Admit it. We all love new cars. And not just for the convenience. But also the glam that comes with them.

Sadly, there’s that one significant downside- costs.

Of course, dealerships will always scream that they have the best prices in town. And might even introduce you to a couple of models on special sale prices.

But overall, you still have to dig deep into your pockets. Buying a new car is not an easy feat, to say the least. And that alone complicates everything, especially if you need one urgently and on a temporary basis.

Well, at least not entirely. It’s still possible to get a new car without actually buying one.

By now, I assume that you’ve heard about car leasing. It has been the magical option for decades now. Came quite handy when you needed a vehicle only for a limited period of time.

However, going by recent trends, leasing has morphed into a different thing altogether. It’s not just for travelers and temporary drivers anymore.

Everyone is going for it. In the past five years alone, car leasing volume has increased astronomically by 91%.

Source: Edmunds

Millennials are particularly fond of this option. Of the lot that got new vehicles in 2016, at least 31% of them did it through leasing.

Source: Edmunds

What’s the catch? For starters, its way cheaper than actually purchasing a new car. Including when you alternatively choose to buy your car through financing on monthly payments.

Here’s the interesting bit. On average, car buyers are now paying about $120 more a month than their leasing counterparts.

Let’s be honest. It has something to do with the fact that financiers are in for the long ball when it comes to profits.

To be fair, however, leasing also has its sets of problems. With the principal one being lack of adequate information about the whole concept.

Most of what we see are marketing campaigns by leasing dealerships. No one likes going into those finer details because they might spoil the party.

Insurance, for instance, is rarely mentioned by anyone. Even the State of Michigan hardly delves into the subject.

If you’ve been following this blog, you know that auto insurance is compulsory. And not just in Michigan, but also the rest of the country. What varies, however, are the actual policies.

But, it’s mostly only associated with cars that have been bought.

And that begs the question. Do you need different auto insurance if you lease a car?
Well, your car lease dealership has probably introduced you to this thing they call lease insurance. And even told that you that it’s compulsory.

Here’s the hard truth. It turns out they are right.

That means you should go ahead and mark the lease insurance checkbox on the form, right?

Now, hold it right there.

That’s where they go wrong. They may be right about one thing, but there’s a lot they haven’t told you.

Thankfully, we have your back. We’ll cover the most critical aspects of lease insurance. And then tell you why you shouldn’t rush to accept your dealer’s offer.
So let’s dive in and look at the basics first.

What is Lease Insurance?

Going by information published by Michigan State Police, more than half a million vehicles were involved in road crashes last year. And no specific type or model was spared.

Passenger cars, SUVs, and Vans led the list with a combined figure of slightly over 400,000. Pickup trucks come second, then small trucks at a distant third.

You might assume that it all ends there. But surprisingly, even vehicles like motorhomes, snowmobiles, and ATVs were part of the drama.

And sadly, it didn’t end so well for some of the occupants. 1,733 of the crashes were fatal, while 109,682 ended in injuries. Overall, more than 433,157 of the vehicles also caused property damage.

Source: Michigan

The point? Evidently, no vehicle is safe from a traffic crash and potential carnage. Including leased vehicles. And the State of Michigan knows this all too well.

As a result, no one is exempted from the compulsory no-fault insurance. That usually forms the first part of lease insurance. It comes with:

● Personal Injury Protection: This coverage grants you full reimbursement for medical expenses incurred as a result of a traffic crash. The insurance provider also caters for attendant care and pays a fraction of the lost income.

● Property Protection Insurance: If you end up crashing and damaging property or other stationary vehicles, this is the coverage you fall back on. It only applies to incidences within the state of Michigan.

● Property Damage: This is pretty similar to Property Protection Insurance. The only difference is the fact that it fundamentally applies to incidences outside the state of Michigan.

● Residual Bodily Injury Liability: This is applicable to traffic crashes that cause third-party injuries. The insurance company takes care of the resultant medical expenses.

But what happens when the car you’ve leased is owned by someone already covered? Wouldn’t that be good enough?

According to the Department of Insurance and Financial Services, you’re considered the owner of a vehicle if you lease it for more than 30 days. That essentially makes it compulsory to purchase this insurance of the lease period stretches past one month.

Come to think of it, the insurance is reasonably fair for parties involved. Quite a solid set of coverage there, to be honest.

But take another look. Assess it much deeper this time. Notice anything missing?
One prominent party has been left out. The dealership or individual that actually owns the car you’ve leased.

The state makes no mention of any coverage for the vehicle you’re driving in the event of a road crash. As far as they’re concerned, you can even wrap it and send it to the moon. All they care about, apart from your health, is reimbursing third parties.

So, do the actual vehicle owners stand a chance of losing their investment?
Well, that forms the second part of lease insurance. It basically protects the car owners from potential loss of their vehicle.

All factors considered, they actually face more risks than you. A crash is only one part of the potential problems. They could still lose their vehicle through theft, fire or natural disasters.

To make matters worse, cases of vehicle theft in the U.S have been increasing since 2014. After trending downward for 25 years. Are thieves getting smarter?

Source: Statista

According to FBI’s Uniform Crime Report, thugs made away with 765, 484 vehicles in 2016. Translates to 239.6 cars for every 100,000 people. A disappointing 6.6% rise compared to the previous year.

Source: FBI

And since today’s cars cost more than previous models, these cases translate to significant financial losses. In actual figures, Americans lost about $5.9 billion in 2016 alone.

Now, review this really critically. Not as leaser. But rather as a car owner.

Well, you’re dead right. Your leased car’s owners want none of this. That’s why in addition to no-fault insurance, you’ll also be required to get comprehensive auto insurance.

Collectively, they make up a typical lease car insurance.

So, does it operate within the same framework as regular auto insurance?
No. Not quite exactly. There are certain crucial elements that you should always remember.

Important Facts About Lease Car Insurance

● It Might Cost More Than Regular Auto Insurance

Admittedly, leasing has been attractive because of its comparatively low costs. But sadly, it’s not a fairy tale bed of roses. And lease insurance cost is the culprit here.

