AUTO INSURANCE DISCOUNT FRENZY: What they are not saying.

Every major auto insurance company is promising customers a savings up to as much as five hundred dollars for switching to their company. Why so much discount? What’s in it for them? What’s in it for us?

Auto Insurance companies are in a frenzy to catch the market of consumers who are holding on to their cars after paying for them and keeping their auto insurance as is; usually full coverage as required by auto financers. The auto insurances company’s goal is to give customers incentive to switch from full coverage (or far less coverage) to general liability coverage that the companies will pay out much less on.

Discounts of hundreds of dollars (annually) is incentive to switch but it further fuels the customer to switch by revealing their current company is ripping them off in high premiums; meanwhile the smoke and mirrors distract them from their overall best interest–car value replacement– to focusing on just how much can they save and still be legal.

With this current economy, people are desperately seeking ways to cut their expenses without losing necessities such as auto insurance. It used to be that by the time a person paid off their car loan, they were on the market for another one. Today’s economy dictates that we keep our cars longer rather than rush into another car payment. Once the car loan is paid off, we are better able to afford the same full coverage insurance premium and thus likely to keep it. However, now that costs are up and jobs are down, an offer to save four hundred dollars is prime incentive.

But when I think about it, a four hundred dollar savings on my policy sounds substantial, however it only cuts about $33 from my monthly bill if I pay by installments. Yet, should I survive a covered incident, I go from having the ability drive a rental the next day until my damaged or stolen car is repaired, recovered, or replaced; to walking away with nothing—all because of being lured into these deals and discounts being offered by the auto insurance companies that do everything in their power to minimize the risk of paying “any” claims in the first place.

Since the law requires you to have auto insurance and it is in your best interest to do so, you may as well make it a worthy asset rather than a “liability” should you have to encounter a claim. My advice is pay the extra couple of dollars always to get full coverage and full tort…oh and yes, go for the “better” car replacement if you can! Insurance is meant to leave you better off in the event of an unforeseen.

Below is an explanation of policy terms involved in most discounts to help you decide:

Liability
If you hurt someone or damage someone’s property in an accident, your insurance will pay for covered damages. That’s it. There is no coverage for damages to your own vehicle.
This choice of coverage is only suitable if your car’s value is less than the lowest deductible on a “Collision” policy. If you rely on your car for transportation to and from work, this policy is detrimental to your wealth.
An insurance policy of any kind should always leave you either unaffecting your current circumstances or improving them substantially. Liability does neither and presents adverse effects such as, no car, no repair, no rental, no sympathy. The only benefit is no jail.

Uninsured / Underinsured Motorists
If you’re in an accident caused by someone who doesn’t have insurance, or not enough, your insurance will cover you and other passengers in your vehicle, up to your policy limits.

Collision
Collision coverage, means you’re covered if your car rolls over, is hit by another car, or hits another car or object, (minus your deductible). You can add the benefit of having a rental car during repair or replacement of your vehicle. Make sure you opt for this.
This is a must to have in auto insurance if you rely on your car for transportation and you cannot buy another car with money from your savings or pay for out-of-pocket repairs of more than your deductable requires.
Most people get confused with the extensive benefits of collision. This coverage pays for those little nicks and parking lot dings that we pay out of pocket to fix because it’s usually under a hundred or so dollars or they are afraid to “bother” the policy so their premium doesn’t go up. Generally it won’t go up for such items; however claiming those items certainly brings down your deductible whereas a major collision may mean you have to come up with the entire deductible at once if you had not taken the advantage of claiming each time you paid cash for those covered dings.
Example; my deductible is $500. A cart in a parking lot dents my rear passenger door which is an item covered in my policy. a mechanic fixes it for $180. I pay for it out of my pocket but I also claim it with my insurance company and now I have paid $180 of my $500 deductible; so now if I have an accident that cost $3,000 to repair, I only have to pay out $320 and my insurance pays the rest.

Comprehensive
This coverage protects your car if it is stolen or damaged by something other than collision, such as fire, vandalism, windstorm, earthquake or hail. A deductible applies.

Limited Tort
With Limited Tort, you give up the right to receive compensation for pain and suffering if you are injured in a car accident. If you have never been injured in an auto accident, you may not realize the pain and suffering that a person goes through. Car wrecks can lead to injuries and long-term disabilities that last for months or years.
By choosing Limited Tort, you sacrifice full protection for you and your family members who are covered under your car insurance policy. Limited Tort not only puts you and your family at risk in your own car, but it even applies when you or your children are injured as passengers in someone else’s car or even as a pedestrian.

Full Tort
With Full Tort, you are allowed under law to seek money for your pain and suffering due to any injury you receive in an auto accident. This is, of course, provided that someone else is at fault for the accident.
Choosing Full Tort on your policy instead of Limited Tort does cost a little more on your car insurance premium, but it could mean thousands of dollars to you if you are injured in an auto accident. Having additional money to help you through a difficult time in your life is well worth the few extra dollars in premiums.

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