Why is price not the only consideration on auto insurance?

Families and individuals have many options when choosing an auto insurance company. It seems like every other TV commercial presents a different company jockeying for our business by stating how much—and how quickly—we’ll save by switching to them. But not all insurance is created equal.

Although price is important, the coverages, the insurer and the value you receive for that price are equally important considerations. If you think of yourself as a value shopper you may want to tread lightly when it comes to auto insurance. Do not fall victim to the price war and assume that an agent has included the best coverages. If there is a small price difference, it is more than recaptured in the event of an accident or claim.

Some benefits of placing your auto insurance with a high net worth insurer include:

  • Use of original manufacturer parts (OEM): Most standard auto insurers use cheaper “after-market” or refurbished parts, which may impact the resale value and safety of your vehicle.
  • Agreed value coverage: Unlike standard insurers, which pay the claim on an actual cash value basis, agreed value coverage locks in the vehicle’s value throughout the policy period. This ensures that there is no haggling on the car’s value in the event of a total loss. Generally, the deductible is waived in the event of a total loss.
  • Claims are settled without depreciation: In a partial loss all parts will be replaced without depreciation for wear and tear, just as standard insurers do.
  • Repair shop of choice: Standard insurers require you to utilize their network of repair shops. If you decide to use your trusted body shop, you may end up paying the difference.
  • Worldwide rental car coverage: Most standard insurers are limited to the United States and Canada.
  • Increased loss of use: With a high net worth insurer there is no maximum per-day limit for a rental car after a covered loss, and the coverage may be used for airline, hotels or other expenses. Standard insurers provide a nominal cost per day, which is easily exhausted in serious accidents.

When you are not at fault, whose auto insurance should pay? When someone is involved in an auto accident, the first question is often, “When will I get my car back?” Those insured by a high net worth insurer should file the claim with their own insurance company even if they are not at fault. The other party in the accident may have coverage through a standard company, which will not provide the benefits of a high net worth insurer such as OEM parts, choice of repair shop, etc. In many cases, these insurers are slow to accept responsibility for the accident and claims may take months.

Even if you’re not at fault, the other driver may still claim you were and file a claim or lawsuit against you. Having already filed the claim under your own policy helps prevent these false claims being paid.

What should you do after an accident? We suggest following these steps to ensure peace of mind and a streamlined process with your insurance company. Even seemingly minor accidents may turn into major payouts without witnesses or the proper information.

  •  Be safe: Immediately move out of the way of traffic and turn on hazard lights.
  • Call for medical assistance if needed.
  • Call the police.
  • Do not admit fault or discuss your coverage limits.
  • Exchange documentation.
  • Take pictures at the scene with your phone.

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