As we’ve discussed, you’ll have to take insurance against two levels or risks. The no-fault insurance applies to you as the driver, while comprehensive insurance protects the car owners.

Sounds good to some extent. But quite a different tale when it’s all translated to actual costs. Especially when you consider the fact that auto insurance rates have increased by 20% since 2011.

Source: Zebra

● There Are Still Ways To Save on Lease Insurance
Paying more for lease insurance is one thing in other states. Like North Carolina, where the average auto insurance rate is a paltry $865.

Now, when we cross over to Michigan, it becomes quite a hard pill to swallow. We’re already the highest in the nation, paying an average of $2,610 for auto insurance.

Source: Zebra

Things are even worse in some of the cities. Detroit drivers, for instance, are paying $5,414, on average.

So, of course, it’s understandable to feel helpless when you learn that lease insurance might even be costlier than regular auto insurance.

Fortunately, there are ways to reduce your overall premiums. Several, as a matter of fact.

But, they are not universally applicable. Plus they don’t come easy at all.

You see, each dealership has its unique lease terms. And insurance providers, similarly, have their own unique offerings with varying policies and corresponding discount rates.

Securing a good rate, therefore, requires extensive shopping. And most importantly, working with a reputable independent insurance agency. They know where to mine for the most suitable discounts.

● The Rental Car Dealer Is Not Always Right

And now back to our issue with the rental car dealer.

There are many issues that dealers are quite conversant with. But insurance is certainly not one of them.

The one you’re dealing with might attempt to include the lease insurance as part of the whole lease agreement. Of course, it might seem like a convenient package. But, don’t entertain the idea of signing it.

Odds are the dealer could be making some commission off your insurance premiums.

Although they are correlated, leasing a vehicle and purchasing lease insurance are two different things. Treat them as separate entities. They should never get mixed up.

A good approach would be negotiating with different rental companies on their rates. Then engaging an independent insurance agency when it comes to the corresponding insurance.

Conclusion

To recap:
● Leasing has morphed into a different thing altogether. It’s not just for travelers and temporary drivers anymore.

● In the past five years alone, car leasing volume has increased astronomically by 91%.

● Millennials are particularly fond of this option. Of the lot that got new vehicles in 2016, at least 31% of them did it through leasing.

● On average, car buyers are now paying about $120 more a month than their leasing counterparts.

● Going by information published by Michigan State Police, more than half a million vehicles were involved in road crashes last year. And no specific type or model was spared.

● No one is exempted from the compulsory no-fault insurance. That usually forms the first part of lease insurance.

● According to the Department of Insurance and Financial Services, you’re considered the owner of a vehicle if you lease it for more than 30 days.

● All factors considered, lease car owners actually face more risks than you. A crash is only one part of the potential problems. They could still lose their vehicle through theft, fire or natural disasters.

● Cases of vehicle theft in the U.S have been increasing since 2014. After trending downward for 25 years.

● According to FBI’s Uniform Crime Report, thugs made away with 765, 484 vehicles in 2016. Translates to 239.6 cars for every 100,000 people. A disappointing 6.6% rise compared to the previous year.

● You’ll have to take insurance against two levels or risks. The no-fault insurance applies to you as the driver, while comprehensive insurance protects the car owners.

● There are ways to reduce your overall premiums. Several, as a matter of fact.

● There are many issues that dealers are quite conversant with. But insurance is certainly not one of them.

That said, what kind of insurance did your dealer make you get for your vehicle?

You’ve just added a new car to your fleet, and the business is finally looking up. Quite a significant achievement there, to say the least.

But, while a vehicle is a great asset if leveraged for profit, it can also be a source of multiple liabilities.

Imagine getting paid $1,000 to deliver goods worth $20,000 only to end up causing a major road accident down the highway. Such an incident could end up with irreparable damages on the goods, plus extensive structural and engine destructions affecting all the vehicles involved.

If you’re lucky, the driver might walk away unscathed. And possibly only incur costs for repairing your vehicle.

Otherwise, you risk liabilities for not only the goods in transit but also third-party vehicles and their corresponding occupants.

Thankfully, no fault coverage is one of the legal requirements for all drivers in Michigan. Hence the consequent average rate of $2,394, which is ranked highest in the country.

Seems quite solid when you read through Michigan’s laws. But strangely, this is where things get a bit interesting.

Your insurance company’s agents might smell your inexperience from a mile away. Then capitalize on it by quoting a premium that’s way higher than that state average. And that would only cover basic legal insurance.

If they beat you at the negotiating table, you might end up paying that premium for quite some time. And just when you assumed that such a high figure would guarantee optimal protection, an accident proves otherwise.

A small technicality ends up disqualifying you from possible compensation. It might seem unfair, but that’s how capitalism works.

That’s why it’s critically important to be extremely analytical when choosing an insurance company. Fortunately, Michigan is a comparatively extensive market, with multiple insurance providers offering varying coverage at different price ranges.

One of the most prominent companies right off the bat is AAA Auto Insurance.
So, what is it all about?

Overview

AAA Auto Insurance is well-known for a good reason.

To begin with, it’s more than a century old. Well, not technically as an insurance provider. It only started out as a lobbying body in 1902.

At that time, it was known as the “American Automobile Association”. It essentially provided automobile services to improve overall road safety.

As a matter of fact, AAA went ahead an established a school safety program 18 years later. Consequently making it a pioneer in running driver safety programs.

Auto traffic in America was, of course, considerably low at that time compared to modern trends. But road safety was still a fundamental concern. Especially since car safety features were not that developed.

Source: AAA

AAA continued spearheading safety campaigns until 1947. It then achieved yet another milestone. And ended up establishing the AAA Foundation for Traffic Safety.

It continued diversifying its services throughout the century. All fundamentally aligned to traffic safety.

This long history ultimately won the association the U.S Transportation Department distinction. Basically as Clinton administration’s principal road safety partner in 1998.

Currently, AAA is not just a roadside assistance organization. It is made of 51 autonomous clubs. All specializing in a wide range of services.

In addition to roadside assistance, some of the chief ones include auto insurance, financial services and travel planning, just to name a few.

