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Auto and Motorcycle Insurance
The age of TV and internet advertising has strived to simplify the perception of buying car insurance. Online quoting and direct to consumer companies provide what many consumers feel are fast solutions without the ‘hassle’ of consulting with an agent. While personal auto insurance coverages are somewhat standardized, there are still significant pitfalls you need to be aware of in order to avoid the potential financial ramifications associated with a policy which inadequately covers your losses.
Before you bypass a discussion with an insurance professional, some of the questions you should be asking yourself include:
- Do I know the difference between full and limited tort?
- Am I familiar with uninsured and underinsured motorist coverage?
- Do I understand first party benefits?
- Do I know the difference between combined single limit (CSL) and split limit liability?
The above are a few of the facets of a car insurance policy you should be familiar with. A licensed insurance professional can help you navigate the complexities of a car insurance policy and provide you with the knowledge and expertise to facilitate a well-informed decision about the coverages you ultimately choose to buy. Furthermore, working with an independent agent gives you the luxury of comparing quotes from multiple companies to determine which offers the best value in regard to price and coverage. Given the added benefit of choice, it is common for an independent insurance agency like Ruhl Insurance to be able to provide you with a more robust insurance policy for a better price.
Policies with additional value may include things like:
- Higher liability limits
- Additional first party benefits or higher limits, such as medical, wage loss, funeral expense, and accidental death
- Towing and rental car expense coverage
- First accident forgiveness
- Lower deductibles for physical damage coverages (comprehensive and collision)
- Endorsement packages which can include things such as accidental airbag discharge, locksmith coverage, zero deductible for a totaled vehicle, etc.
Individuals purchasing insurance policies have a lot on their plate. Life is hectic and we don’t always have time to familiarize ourselves with all of the nuances of the insurance buying process. Working with an experienced agent can help you uncover added values and savings within your personal insurance coverages.
Frequently Asked Questions
What is the difference between combined single limit and split limit auto liability?
Split limit liability will separate the maximum payments made to a person who is injured or experiences property damage if an auto accident is determined to be your fault. For example, your policy limits may be $250,000 per person for bodily injury, $500,000 maximum per accident for bodily injury and a $250,000 limit for property damage. This means if you hit a car and injured two people, each person may receive up $250,000 to compensate them for the bodily injury they incurred because of your fault. If they are driving a vehicle with an actual cash value of $25,000, your property damage liability can cover this damage with $225,000 to spare.
Combined single limit (CSL) does not separate limits for Bodily injury per person, per accident, or property damage. If your auto policy is written at a combined single liability limit of $500,000 and you hit and totaled someone’s Ferrari which had an actual cash value of $300,000 and the person had a $5,000 emergency room bill, your policy would pay for the $300,000 of property damage and the $5,000 of medical payments. Combined single limit liability can provide more flexibility for claims payments and dollar allocation, but a comparable amount of split limit liability could possibly provide you with a higher liability payout depending on the specifics of the situation and the details of the accident you caused.
What are the state minimum liability limits in PA?
In Pennsylvania, the minimum liability limits allowable by law for a policy written with split limits is $15,000 per person (bodily injury), $30,000 per accident (bodily injury), and $5,000 property damage. The minimum limit for a combined single limit policy (CSL) is $35,000, which includes both bodily injury and property damage. Operating your vehicle with only state minimum limits is not advisable for many reasons.
Why do I need higher auto liability limits than the state requires?
Hopefully you are having a conversation with an experienced insurance agent about how to protect yourself and your family from the risk of financial loss. This includes protecting yourself and your assets from the unforeseen liability exposures that life inevitably throws your way. Having an adequate amount of liability insurance protects you in the event that someone attempts to sue you if your negligence results in their property damage or bodily injury. You should be evaluating your net worth, the assets you hold, and the liability exposures present in your life.
For example, if you live in a million dollar home and you have state minimum limits on your auto policy you are opening yourself up to the potential for an injured party to come after your personal assets once your insurance policy limit is exhausted. Lawyers are very adept at discovering assets and given the cost of medical care today, $15,000 per person is hardly sufficient even in the case of some minor accidents. Imagine the unfortunate situation where someone is killed or paralyzed in an accident where you are at fault. $15,000 of liability insurance will be consumed within the first hour of their treatment. You may become legally obligated to pay their expenses without appropriate insurance limits to do so. You may have to liquidate assets to resolve the litigation.
Furthermore, if you have a youthful and inexperienced driver in your household, your risk has statistically increased. You should consider this added exposure and consider higher auto liability limits and even a personal umbrella liability policy to add additional coverage above and beyond what is provided on your auto policy.
How can I save money on my auto policy?
1. The first and best way to save is to look at combining your auto policy with a homeowners or renters policy. You may be able to receive significant discounts for buying multiple policies from the same company.
2. Secondly, you can choose to retain more risk by choosing a higher deductible for your comprehensive and collision coverages, which provide protection against losses to your own vehicles. You should evaluate these savings with your agent, since the amount of savings doesn’t always make sense when compared to the amount of the deductible increase.
3. You might also have a conversation with your agent about discounts provided by the insurance company for safe driving training, or even Good Student discounts for youthful drivers who maintain a certain GPA.
4. In the state of Pennsylvania, you can also save a significant amount of money on your auto insurance policy by choosing the limited tort option. Before you do this, you should have a conversation with your agent about what you give up by moving to a limit tort policy from a full tort policy. Nevertheless, the savings can be substantial and if you are comfortable with the concessions you make given such a change, you can benefit from significant premium savings.
