You have seen the commercials about saving $400 on your auto insurance. You have seen the ability to “name your own price”. You have been asked to go get online car insurance and save. The discounted, direct-marketed insurance companies would have you believe that every auto insurance policy is the same and that they all offer you the same coverage. They want you to believe the only difference is price. Unfortunately, like many other things, if you buy cheap car insurance, it could be very expensive when you have an auto claim.
The problem is, many of these policies have gaps and areas where they lack coverage. Because many customers don’t take the time to thoroughly read their policies, they find out they don’t have any coverage when they go to file a claim. This can often cost the insured thousands of dollars more than the premium savings on these policies. The following are examples of these gaps and exclusions:
1. Undisclosed household residents are excluded. It is not uncommon for adult children to move back into the household. Many cut-rate policies will not cover them using your vehicle unless they are added to the policy.
2. Business use of any auto is excluded. Do you sell Mary Kay, Tupperware, or Silpada Jewelry? Do you run to the post office in your personal vehicle for your boss? Some policies will exclude coverage for this.
3. Use of any non-owned auto is excluded. Did you ever take turns driving a friend’s car on a road trip? Does your policy cover this?
4. Vehicles over 10,000 pounds are excluded. Are you renting a U-Haul or large truck to pick up a load of dirt for that landscaping project? Renting an RV for vacation? You may not be covered for this.
5. Any type of delivery is excluded. Delivering Pampered Chef items? Does Junior deliver pizza at college to make a little extra money? The policy may not give you any coverage.
6. Permissive users only get minimum limits. You bought higher liability limits to protect yourself from lawsuits as a result of a traffic accident. Are you protected the same if you let your friend borrow your car?
7. Street racing is excluded. Can the company eliminate coverage because they think the driver may have been racing at the time of the accident? Most standard policies exclude racing “inside a facility designed for racing.”
8. Criminal acts are excluded or limits reduced to statutory minimums. Get a DUI or major speeding ticket as a result of any accident – some policies may not provide you with any coverage.
9. Medical payments only include licensed physicians fees. Critically injured in an auto accident? The “life flight” that transported you to the hospital may not be covered.
10. Theft without evidence of forced entry if excluded. Did you leave your keys in the car when it was stolen? It may not be covered.
11. Sales tax is not covered under loss settlement. Your $30,000 new car is stolen. At Michigan’s 6% sales tax you would have to come up with an additional $1,800 out of pocket just to replace your vehicle.
The Marvin Okun Agency in Kalamazoo, Portage and Jackson is an independent insurance agency that can get you coverage with many competitive companies that don’t reduce coverage to save you money. Are you concerned about your current coverage? Bring us a copy of your current policy and one of our knowledgeable insurance professionals will review it with you. Don’t find out how little your cut-rate policy covers when it’s too late!