This has seen it attract more than 50 million members across a wide range of states, including Michigan.

So, what insurance products does it offer for Michigan residents?

Types of Coverage Provided AAA Auto Insurance

There are over 8 million private and commercial vehicles in Michigan. Consequently translating to a wide pool of drivers. To position itself competitively against other insurance providers, AAA Auto Insurance attempts to cater adequately to this extensive market.

Source: Statista

It provides a wide range of coverage tailored to varying needs and possible liabilities. The primary ones include:

● No Fault Coverage: This is a compulsory requirement according to Michigan Law. It’s a Personal Injury Protection insurance that caters for any medical bills incurred by your car’s occupants. It applies to all accident situations, regardless of the party at fault.

● Underinsured/Uninsured Motorist Coverage: 20.3% of the drivers in Michigan are uninsured. If any of them causes an accident, this coverage qualifies you for compensation for personal injuries and vehicular damages.

● Comprehensive Coverage: Applies to car damages caused by non-collision incidents. For example natural calamities and weather factors.

● Collision Coverage: Applies to vehicular damages caused by a road accident.

● Bodily Injury and Property Damage Liability: Pays medical bills and car damage costs of third parties when you’re at fault in an accident.

Then there’s a rather comparatively unpopular set of auto insurance offerings. They are only applicable to special circumstances:

● Pet Coverage: Caters for your pet’s medical bills in case of a road accident

● Non-owners Insurance: If your car is driven by individuals who don’t own vehicles, this should cover their resultant liabilities.

● Rental Car Coverage: Covers corresponding liabilities when you rent a car.

● Rental Car Reimbursement Coverage: Provides you with a rental car while the company works on your vehicle after an accident.

● Gap Insurance: This applies to individuals who lease vehicles or have outstanding auto loans. If the car is totaled, this compensates the cost difference between replacement and the outstanding lease or loan balance.

AAA Auto Insurance Locations

AAA Auto Insurance has firmly secured its position in Michigan. It operates through tens of AAA branches distributed evenly throughout the state.

Source: Google Maps

To find the closest branch, simply visit its Michigan site and enter your ZIP code. Various offices will be subsequently listed according to distance.

AAA Auto Insurance Features

AAA Auto Insurance, unfortunately, is an exclusive service only open to AAA Members. This requires you to apply for either of the three membership programs to be eligible.

While Classic membership costs $52 in Michigan, Plus goes for $87, while Premier will set you back $117. These, of course, might seem like added fees at first. But they are all worthwhile when you consider the extra services.

The basic element that sets this company from the rest is the fact that it’s not just an insurance provider. If anything, insurance is barely a component of its services.

AAA is essentially a holistic organization that provides a comprehensive set of services critical to road safety. That’s pretty much how it has managed to grow from 1500 to 50 million members.

Therefore, as a member with auto insurance, you also qualify for exclusive benefits including:

● Roadside Assistance: The membership programs come with varying levels of roadside assistance services like fuel delivery, towing, battery boost and tire change. They are all offered round-the-clock.

● Deals and Discounts: You qualify for deals on discounts on a wide range of facilities associated with AAA. They range from basic travelling amenities like car rentals and hotels. Plus gadgets like cell phones and eyeglasses.

● Trip Planning: You’re granted access to a wide range of travel guides travel guides that assist in planning trips. As a result, you get detailed maps to find essential amenities like gas stations, restaurants and hotels.

AAA Auto Insurance Pricing and Discounts

Because of the extra services, the popular assumption has always placed AAA auto insurance on the costly end. But, surprisingly, the provider has always maintained considerably competitive insurance quotes.

While the pricing of individual coverage differs by state, AAA has managed to hold on to the strategically competitive cost trend across all the regions.

Basically, AAA auto insurance might not have the absolute cheapest premiums. But it also doesn’t come close to the most expensive auto insurance quotes.

When various parameters are reviewed, the provider continues to maintain below-average pricing both monthly and annually. All ranking considerably well against its major competitors.

Source: ValuePenguin

And that’s not all. You can still lower your premiums further. By taking advantage of a wide range of possible discounts.

This should be especially easy to achieve if you consult a well-informed independent agent. One with an exceptionally good analytical eye for detail.

The discounts include:

● Student Away From Home: Entitles you to up to 15% discount if a young driver schools at least 100 miles from home. But goes to school without the vehicle.

● Good Students: Reduces the premium by up to 15% for good school grades by a young driver.

● Paid in Full: Applies 5% discount when you clear the entire auto insurance premium.

● Advance Purchase: Reduces overall cost by 5% after paying for the policy at least a week before your current policy lapses.

● Longevity: Qualifies you for a discount of up to 12% if you’ve been with your previous auto insurance provider continuously for 36 or more months.

● Low Mileage Discount: Reduces your premium by up to 12% when low mileage has been verified on your car.

● Association with Professional Groups: Applies a discount of up to 10% when you have connections with professional or affinity groups.

AAA Auto Insurance Claims

Filing a claim with AAA auto insurance is pretty simple and straightforward. The process begins online. And it’s always advisable to first seek help from an independent insurance agency.

After accessing your AAA club’s website, proceed to the Insurance drop-down menu and click on Make an auto insurance claim. Then enter all relevant details including incident particulars, car specifications and personal details.

The insurance company will finally get in touch with you through the contact information given.

AAA Auto Insurance Customer Experience

While online customer reviews can be good indicators of the expected experience, they have a major downside.

An overwhelming majority of customers don’t bother to document their experiences. And those that do are only compelled by unpleasant experiences.

That said, it’s worth noting that AAA Auto Insurance has attracted its fair share of poor reviews. And even more positive reviews in not only Michigan but also other states.

This has seen it get an above-average rating of 0.55 from the National Association of Insurance Commissioners. A.M Best Insurance Rating, on the other hand, awards the provider a rating of “A+”.

Only a minority of customers have expressed concern over the complicated process of cancelling policies. Others have complained about increasing premiums. But this is a phenomenon we’ve previously established as an industry standard.