*It's never advisable to lower your liability limit to save money. Usually, the savings is not significant and is not a good trade-off for the additional risk you assume!
Do I need to list my trailer on my car insurance policy?
Oftentimes, auto owners might have a utility trailer for personal use. If the trailer is titled to you personally and you wish to insure it for comprehensive or collision (physical damage) you may schedule it onto your auto policy. If you would like liability coverage only, this can be received through the “power unit” that is pulling the trailer. In other words, if you have a Ford F150 on your policy which you use to pull an 8 foot utility trailer, the liability limit that applies to your pickup truck can carry over to your trailer when it is being pulled by that vehicle.
Note: Business auto policies treat trailers differently than personal auto policies and owned trailers over certain GVW limitations need to be scheduled on a business auto policy for liability coverage.
What are first party benefits?
First party benefits are benefits afforded to you and any passengers in your automobile. These include things like Medical Expense, funeral expense, work loss, and accidental death. Different limits are available. By law, in Pennsylvania, auto policies must include $5,000 first party medical expense benefit, but this can be increased if you choose to purchase added benefit limits.
Am I only covered by First Party Benefits when I am in my own car?
No. In the state of Pennsylvania, the first party benefits on your personal auto policy can apply to any injury you sustain related to an automobile. This could include riding in a friend's car, riding in an auto insured under a business auto policy, or even being hit as a pedestrian. The amount of FPB that your policy pays may be calculated proportionately with any other policy that may apply to the accident (such as a business auto policy), but your coverage will follow you and provide you with benefits.
What is First Accident Forgiveness?
First accident forgiveness is essentially an insurance company's way of giving you a free strike. If you are at fault in an accident and you have first accident forgiveness on your policy, you can avoid rate surcharges that may have otherwise applied after they paid the claim on your behalf. Every company’s program is different and you may have to earn first accident forgiveness by staying accident-free for the first several years you have your policy with them. In this case, the accident forgiveness is essentially a reward for the years you drove accident-free.
Other companies may automatically give you first accident forgiveness if you have not had any accidents within 3 years, even if you were insured with another company during that time. If you have an accident, some companies will allow you to earn back your first accident forgiveness over a period of time, typically around 3 years, if you stay claim-free. Still, other companies may not put first accident forgiveness back on a policy once it is lost, making it necessary to cancel and rewrite the policy if accident forgiveness is to be gained again.
Should I purchase rental coverage?
Rental coverage is a good idea if you don’t have another car to use in the event that your primary vehicle is damaged or inoperable due to a covered loss (accident). Rental coverage is inexpensive and is typically written on as a daily limit and per accident maximum. Usually, the maximum limit is the daily limit multiplied by 30; thus giving you a month of rental expense coverage while your car is getting repaired or you search for a new vehicle if yours was totaled.
Can I get an insurance quote before I buy a car?
It’s a good idea to ask your agent to quote the insurance rate for a new vehicle prior to purchase. The easiest way to have your agent do this is to get the VIN from the dealership. Depending on the vehicle, the liability or physical damage coverage can vary greatly from the charges associated with your current auto. Other times, the difference is nominal.
It's also a good idea to call before buying a vehicle for your 16-year-old youthful driver. Parents are often shocked to see what the insurance premium might be for an inexperienced driver operating a higher GVW vehicle like an F250 pickup truck. Larger vehicles have a greater risk of more severely injuring a third party if an accident occurs.
Likewise, high-value vehicles or vehicles with expensive components that are operated by a youthful driver may cause the comprehensive and collision coverage premiums to be significantly higher, since the risk of loss and the potential for higher claim payments have both increased, statistically.
How fast can I get an auto quote from an independent agent?
Independent agents can provide you with same day quotes, and often can provide auto quotes while you wait. You can help speed up the process by being prepared with all of the paperwork and information your agents needs to provide you with an accurate and reliable quote.
What do I need to provide to get an car insurance quote?
Your current policy declarations page will have much of the information an independent agent needs to provide you with an insurance quote. Your auto insurance declarations page will usually provide your vehicles’ VIN numbers along with the usage and driver assignment information.
Additionally, your agent will need to know the name, date of birth, and driver’s license number of all the driver’s in your household. Most carriers will require the social security number of at least the first named insured on the policy. Carriers use this to determine an insurance score which helps to reflect the favorability of your risk and determine a tier for rating purposes. Some carriers will use the applicant (first named insured) and co-applicant social security numbers and tier the rating based on whichever one is better.
How much pricing flexibility does my agent have?
Agents writing personal insurance policies rarely, if ever, have flexibility in the rate that you receive. People often incorrectly assume that personal lines agents have leeway or “wiggle room” and, as such, are reluctant to provide a copy of their current policy because they feel that they will not receive the best pricing if the agent knows what they are paying now.
An independent agent does not have control over the rate you receive on your auto quote. This is determined by actuarials and algorithms, which are based on your driving record, the usage of your vehicle, prior claims, the experience of the drivers in your household, your insurance score, and sometimes even your credit score, along with other criteria. Your independent agent can provide you with a comparative quote across multiple companies and help you select the best coverage to price value.
Agents who are selling through a consultative approach will typically ask for a copy of your current policy to be able to determine if there are any potential coverage gaps and to ensure they are matching or exceeding your current coverage limits. Simply offering a cheaper quote is only half the story, and without a copy of your current policy, it is difficult to truly compare each company, coverage to coverage.