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by Tom O'Leary
In Part 1 of "How To Get Even With Your Car Insurance Company In 10 Easy Steps" we covered the first 5 Steps. Here's 6 thru 10.
STEP 6 - Review, Change or Cancel No Fault & PIP (Personal Injury Protection)
No-Fault Coverage, and it's Twin - PIP - started out as great idea's. Your premiums were actually going to be lowered. Then, your State Politicians got involved (at the urging of Insurance Lobbyists, of course) and mucked it up.
You see, no-fault insurance coverage was originally intended to have each individual's losses, covered by their own car insurance company - no matter who was at fault.
Today, in many States, car insurance companies are making a ton of money on no-fault because the insurance companies convinced State law-makers to make "modifications."
Today, because of the these changes, car insurance companies have actually used the no-fault laws to reduce payments on a claim made by a customer, instead of reducing car insurance premiums as it was supposed to do.
So, premiums keep going up-and-up and insurance companies end up paying less for claims - Someone's getting rich on that deal....and it's not you.
And to make matters worse, some States (with really, really talented Insurance Lobbyist's) also require an additional premium be paid on top of the no-fault premium. This beauty is called Personal Injury Protection (PIP).
PIP is a "wide-blanket" of coverage and can provide Collision Coverage, Hospitalization, Social Security Disability, Workers Comp, Personal Disability Insurance & Life Insurance.
The problem with PIP and what it covers is....
You already gave most, if not all, of these coverage's anyway, don’t you? So, you're paying twice!
So, you need to do a couple of things:
Google “minimum levels of required auto insurance”
to see if No-Fault Insurance and/or PIP Is required in your State;
Then, check your policy. If it's not required by your State to have No-Fault/PIP Coverage and it's on your policy - cancel it. If No-Fault/PIP is required by your State....take the absolute minimum. Here’s how.
If you must have No-Fault/PIP, ask for and get a deductible from your car insurance company.
STEP 7 - Cancel Medical Coverage.
Medical Coverage, on most car insurance policies, is a promise to pay "reasonable" medical expenses for anyone who is riding in your car should you have an accident...as well as anyone in your car should it get hit by someone else.
Cancel it. You don't need it.
Why is that you say? Well, medical coverage as part of your car insurance policy is a duplicate of your own:
- Medical Plan;
- Any Life Insurance Coverage you might have, as well as;
- The Liability Sections of almost every car insurance policy written in the U.S.
Think of it this way....Do you have a Health/Medical/Hospitalization Plan thru work or an Association you belong to?
Then why are you paying premiums for Medical/Hospitalization Coverage on your Car Insurance Policy?
Here's what's going to happen when you tell the car insurance company or Agent that you "Don't want the Hospitalization/Medical Coverage." You're going to hear very slick "scare tactics" to help change your mind.
The insurance company employee will say "Well, if you're in an accident, and it's your fault, who's going to cover the medical bills for any injured passengers in your car?”
Here's your answer. Your family is already covered by your Health/Hospitalization Plan. If anybody else is in the car and they're injured - they're covered by your Bodily Injury Liability coverage that you're already paying
Get a free brand new car!
for....and their own Health/Hospitalization Plan.
So go ahead - save some more money and get rid of this coverage.
STEP 8 - Cancel Death, Dismemberment & Loss of Sight.
Do you have any of these coverage's on your existing car insurance policy? If so - cancel them.
And if you're a first time car insurance buyer or, just looking at getting several car insurance quotes, don't let anyone talk you into them!
Because, these coverage’s are an absolute waste of money. Most of these optional coverage's are simply "glorified" life insurance policies with ridiculous provisions and horribly overpriced premiums. If you need life insurance, make it a separate Insurance Policy.
STEP 9 - Cancel The Extras
Do you have "Roadside Assistance" or "Rental Car Reimbursement" on your policy? If so, cancel them.
And again, if you're a first time insurance buyer or getting a few car insurance quotes, don't bother with these coverage's.
Why? Because they're severely overpriced, are rarely ever used, and limit what you can and cannot do.
For instance, some rental car reimbursement" coverage is almost $100 a year for each vehicle on your policy. So if you have two cars, you'll spend almost $2,000 on rental car coverage in the next 10 years - and likely never even use it.
And roadside assistance? The piece-of-mind it offers gets trampled by the premiums the car insurance companies want for this coverage. Roadside assistance is a good idea. But use AAA for a cheaper solution.
STEP 10 - Terminate Comprehensive & Collision Coverage On Older Cars.
If you have an older car - by that I mean one that's worth less than $2,000 wholesale (the amount a car dealer would give you if you were trading it in) cancel any Comprehensive and Collision Coverage you have or
decline that option when getting a car insurance quote.
Here's why. If an 8 year-old car and a brand new car have identical damage, the cost to repair both will be identical as well, even though the 8 year-old car is worth next-to-nothing.
You see the cost of a bumper and fender are the same - whether it's for a brand new car, or one that is 8 years-old. That's why your premiums don't go down as the value of the car goes down. Your payments remain almost the same, year-after-year-after-year.
But, the bottom drops-out of what you'll be able to collect on that older car. For instance, if your car is "totaled", your insurance company will only pay you the wholesale value of your car.
So, let's say your car is worth $1,000, but the total damage is more than $4,000, the insurance company is only going to give you a check for $1,000....minus your deductible, of course.
So you might end up getting $500 back. Sounds like a lousy deal....but that's how it works.
So, the rule-of-thumb is this - cancel your comp & collision coverage when your vehicles value is less than $2,000....or you'll be throwing your money away.
Okay - you've jotted down some notes and are ready to make some changes to your car insurance policy. So pick up the phone and start slashing your premiums!
About the Author:
Tom O'Leary is an Automotive Portfolio Analyst based in Cincinnati, Ohio and Publisher of http://www.mynewcarpurchase.com, a consumer web site that assists with buying a new or used car, car insurance strategies and auto loans.
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