The rest of the policyholders continue to praise it for timely roadside assistance and a stress-free claim process. It’s a financially stable company that continues to honor its customers’ claim demands.

Bottom Line

AAA Auto Insurance might not be the cheapest insurance provider on average. But it comes with a whole lot more than basic insurance.

Definitely a good option to consider if you fancy an all-rounded club. Plus, it reportedly continues to honor its customers’ insurance claims.

All in all, it’s still possible to secure all these benefits at a substantially lower price. All you need is to strategically raise your negotiation stakes by working with an independent insurance agency.

A reputable one with experienced professionals will not only show you how to capitalize on membership deals. They will also promptly identify all the discounts you’d be eligible for.

And, of course, they will assist you to effectually compare AAA Auto insurance with other possible options.

Conclusion

● No fault coverage is one of the legal requirements for all drivers in Michigan.

● It’s critically important to be extremely analytical when choosing an insurance company.

● AAA only started out as a lobbying body in 1902. At that time, it was known as the “American Automobile Association”.

● AAA Auto Insurance has more than 50 million members across a wide range of states, including Michigan.

● AAA Auto Insurance provides a wide range of coverage tailored to varying needs and possible liabilities.

● The company operates through tens of AAA branches distributed evenly throughout the state.

● AAA is essentially a holistic organization that provides a comprehensive set of services critical to road safety.

● When various parameters are reviewed, the provider continues to maintain below-average pricing both monthly and annually. All ranking considerably well against its major competitors.

● AAA Auto Insurance gets an above-average rating of 0.55 from the National Association of Insurance Commissioners. A.M Best Insurance Rating, on the other hand, awards the provider a rating of “A+”.

● AAA Auto Insurance might not be the cheapest insurance provider on average. But it comes with a whole lot more than basic insurance.

And now for the big question. How does this company compare with your current insurance provider? Do you like your current choice? Why?

You’ve just acquired a brand spanking new car, and your life now almost feels surreal. Everything about it is just perfect, and you couldn’t be prouder of yourself.

Of course, you can’t wait to take it out for a ride on Michigan’s roads. Because nothing is as exciting as cruising down the highway while listening to music and enjoying that new car smell.

Well, congrats. It’s definitely an admirable achievement. The stuff of dreams. At least it seems like one. But unfortunately, you’re not there yet, because of one major caveat- traffic risks.

In 2017 alone, Michigan saw 314,921 road crash incidents, 937 of which were fatal. 57,263 of the cases resulted in some form of bodily injury, while 256,721 caused property damage. All in all, 78,394 individuals were injured, and 1,028 were not fortunate enough to make it out alive.

Source: Michigan

You might be the keenest and most careful driver in the state. We’ll give you that. But if you review information compiled by the State of Michigan, there are numerous causes behind these crashes.

They range from the obvious like “overspeeding” and “reckless driving”, to the least expected like “failure to yield”.

Source: Michigan

Essentially, even when you’re super careful, another road user might trigger an accident. It’s a wild world out there in the streets.

That’s why Michigan State legislation requires each driver to purchase liability insurance. To essentially cater for possible resultant injuries and property damage.
Unfortunately, road crashes are barely a fraction of the risks your new car faces. Even if it successfully survives the crazy traffic jungle, there are numerous other things to worry about.

Thugs might spot it right when they are looking out for that specific model. And you know there’s nothing as irresistible as a new car, especially when it comes to grand theft auto.

Of course, you might try to secure it accordingly. But Michigan, in recent years, has proven to be the Wild West of motor vehicle theft. We don’t deal with amateurs anymore. Only professionals.

When car makers introduce new security features, the thieves have always found ways around them. That’s how they were able to steal close to 20,000 vehicles in 2016. And surprisingly, most of them vanished completely since only 49% were recovered.

Source: State of Michigan

Sadly, that’s not all. If you avoid road crashes, and potential thieves fail to notice your car, nature might still get it. A tree might fall on it during a storm, or a technical hitch might ignite a fire.

Principally, whichever way you look at it, there are risks everywhere. That’s why auto insurance is critically important.

The broader the coverage in your policy, the more you’ll be protected from these risks. Although such optional policies are usually costlier than standard compulsory insurance, cautious vehicle owners have always gone for them.

Hence the full coverage auto insurance. But what exactly is this? And is it even suitable for vehicle owners in Michigan?

Debunking The Full Coverage Auto Insurance Myth

You’ve probably seen auto insurance providers marketing numerous different kinds of coverage. Each is priced separately, addressing a specific risk.

So, of course, it might make sense that the same companies would also consider bundling them into one special buffet policy. At least to cater to customers who might be seeking to simply protect themselves from all possible auto-related risks. Hence the all-too-common term, “full coverage auto insurance”.

But let’s get something clear right off the bat. Technically, there’s actually no such thing as full coverage in the motor insurance circles.

You might have heard other car owners and probably a couple of insurance agents throw the term around. But you can’t walk into an insurance company and request to purchase a full coverage policy. It simply doesn’t exist. At least officially.

Wait a minute. Does this mean that insurance providers do not allow bundling of multiple types of coverage in one policy?

The insurance industry would actually be dead if this was the case. As a business, an insurance company will even encourage you to acquire additional coverage. The more the bundling, the higher the subsequent profits.

So the concept does apply to the entire industry. The only thing that is technically inexistent is “full coverage auto insurance” as an official policy name.

The thing is, as an unofficial term, the definition can vary significantly depending on who you’re dealing with. The industry is pretty extensive, with numerous companies offering varying auto insurance coverage.

That said, there are specific kinds of coverage that are typically accepted widely as core components of full coverage insurance. If you suggest that you’d like to protect yourself fully, then chances are your agent might suggest the following:

What ‘Full’ Coverage Auto Insurance Entails

An insurance coverage that provides full protection should have at least two primary parts. One that addresses general liabilities, and another for comprehensive benefits.

● First Part: Liability Insurance

Liability insurance, as we’ve previously discussed, covers damages resulting from road accidents. In addition to bodily injuries, it extends to physical damages on third party vehicles and property.

It’s essentially the only type of insurance that is required by law in each of the American states. Only slight details vary when you shift from one state to another.

