between that price and the $21,000 covered in the claim. If you have gap insurance, your insurance company covers the $4,500.
Miscellaneous
Why does Erie have me fill out an Auto Renewal Questionnaire?
The Auto Renewal Questionnaire (ARQ) is a way for Erie to make sure the existing information on your policy is up-to-date. Once you fill out the ARQ and mail it back, Erie reviews the information you have provided and makes necessary changes to your policy so that you are properly covered.
Is my car’s stereo system covered under my insurance?
As long as it is permanently mounted in your vehicle, your stereo system is protected under the collision coverage of your auto policy. If it is not permanently installed, then the stereo system can be protected as part of your homeowner’s insurance policy.
Home Insurance Basics
Is home insurance required if I own a home?
No, home insurance is not required for all homeowners. But, a mortgage lender will most likely require you to have coverage until your mortgage is paid off. Whether or not you have a mortgage on your home it is a good idea to purchase insurance so that your home and what you’ve invested in it will be protected.
How much homeowner’s insurance do I need?
You need enough insurance to cover your home’s structure, your personal possessions, your liability to others and the cost of living expenses should your home be damaged.
- Your home’s structure: Make sure you have enough insurance to cover the cost of rebuilding your home today.
- Do not include the cost of land in your estimate.
- Don’t use the price it took to build your home when you purchased it. The cost of building your home today is probably much different.
- Your personal possessions: Make sure you have enough insurance to cover the cost of replacing your possessions.
- Most policies offer possession coverage for 50-70% of the insurance amount for your structure.
- Conduct a home inventory to determine whether this amount is enough.
- Your liability to others: Make sure you have enough insurance to cover the cost of injuries or property damage members of your family cause to others.
- This also covers damage caused by pets.
- Cost of living expenses after a claim: Make sure you have enough insurance to cover the cost of temporary living should a claim render your home unlivable.
How do I conduct a home inventory, and is it really worth the time?
A home inventory is a detailed list of all your personal possessions. Sound daunting? If so, you’re not alone in feeling that way. Although it may seem like more time than it’s worth, creating a home inventory will help you purchase the correct amount of coverage for your home and expedite the processing of any future claims.
- Start your inventory early: Complete your inventory before you purchase homeowner’s insurance so that you know what type and amount of coverage your home needs.
- Choose a system: Decide whether you’d rather write the inventory by hand or record it on your computer. Either way, make sure the inventory is legible and easy to understand.
- Take photographs: While written descriptions are useful, a picture could help jog your memory down the road.
- Divide and conquer: Break down your inventory into sections so that you don’t get too overwhelmed. Complete the inventory over a few days if needed. That way, your mind will stay sharp and your inventory will be more accurate.
- Take more time with valuable items: Be detailed when documenting items worth $500 or more. Record makes and models for appliances and save receipts.
- Get a second opinion: Review your inventory with someone else. You might’ve missed something that he/she will catch.
- Update: review your inventory every few years so that you can add any items you’ve acquired since you last updated it.
- Store it somewhere safe: Keep your inventory somewhere secure and that you’ll remember. You should be able to easily access the inventory if you have a claim.
How can I lower the cost of my homeowner’s insurance?
- Take a higher deductible
- Pay premiums annually and take advantage of the paid-in-full discount.
- Tell your agent about changes in your life-If you purchase an alarm system or sell an expensive belonging, your premium could decrease.
- Purchase home and auto policies through the same company so that you’re eligible for multi-policy discounts.
Coverage, Home
Can I insure my jewelry as part of my homeowner’s policy?
Jewelry is an all-risk endorsement to your home policy, meaning that it is not subject to a deductible. To add jewelry, provide your agent with either a sales receipt or an appraisal for every piece you want insured. Contact your agent to set up an appointment for a jewelry appraisal.
I live in a townhouse. What kind of insurance do I need?
It depends. If your townhouse association has a master policy, then you should purchase a tenant policy to protect your personal property. If not, then you will need to purchase home insurance for your townhouse so that you have sufficient coverage. Talk with your association first so that you don’t end up with too much or too little coverage for your townhouse.
What is the difference between guaranteed replacement and extended replacement?
Under guaranteed replacement, the insurance covers 100% of costs needed to rebuild your home prior to the claim, regardless of policy limits. With extended replacement, your insurance will cover costs a maximum of 20-25% over the policy limits. Although it may seem like extended replacement, which offers up to 125% over your policy limits, would be a better choice, guaranteed replacement covers the cost of rebuilding your home regardless of how far it exceeds your policy limits.
Does my home policy cover flood damage?
No. Flood damage is covered through a separate flood policy issued by the Federal Insurance Administration.
My dog bit someone. Does my homeowner’s insurance cover this?
Yes. Your medical payments coverage applies to injuries caused by any animal you own or care for, as long as the injury didn’t happen in the course of a business involving that animal.
Will my insurance cover me if my neighbor’s tree falls onto my house?
If the tree clearly belongs to your neighbor, then his/her insurance will cover the damage the tree caused to your house. If there’s a dispute over who owns the tree, then your insurance will cover the damage.
When I’m traveling, what coverage do I have for my personal belongings?
Your homeowner’s insurance covers 10% of personal property owned or used by you.
My child just went away to college. Does my home policy cover his property?
Yes. A college student’s property is covered under the Personal Property coverage of a home policy, as long as the student is under 24 years old, lives on-campus and is a resident of your household.
What’s a PCL?
A Personal Catastrophe Liability policy, or an umbrella policy, covers liability claims that exceed the limits on a primary policy (such as your personal auto, home or boat policy).
How much coverage do I need on my rental policy?
Your rental policy should cover the costs of replacing all your personal possessions should a disaster occur. Conducting a personal inventory is a good way to determine just how much coverage you need.
How does the new condo law affect my condo policy?
This April, the Maryland Court of Appeals ruled that a condo association’s insurance policy isn’t required to pay for damage to individual condo units. Whereas before damage to individual units fell under the association’s insurance policy, the condo association is only responsible for elements that are common interests of all owners and co-owners of the entire condominium. This decision puts more responsibility on your insurance policy. In light of this, contact your agent to determine whether your current condo policy has enough coverage.
Sources:
Insurance Information Institute: http://www.iii.org/
http://mdcourts.gov/opinions/coa/2008/99a07.pdf
Contact us today for more information.