This is a great, quick read to learn some important auto-insurance-coverage topics that have a big impact!
Auto insurance is an important purchase that should not be taken lightly. Unfortunately, many people make mistakes when purchasing auto coverage, which can leave them vulnerable to significant financial losses. In this article, we will discuss five common mistakes when purchasing auto coverage and provide tips for avoiding them.
Mistake #1: Inadequate Liability Insurance Coverage
Liability insurance is essential to protect you financially in the event that you cause an accident that results in property damage or bodily injury to others. However, many people purchase only the minimum amount of liability insurance required by their state, which may not be enough to cover all damages in a serious accident. To avoid this mistake, it’s important to consider how much you can afford to pay in the event of a liability claim and purchase as much liability insurance as you can afford.
Mistake #2: Insufficient Uninsured/Underinsured Motorist Coverage
Under/uninsured motorist coverage is designed to protect you in the event that you are in an accident with a driver who is either uninsured or underinsured. Despite its importance, many people purchase only the minimum amount of under/uninsured motorist coverage required by their state. To ensure that you are adequately protected, it’s important to purchase the maximum amount of under/uninsured motorist coverage that you can afford.
Mistake #3: Confusing Actual Cash Value and Agreed Value Coverage
Many auto insurance policies reimburse you in the event of a covered loss for the actual cash value of the vehicle at the time of the accident or theft. Actual cash value takes into account depreciation and may not provide you with enough money to replace your vehicle if it is totaled. On the other hand, agreed value coverage provides coverage for the value of your vehicle that is agreed upon by you and your insurer at the time of policy issuance, without taking depreciation into account. To avoid this mistake, it’s important to understand the difference between actual cash value and agreed value coverage and obtain a policy or endorsement that provides agreed value coverage
Mistake #4: No Gap Coverage
Gap coverage is designed to protect you in the event that you owe more on your vehicle than it is worth at the time of a total loss. This can happen if your vehicle depreciates more quickly than the amount owed to the lender. Without gap coverage, you may be left owing a significant amount of money after your insurance pays out for the depreciated value of the vehicle. To avoid this mistake, it’s important to determine if gap coverage is necessary and purchase the appropriate amount.
Mistake #5: No Modification Coverage
If you have made valuable modifications to your personal auto, such as with a classic or collector car, it’s important to obtain specific coverage for these modifications. Most personal auto policies do not cover modifications unless an endorsement is obtained. To avoid this mistake, it’s important to establish the value of the auto modifications and obtain specific coverage to ensure that the modifications will be repaired or reimbursed in the event of a covered loss.
To Sum it Up
Purchasing auto insurance can be complicated and requires careful consideration. To avoid making these common mistakes, it’s important to work with a trusted advisor who can help you build a personalized coverage solution for personal autos and other important assets. Start building fast and careful coverage with Notable Risk today by completing the initial smart-form below!
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