Fortunately, Michigan has one of the most comprehensive liability insurance packages in the country. While most states only limit this to at-fault third party damages, Michigan is among the 12 states that have included personal injury protection.

Therefore, the first part of a full coverage auto insurance in Michigan should come with:

● Personal Injury Protection (PIP)

● Property Protection Insurance (PPI)

● Bodily Injury/Property Damage (Residual BI & PD)

Source: ValuePenguin

As the name suggests, Personal Injury Protection applies to first person injuries. Regardless of whether you’re at fault or not, the insurance company should take full responsibility for your injuries until you ultimately recover.

The best thing about this is the fact that you won’t be required to pay even a dime for your medical treatment. As a matter of fact, it doesn’t even have maximum limits. Whatever the extent of your injuries, there’s no ceiling on the medical amount payable.

And that’s not all. Even after catering for your bills, the insurer should also ensure that you’re comfortable by compensating for lost income.

In addition to a payout amounting to 85% of lost income, you should receive a daily household subsidy not exceeding $20 per day. In some cases, these handouts can extend for as long as 36 months after a traffic incident.

Certainly explains why Michigan has the highest average auto insurance rate in the U.S. At $2,394, it ranks ahead of second-placed Louisiana at $1,921. It even surpasses the national average of $1,318 by more than $1,000.

Source: Insure

All things considered, bodily injury is only one of the possible consequences of a road accident. That’s why Michigan’s liability insurance also includes Property Protection Insurance.

This helps you offset the costs of repairing any third party property damage you cause in a road crash. But, unlike the former, it has a limit.

Insurance companies will not pay more than $1 million per crash. But, to be fair, that’s still a significantly huge amount of money, considering the standard cost of properties usually damaged in a typical road crash.

Interestingly, it does not extend to all properties. Insurance payouts are only made for properties that were stationary at the time of impact. This disqualifies other drivers’ cars unless they were parked and immobile.

Don’t be alarmed though. The insurer won’t completely bail out if other damaged vehicles were moving.

Instead, they’ll switch to the third component of Michigan’s liability insurance- Bodily Injury and Property Damage (Residual BI/PD). This entirely addresses third-party injuries and property damage in accidents you cause.

Unlike the previous two, this coverage has stated limits you can pick from. However, you’re required to proceed with an option that provides a protection of at least $20,000 for each injured individual.

When the number of injured persons is two or more, the least expected coverage is $40,000, while $10,000 applies to property.

If affected parties are dissatisfied with the initial payout offers, the law grants them the right to sue for additional benefits. This could potentially be costly even to you, especially if your limits are comparatively low.

That’s because insurance companies will never extend past the set limits. If the court settles for a higher amount, any deficit amount after limit deduction should be paid directly by you.

● Second Part: Collision Insurance and Comprehensive Insurance

Michigan’s liability insurance is solid enough. But it’s barely comprehensive, probably to minimize legal insurance costs.

One substantial element that is prominently missing in each of the three liability coverage types is the first-person vehicle. As long as you’ve fully settled costs for third-party damages, the state doesn’t really care what you do with your car.

If it’s totaled, you might as well dump it in a wrecking yard. Or sink it in Lake Michigan.

But if you care about it, you should consider adding Collision Insurance to your full coverage auto insurance. It’s more or less like a PIP for your vehicle.

Regardless of the party that is at fault, your insurer is expected to asses and repair any damages to your car. It’s pleasantly swift because you don’t even have to wait for a payout from the other driver’s insurance provider.

Unfortunately, just like all other favorable policies, it has its downside. It’s typically the costliest auto insurance coverage, and could potentially even double your premium.

Luckily, you can mitigate this by choosing a significant deductible, which normally ranges between $50 and $2,000. The higher the deductible, the lower the subsequent premium.

So far, we’ve fully addressed possible road accident liabilities and damages. But that’s barely half the tale.

You still need protection from other risks as previously mentioned. And that’s where Comprehensive Insurance comes in.

This coverage applies to your car pretty much like collision insurance. But, instead of accidents, it only covers damages triggered by external forces. Like, for instance, vandalism, an errant object going through your windshield, or a tree falling on your car.

Thankfully, since these events are rare and avoidable, comprehensive insurance is considerably cheaper than collision insurance.

Conclusion

● In 2017 alone, Michigan saw 314,921 road crash incidents, 937 of which were fatal. 57,263 of the cases resulted in some form of bodily injury, while 256,721 caused property damage. All in all, 78,394 individuals were injured, and 1,028 were not fortunate enough to make it out alive.

● There are numerous causes behind these crashes. They range from the obvious like “overspeeding” and “reckless driving”, to the least expected like “failure to yield”.

● Thieves were able to steal close to 20,000 vehicles in 2016. And surprisingly, most of them vanished completely since only 49% were recovered.

● If you avoid road crashes, and potential thieves fail to notice your car, nature might still get it.

● Technically, there’s actually no such thing as full coverage in the motor insurance circles.

● An insurance coverage that provides full protection should have at least two primary parts. One that addresses general liabilities, and another for comprehensive benefits.

● Liability insurance, as we’ve previously discussed, covers damages resulting from road accidents. In addition to bodily injuries, it extends to physical damages on third party vehicles and property.

● The first part of a full coverage auto insurance in Michigan should come with: Personal Injury Protection (PIP), Property Protection Insurance (PPI), Bodily Injury/Property Damage (Residual BI & PD)

● Collision insurance is more or less like a PIP for your vehicle. Regardless of the party that is at fault, your insurer is expected to asses and repair any damages to your car.

● Comprehensive insurance applies to your car pretty much like collision insurance. But, instead of accidents, it only covers damages triggered by external forces.

All in all, this should be an exceedingly beneficial combination of insurance coverage. But they can only serve you well if you’re extremely keen on the selection process from the word go.

So talk to us to today and let’s help you secure the most favorable types of coverage, from the best possible insurers, at the lowest quotes in the market.

There are two primary occasions in your motoring experience you’ll probably never forget. That time you bought your first car. And when you finally passed the driving test to get a license.

