Everything about car owners insurance

Apparently insignificant caveats and clauses embedded deep in the fine print of auto insurance often make the difference between good and bad policies. You can ask your insurance agent the following questions before signing a car owners insurance contract, and make sure the identical answers are found in the policy itself.

Is this a ‘family policy’ or an ‘insured by name only’ policy?

Family policies protect each of the drivers in the home and anyone they lend their vehicle to, while “name-only” policies cover only drivers explicitly named on the policy. Family policies will likely cost an additional 10% to 15% (or higher, based on many factors, such as one of the other drivers’ driving records), but they will be the right choice if anyone other than the policyholder ever drives the car. Many car owners don’t even understand that they have a name-only policy that is insured, and they lend their vehicles to friends and family, unaware that they may not be covered in the event of an accident.

Do I have the right to decide on my own repair facilities and OEM (Original Equipment Manufacturer) parts with this policy?

A number of insurance agencies, including Geico, Nationwide, and Progressive, have reformulated some auto insurance contracts to limit auto owners’ repair choices after accidents. The use of aftermarket parts – parts not made by the vehicle manufacturer – in the vehicle may void the warranty. For example, your radiator needs to be replaced after a car accident. A year later, your engine stalls. The dealer will probably not honor your warranty because of the aftermarket radiator.

Does this insurance have a valuation clause?

This clause allows the policyholder to request an appraisal in the event that the insurer offers you a lower amount for a total vehicle than the policyholder believes it has been appraised. Also ask: Does this review clause allow the appointment of a third participant by a “court”? If the appraisers of the policyholder and the insurance company cannot agree on who to choose as an arbitrator under this method, both appraisers can request the appointment of an arbitrator by a competent court to break the deadlock. If the answer to any of the questions is no, be warned. You may be powerless if your insurance company claims your car is worth less than the Kelley Blue Book or NADA (National Automobile Dealers Association) Guide value.

Does the “Limitations of Liability” section of the contract contain the phrase “as defined by us”?

This particular part of your auto insurance policy puts limits on how much the insurer will pay. It could say that the insurer “cannot pay more than the prevailing hourly labor rate from repair shops in the region”, or “no more than a competitive estimate of repair costs”.

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Unfortunately, some insurers have started adding the phrase “as defined by us” to the closing clauses in some contracts, effectively giving the insurance company the right to insist on repair rates that are below market price. Their policyholders must either take their vehicle to the insurer’s “approved” repair shop, which is willing to make repairs for that low rate, or take the car to a superior repair shop and pay the difference up front.

Where to find the best insurer

Some insurance companies make a responsible effort to represent the interests of their customers, while some consider primarily their own profit motive. Sensible ways to determine which are which…

Examine the level of customer problems. Call your state’s insurance department and ask which insurers have the fewest customer complaints.

Research customer satisfaction ratings. Business research firm JD Power and Associates produces its own annual survey of auto insurance customer satisfaction. The most recent ratings can be obtained at http://www.jdpower.com/autos/ratings/autos-insurance.

Request suggestions from bodyshop managers or owners. Ask which insurers are taking good care of their customers and which are trying to cut costs on repairs.