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What is your car insurance actually insuring? Although you’re buying a single insurance policy covering a specific vehicle, a number of components make up the final cost:

  • Bodily injury liability: Covers injury and death claims against you, and legal costs, if your car injures or kills someone.
  • Property damage liability: Covers claims for property that your car damages in an accident. Because liability coverage protects the other party, it is required in all but three states.
  • Medical payments: Pays for injuries to yourself and to occupants of your car. This is optional in some states. In “no-fault” states, personal injury protection replaces medical payments as part of the basic coverage.
  • Uninsured motorist protection: Covers injuries caused to you or the occupants of your car by uninsured or hit-and-run drivers. “Under-insured” coverage also is available, to cover claims you may make against a driver who has inadequate insurance. In some states, as many as 30 percent of drivers are uninsured.
  • Collision coverage: Covers damage to your car up to its book value. Collision coverage carries a deductible, which is the amount per claim you have to pay before the insurance takes effect. The lower the deductible, the higher the premium. While it is legally optional, a lending institution or leasing company usually requires collision coverage.
  • Comprehensive (physical damage): Covers damage to your car from theft, vandalism, fire, wind, flood, and other non-accident causes. Comprehensive also carries a deductible.
Please take a moment to look away from the inundation of ads telling you to name your own price or save, save, save on your insurance coverage.  The basic premise of insurance does not change with competition – it is intended to protect you and your assets from an unintended and unexpected loss.
Rather than searching for the “cheapest” insurance, consumers should use the competitive market to enhance their insurance protection, and possibly save premium at the same time.  A few points to follow to accomplish this goal;
1)      Combine your auto and home policies to the same insurance carrier.  Substantial account, loyalty, and loss free discounts can become available to you by doing this.
2)      Make sure your home is insured to its full replacement cost, and increase your homeowners policy property deductible to $1000.00.  The saving for this change is meaningful, and submitting a claim for under $1000 would mean a minimal claim payment, and possible premium increases down the road
3)      Automobile Insurance – increase your Bodily Injury to others (part 5) to $250,000/person $500,000/accident, and your Property Damage (part 4) to at least $100,000.  To offset the premium increase, change your collision deductible to $1000, this results in a measurable discount.  Bodily Injury and Property Damage are coverage’s that protect you when a third party sues you.  To purchase low liability limits is leaving all of your assets exposed to the unforeseen event.
4)      Purchase an Umbrella Liability policy – a $1,000,000 limit which is excess of your auto and home liability limits is a must, and it is fairly inexpensive.
The key point to remember is to take advantage of the competitive market and insure physical loss to your own property with higher deductibles,  use the premium savings to secure proper third party liability limits.
Written by : Arthur B. Fair, III, President Fair & Yeager Insurance Agency 10 Main Street Natick MA 508-653-3131 x107

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