If your teen is anything like you, they must have anticipated the day at which they were eventually eligible for driving.

At 14 years and 9 months, Michigan has one of the lowest eligibility ages for learner’s permits. However, new drivers are only granted restricted licenses at 16. Then full licenses when they hit 17, which is also fairly low compared to other states.

Now, of course, a new driver in the house is pretty exciting. But it’s also just as dreadful.

Exciting because it’s exceedingly liberating to finally have someone else who can run errands with the car. Plus your days as a chauffeur are finally coming to an end.
Dreadful because it comes with additional risks and expenses.

While this is exceptionally pronounced in young teenage drivers, it also applies to much older drivers. So buckle up even when the new driver is your spouse. Or maybe an employee in your business.

But we’ll largely focus on teenage drivers because of the corresponding numbers and associated risks. Although the issuance of licenses to teenage drivers has been dropping in the recent past, the bulk of new drivers are still individuals aged 16 to 19.

Unfortunately, this comes with its set of problems. It’s common knowledge by now that teenagers are the most reckless drivers in not only Michigan but also the rest of the country. Well, apart from drunk drivers.

According to the Center for Disease Control and Prevention, motor vehicles crashes are the leading cause of death among teenagers. As many as a third of deaths among 13-19-year-olds are caused by traffic accidents.

Source: CDC

This is particularly prevalent among drivers aged 16. They have higher crash rates compared to other age groups.

We understand that this might be worrying if the new driver is your son or daughter. And possibly even more troubling if you’ve never had a new driver before.

Sadly, that’s only a part of the problem.

Your insurance provider is also aware that teenagers belong to a special category of drivers. That’s why they might increase your insurance premiums substantially.

According to an analysis of standard auto insurance premiums, a single teenager translates to an average premium bump-up of 78%.

It’s notably more expensive for boys, with an average rate of 89%. Girls, on the other hand, attract a much favorable rate of 66%.

Source: Insurance Quotes

In areas like Rhode Island, Maine and New York, you might have to pay about 100% more. But thankfully, despite comparatively high insurance auto insurance rates in Michigan, companies have been a little considerate with this one.

Premiums only increase by an average rate of 55%. Not bad. Not bad at all. Plus you can reduce this even further if you’re particularly strategic.

Even better, you can also minimize risks for your new driver using proving methods.
Conversely, handling the whole process blindly could increase your policy rates two-fold. With correspondingly high auto risks.

So we’ll walk you through 7 things you should do to get everything in order.

1. Understand The Law

Technically, you two are both drivers now. But the State of Michigan views it differently. It does not consider you as equals.

Because of the corresponding risks, Michigan has enacted laws specifically for young drivers. They are meant to minimize risks and overall road carnage.

For instance, it’s illegal for a teen driver with Level 1 or 2 Graduated Driver License (GDL) to drive while using phones. Additionally, a Level 1 driver is only allowed to drive alongside a licensed designed passenger aged 21 or older.

Failure to understand and adhere to these laws will not only endanger the new driver. It might also turn out to be sufficient grounds to reject a claim in case of an accident.

2. Train the New Driver Further

Contrary to popular misconception, passing a driving test doesn’t mean you’re a good driver. A license is only an indication that you barely meet the minimum required standards. That you now have the power to learn driving on an actual road.

If licenses were only issued to good drivers, tests wouldn’t be as simple as a couple of parallel park jobs. They’d be much more complicated with difficult tasks.

But parents don’t realize so. Research indicates that they rarely train their kids to become safer drivers. They mostly rely only on the driving education programs.

Certainly explains why new drivers frequently take unreasonable risks and make otherwise avoidable mistakes.

3. Buy Used Cars Or Hold Onto Ones You Already Have

Having a new driver might feel like a great time for a new start. Probably a new car as a birthday gift? At least that will keep them away from messing around with your car, right?

Understandably, getting a new car for a teenage driver may be a thoughtful token of love. They’ll definitely be very excited. But your insurance provider won’t be as gleeful.

A new car means expensive repair jobs. Which consequently translates to higher premium rates.

A teenage driver should instead start out with the cars you already have. And if you have to purchase an additional one, get a used one. At least until they are adequately experienced as safe drivers.

To help you in this, the Insurance Institute for Highway Safety annually publishes a list of the safest, most affordable vehicles for teenagers. Your final choice should be largely dependent on your specific condition and insurance company policies.

4. Shop Around

A car may be a bad idea. But not everything about a fresh start is equally unwise. A thoughtful move like switching to a more favorable insurance provider would be increasingly beneficial.

Of course, it would only be logical to shop around among competitor companies for cheaper rates. But, as we’ve established before, quite a number drivers don’t bother.

But don’t be quick to tell them off. Beating insurance companies at this game is actually not as easy as it might seem at first.

They know the process of shopping around is exceedingly cumbersome. You’ll essentially scout the web seeking alternative quotes. And it could be tiring and frustrating especially if you don’t know where to begin.

To discourage you, therefore, your provider will make a seemingly “attractive” offer. Possibly a discount for an additional driver.

But in actual sense, the new premium might turn out to be significantly higher than possible offers from a host of other alternative companies.

So engage reputable independent insurance agents. They would know gold mines that are perfectly ideal for your situation.

5. Seek Insurance Discounts

Insurance companies offer multiple auto insurance discounts to encourage their customers to stick around. And this alone even triggers drivers to increase spending by adding more individuals and vehicles

In addition to good student discount, other possible ones include:

● Multi-vehicle discount

● Low mileage discount

● Driver training discount

● Good driver discount

● Family setup discount

● Monitored teen discount

Each comes with a unique set of qualification criteria. Since you’re bound to qualify for a few with a new driver, discounts are undeniably a good marketing strategy.

But insurance providers can be very sly at how these are implemented.

Chances are you’d expect discounts to apply automatically. But only selected ones like increasing deductibles would immediately reduce your premiums. And that’s probably due to the fact that they are directly beneficial to providers.

The rest require you to actively seek them out before getting in touch with your provider. They can only be applied if you specifically ask for them.

