Are You Getting The Most For Your Car Insurance Dollars?
May 24, 1999
© Copyright 1999. All Rights Reserved. For as little as $10 or $20, you may be able to double, triple, or even quadruple certain car insurance coverages to protect yourself, your family, and friends! Unfortunately, most insurance agents do not volunteer this information -- some are not even aware of it -- so it's important to know what to ask for when you are shopping for car insurance. Although this article is based on Minnesota insurance law, the coverages discussed are common to most insurance policies.
The Biggest Bargains: Increased "No-Fault" coverage and "Stacking"
Suppose you hit a patch of ice that causes your vehicle to skid off the freeway, injuring you. The "no-fault" or Personal Injury Protection (PIP) coverage on your car will become suddenly important. "No-fault" or PIP coverage protects you and your family when injuries result from the "operation, maintenance or use of a motor vehicle" regardless of fault. Your insurance company will pay the medical bills, lost wages and needed replacement services (e.g., lawn care, snow removal, house cleaning) that resulted from a car accident up to the limits of the coverage. Minnesota requires that each vehicle have at least $40,000 in PIP coverage - that is $20,000 for medical expenses and $20,000 of coverage for lost wages (often called "20/20 coverage"). However, 20/20 coverage is no bargain and may not be adequate protection.
Two bargains are available that will significantly increase your PIP protection for very minimal additional cost: stacking and increasing the coverage purchased. Stacking of PIP benefits is only available if you have two or more vehicles insured under one policy. Stacking the PIP will permit you to access the PIP coverage(s) purchased on the other vehicle(s) under a common policy. Continuing with the example above, assume you have a second car insured under the same policy as the first - both cars having identical PIP 20/20 coverage. Assume also that you have elected to stack the PIP benefits. Your insurance company will now pay the first $40,000 in medical bills plus $250 each week for lost wages up to $40,000. The PIP coverage doubled and the cost was probably between $10 and $20. It gets even better if PIP benefits are stacked and you take advantage of the second bargain in the PIP area -- increasing your benefits.
Regardless of the number of vehicles you insure, you can increase the PIP coverage on each for a very small increase in your premium. Companies differ in the maximum amount of PIP coverage they will sell but a commonality exists in the incredibly inexpensive cost to the consumer for increasing PIP coverage. A call to three insurance agents revealed that to increase PIP coverage from 20/20 coverage to 100/100 coverage costs an additional $12, $15 and $18 respectively! One agent was so surprised by this that he re-wrote his own policy to take advantage of this incredible bargain. Even better, you may be able stack your increased PIP coverages -- taking advantage of both of these terrific bargains.
Increase Your Underinsured Motorist and Uninsured Motorist Coverages
Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages are more than just an insurance bargain -- they are critical coverages for protecting yourself, your family and others who occupy your vehicles. These coverages kick in when anyone occupying your car is injured by another who has no insurance (UM) or has insufficient insurance to pay for all the damage (UIM). These coverages allow you to protect those who occupy your vehicles from others who either ignore the law and drive without insurance or fail to purchase enough insurance to fully compensate those they injure. UM and UIM premiums, combined, account for only about 5-8% of your total premium. Further, these coverages can be increased for little additional cost. However, UM and UIM coverage cannot exceed the amount of the Bodily Injury (BI) coverage purchased for the same car. Get UM/UIM quotes based on $30K, $50K, $100K and $250K of BI coverage -- you may be surprised to find that higher BI coverage is not really that much more expensive than the minimum $30,000 required in Minnesota. So consider all three coverages together when determining whether you are adequately insured and whether you are getting the most protection for your insurance dollars.
Take Advantage Of The Little Extras
Low cost optional coverages are also usually available and are often good deals. For example, glass replacement, towing and substitute transportation (car rental) each offer low cost protection. Some policies even offer road side assistance at rates considerably less than well known companies (you will have to buy your own maps). Ask your agent or insurance company about roadside assistance -- it can really come in handy during Minnesota winters.
Now that you know what to ask for and where the real bargains in car insurance reside you will want to shop various companies for the best rates. You have a couple of on-line sources available:
www.InsWeb.com - provides online insurance quotes.
www.InsureMarket.com - also provides insurance rate comparisons.
Good shopping and drive safely.
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