FORGOT YOUR DETAILS?

Here are some helpful tips to take full advantage of your insurance coverage and your rights.

You’ll pay for your friend’s bad driving, too.

If your friend borrows your car and crashes it, you’ll have to file a claim with your insurance company. You’ll have to pay any deductible that applies, and your rates will probably go up as a result of your claim.

The value of your “totaled” car may surprise you. Auto-insurance companies don’t use the standard Kelley Blue Book or National Association of Automobile Dealers value. Instead, each company has its own proprietary list of car values, and most have specialized software for valuing cars in each region. They take into consideration the car’s mileage and pre-accident condition.The insurance company may also ask local dealers what they’d charge for a similar replacement car. However, the insurer will consider quotes from suburban towns as reasonable estimates, even if you live in the city. You might have to drive several hours to reach the cheapest dealer, just to save the insurance company money. And they might be quoted a better deal than you could get if you walked onto the lot.

Tip: If you disagree with your insurance company’s value determination, there are several things you can do:

  • Next time, get “gap” insurance. It will pay the difference between what an insurer will cover and what you owe, which can be several thousand dollars.
  • If you have maintenance records that show you’ve had the oil changed every 3,000 miles and you’ve had the car checked routinely by a mechanic, present copies to the insurance company to show the car was in good condition. If you’ve been paying premiums on any special parts or upgrades, make sure those are included in the insurance company’s evaluation.
  • Get price quotes on replacement cars from three dealers within a reasonable driving distance and submit these to your insurance company. Ask the insurance company for a list of dealers within a specific distance who can sell you an equivalent car for the value the company is claiming.
  • If you still aren’t satisfied, you can step up the process and go to mediation or arbitration. Mediation involves presenting your case to a neutral party for help in reaching a compromise; arbitration is a binding decision. You can also, of course, take the issue to court.

Check into “diminished value.”

Say your car has been in an accident, but repaired. Is it worth less than the exact same car that hasn’t been in an accident? It’s a hot topic, but some say yes. In 14 states, you’re allowed to file a claim with your insurance company for that lost value.

Tip: Thirty-six states and Washington, D.C., allow insurance companies to exclude payments for diminished value, so if you live in one of those states, you won’t get to claim the loss. But in Florida, Georgia, Hawaii, Kansas, Louisiana, Maine, Maryland, Massachusetts, North Carolina, South Dakota, Texas, Virginia, Washington and West Virginia, you have a chance of getting a diminished-value payment. If you weren’t at fault in the accident, you often can make a successful case against the insurance company of the driver who was at fault.

You may not owe sales tax on your replacement car.

Twenty-eight states require auto insurers to pay for the sales tax when you replace your totaled vehicle with a new or used car: Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Vermont, Washington, West Virginia and Wisconsin.

Tip: Make the request; don’t expect the insurer to offer to pay upfront. Even in states that do not require sales-tax reimbursement, you should request it. Many auto insurers will not deny the request because the policy requires that they make you “whole,” returning you to where you were before the accident at no cost to you.

The tax will be calculated based on the pre-accident value of your car. If the insurance company values your car at $10,000, and you purchase a new car for $20,000, the tax will be calculated on $10,000.

Hit by an uninsured motorist? Try to “stack.”

Stacking uninsured/underinsured motorist (UM/UIM) coverages means collecting from more than one auto-insurance policy that you hold. Most states forbid this practice, but 19 states allow it or don’t address it.Tip: Check the language of your policy to see if stacking is allowed.

There are two scenarios for stacking: First, if you have multiple cars on your policy with UM/UIM coverage on each, you can collect the limit of your UM/UIM coverage under as many vehicles as necessary to cover full payment for damages. Second, if you have more than one policy with UM/UIM coverage, even if they’re from two different insurers, you can make a claim under each policy until all your damages are recovered.

You must officially cancel your insurance policy when you switch insurers.

Your policy most likely states that you can cancel your coverage at any time by notifying the company in writing of the date of termination. However, most people assume that if they decide to terminate the policy at the end of the coverage period, all they have to do is ignore the bill. The insurance companies don’t see it that way. They will send you another bill for the next premium payment, and when you don’t pay it, the company will cancel you for nonpayment. That goes on your credit record.

Tip: Call your insurance agent or the company and let him know you are canceling your policy. Give a specific date, or you may end up uninsured for a period of time. The company will send you a cancellation request. Most often, the form is already filled out and all it requires is your signature. Make sure you read it to check for errors.

You may have to prove to your former insurance company that you have new coverage. And if you’ve financed your car through a dealership, update the dealer on your new insurance information, because purchase contracts often require proof of coverage.

For questions regarding your insurance, please contact our staff, we’re ready to help you!

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