To avoid missing out on crucial ones, engage your independent insurance agency. Its agents should know how to effectively secure all the possible discounts.

6. Use One Insurance Policy

Why should you bother finding ways around your own policy when you could simply apply for a separate one? Isn’t it even less cumbersome splitting and dealing with two distinct policies?

To some extent, two separate policies might be easier to manage. Because sorting out their terms and factors would be much simpler. Especially to someone who’s yet to learn all the insurance ropes.

But, unfortunately, this could be costlier than just adding the new driver to your existing policy. The latter is flexible enough to grant you multiple discount options on bundling and deductibles.

According to a study commissioned by InsuranceQuotes.com, a separate policy for a new driver aged 18-24 will cost you 8% more. In some states, the premiums could be as much as 50% more than sharing the same policy.

Instead of two separate policies, you should review and adequately adjust your current policy. But only after a comprehensive analysis of your situation and possible risk factors.

For example, you might consider going for collision and comprehensive coverage. On one part, it might be thoughtful because of the increased risks. But it would not make sense if you’re dealing with older vehicle models.

To make an informed decision, independent insurance agents should be able to assist you to conduct a solid analysis.

7. Update Safety Accessories

Thanks to tech advancements, some of the latest car models come with quite impressive safety features. The 2016 Chevrolet Malibu, for instance, has many protective elements and grants parents some level of activity oversight.

Such a car would allow you to even set a speed limit for your teenage driver. Plus cap music volume and assess reports on driving patterns.

Pretty neat. But, as we’ve discussed, these latest tech-packed cars are expensive with correspondingly high insurance premiums.

Thankfully, recent explorations and advancements have also introduced many aftermarket alternatives. While some accessories are model-specific, there is a host of others which are universally compatible with all brands. Including older cars

If you need to monitor driving behaviors, for example, you could purchase a gadget like the Voxx Carlink. It’s directly connected to car onboard diagnostics and uses Bluetooth to link to your smartphone.

The consequent data would not only be leveraged for training purposes. It could also help you secure a good driver discount from your insurance company.

And that’s just a drop in the ocean. There are many other companies producing a wide range of additional safety accessories.

And the best thing about them is that they are available in all price ranges. For a few dollars, you can get a gadget that would possibly knock hundreds of dollars off your premium.

Conclusion

To recap:

● At 14 years and 9 months, Michigan has one of the lowest eligibility ages for learner’s permits.

● However, new drivers are only granted restricted licenses at 16.

● Then full licenses when they hit 17, which is also fairly low compared to other states.

● Although the issuance of licenses to teenage drivers has been dropping in the recent past, the bulk of new drivers are still individuals aged 16 to 19.

● According to the Center for Disease Control and Prevention, motor vehicles crashes are the leading cause of death among teenagers. As many as a third of deaths among 13-19-year-olds are caused by traffic accidents.

● According to an analysis of standard auto insurance premiums, a single teenager translates to an average premium bump-up of 78%.

● Because of the corresponding risks, Michigan has enacted laws specifically for young drivers.

● Passing a driving test doesn’t mean you’re a good driver. A license is only an indication that you barely meet the minimum required standards.

● Research indicates that parents rarely train their kids to become safer drivers. They mostly rely only on the driving education programs.

● A teenage driver should instead start out with the cars you already have. And if you have to purchase an additional one, get a used one.

● A thoughtful move like switching to a more favorable insurance provider would be increasingly beneficial.

● Insurance companies offer multiple auto insurance discounts to encourage their customers to stick around.

● Recent explorations and advancements have introduced many aftermarket safety alternatives. While some accessories are model-specific, there is a host of others which are universally compatible with all brands.

Ultimately, overall handling of this process and consequent outcome depends on how well you analyze your risks. Only an experienced independent professional would be able leverage this to achieve the best possible results.
So get in touch with us today and let us help you secure a cheap but adequately ideal policy for your new driver.

You just got off from work and can’t wait to get home after a long day at the office. You desperately need to rest. And nothing will stop you. Not even the heavy snow and ice falling in Michigan.

Confident about your car’s ability to cope with the weather, you switch on the ignition and start cruising down the highway. Apart from the reduced visibility, everything else seems fine. You’re even enjoying the drive as you gradually wind down after a tiresome day.

There’s very limited traffic today, and the drive begins getting boring. The time is now seemingly moving slow. You start yawning, feeling woozy because of the immense amount of sleep creeping into your head.

Suddenly, you hear loud successive honks, and you bolt from sleep. You’re a bit surprised that you had dozed off behind the wheel.

But there’s no time to think about all that because a truck is quickly coming at you. You hadn’t even realized that you had drifted to the oncoming lane.

In panic, you try to turn the steering wheel to correct the situation. The oncoming truck, on the other hand, is visibly trying to apply brakes.

But the road is proving to be too slippery, and it starts veering across the highway. Your car is also letting you down because it’s doing very little to avoid impending danger.

You brace for impact, knowing too well that you might be taking your last breath. Then deafening noise before you black out.

You later gain consciousness just in time to pull yourself out of the wreckage. The seatbelt seemingly came in handy and saved your life. You’ve only suffered minor injuries.

Still shaken, you suddenly realize that you now have one huge problem. The car is totaled. Or so it seems.

As you stand back to analyze the damage, you notice a tree succumbing to the extreme weather and falling on another parked vehicle. Great. A second totaled vehicle.
It sure looks like a day for wreckages, thanks to the snowfall. Maybe another vehicle is probably losing control and hitting a wall in a different part of Michigan.
Whatever the cause, you are all facing a similar problem now. Your cars are totaled, and an insurance claim might be the only way to save yourself.

But, are they actually technically totaled? You’ve heard about other drivers successfully resuscitating their cars after major accidents.

So, is that possible in this case? Or will you be getting a new car? What are the requirements in the first place?

When Is A Car Considered Totaled?

“Totaled” simply means that the car is extensively damaged and largely irreparable. But even when it has been completely flatted by a building, you’re not the one who’ll make this conclusion.
Instead, your insurance company will decide whether your car is a total loss or not. This determines the subsequent type of claim.
A car only becomes totaled if:

● It’s impossible to repair it safely.

● Repair costs surpass the vehicle’s current value. In the insurance circles, a car’s price is assessed as the actual cash value (ACV).

The evaluation process takes into consideration several relevant factors. Two of the principal ones include overall depreciation and any improvements that may affect value.

But don’t get worked up about this right now, because we’ll be comprehensively reviewing it shortly.

Now, of course, it doesn’t make any economic sense doing repairs that exceed the vehicle value. Unless the car has an undeniable sentimental value. That’s why your insurance agent is not likely to contest total loss if the damages are actually extensive.

● The amount of damage exceeds limits stipulated by state laws.

Many states analyze this through a system known as Total Loss Formula or TLF. Essentially, the car’s scrap value plus repair costs need to be equal to or surpass the vehicle’s pre-accident value. This automatically qualifies it as a totaled car.

In Michigan, the allowable damage threshold percentage is 75%. Totaled vehicles are expected to equal or exceed this.

Source: Car Insurance

Steps To Take When Car Is Totaled

So far, 12 to 14 percent of all vehicles reviewed by insurance agents post-accident are ultimately declared totaled. This applies not only to Michigan but also the rest of the other American states.

Technically, this translates to a 1 out of 7 chance of total vehicle loss in case of a traffic accident. Additionally, the older a car is, the higher its chances of being declared irreparable. The trend is consistent up until vehicles aged 10 to 15 years old.

Source: CCIS

With odds that high, it’s critically important for auto insurance Michigan customers to understand the following post-accident procedure:
● Establish Insurance Providers That You Might Be Filing a Claim With

As a Michigan-based driver, you’re protected by auto insurance coverage from one of the many providers in the state. But this doesn’t necessarily make your company the primary compensator in case of an accident.

It all depends on the precise circumstances surrounding the accident.

If another driver is at fault, for instance, their insurance company is the one that should be covering consequent costs.

However, and rather unfortunately, a fifth of drivers in Michigan are uninsured. Of course, that’s illegal, but it doesn’t make them immune to accidents.

In case you’re unlucky enough to have your car totaled by one, you’ll have no choice but to turn to your provider. An underinsured/uninsured motorist coverage should sufficiently protect you here.

The collision coverage, on the other hand, is applicable when you are at fault. Your insurance company will be forced to extend compensation to affected third-parties

● Tow Vehicle To Relevant Auto Shop
Even when it’s visibly irreparable, you should tow the car to the auto body shop nominated by the insurance provider. If you’re lucky, you might deal with a flexible insurance agent who’s willing to accommodate your preferred shop.

This is where the bulk of assessments and damage appraisals will be conducted.

● Determine the ACV Attached To The Car

A comprehensive appraisal will outline all damages to the car. Insurance providers subsequently use this report to determine corresponding estimated repair costs.

They’ll also do a comprehensive assessment of your car’s actual cash value. The findings are then compared with the former to establish the actual state of damages.

Eventually, the vehicle will be considered totaled if the estimated repair costs are equal to or exceed 75% of the ACV.

● Decide Whether You Want To Repair or Replace The Car

Not all drivers are quick to replace their totaled cars. If it perhaps has sentimental value, you may choose to proceed with repairs as opposed to replacement.

But this may not necessarily go down well with the insurance company. That’s why it’s always advisable to provide additional records of past vehicle improvements.

This alone might increase the overall value, consequently persuading the insurance provider to opt for repairs over replacement.

● Receive Initial Offer From The Insurance Company

At this point, insurance agents will get in touch with you with a settlement offer to cover replacement or repair.

In most cases, initial offers are usually lower than the expected settlement. So, instead of rushing to accept, you should seek to further engagement.

● Negotiate The Settlement Offer Through An Independent Insurance Agency

Engaging the provider should give you the chance to negotiate the settlement offer.

Although understanding your rights might be helpful, you’ll be dealing with extensively experienced agents. So don’t expect them to simply agree to your counter offers.

They’ll attempt beating you at the negotiating table by capitalizing on any rights or clauses you may not be aware of.

Thankfully, there’s a way around this. Instead of getting too worked up trying to beat professionals at their own game, simply consult a reputable independent insurance agency. They should have the requisite knowledge and experience to conduct a more fruitful negotiation process.

Adobe Stock #62104449

In the end, the settlement is closed when you deposit the final insurance check. This takes away your legal right to seek additional compensation.

Calculating the Value of a Totaled Car

All things considered, the settlement should ideally match the actual pre-accident value of the car. Knowing how to calculate it, therefore, is fundamental to the whole claim process. Otherwise, you might end up with a settlement that is barely a fraction of the ACV.

The first step is establishing the precise conditions of the car before the accident. Insurance company adjusters often review elements like mileage, age, and previous damages.

Such findings are subsequently fed to third-party software for comprehensive market research. The system will crawl through numerous online databases to compare prices of similar vehicle models.

Finally, the insurance company might settle on the average price, then make a lower initial offer.

But fortunately, you don’t need similar software to conduct comparative assessments. You can alternatively use sites like Edmunds.com, NADA.com and KBB.com to get your car’s average market rates.

This should place you in a better position to negotiate a settlement with the company.

Possible Options After Car Is Totaled

We’ve largely focused on settlements since it’s the most preferred option. But handling totaled vehicles is not a one-way street. There are several choices for drivers based in Michigan:

● Take The Money: Drivers overwhelmingly love this option because of the money attached. The insurance company issues a check on the negotiated car value minus your deductible.

And the best thing about it you’ll be free to spend the funds as you please. You might as well supplement it and purchase a better vehicle.

● Keep The Car and Fix It: For several reasons, you might want to retain the car and use your own resources to repair. It may seem unwise at first, but it totally makes sense if the damage is largely cosmetic.

It’s also worth considering if the car has substantial sentimental value. Or in case the settlement amount is insufficient for a new vehicle.

The insurance company basically deducts the vehicle’s salvage value plus the deductible and hands you the rest of the cash.

● Keep The Car and Don’t Fix It: This is similar to the option above. But, instead of fixing the car, you leave it as it is. Possibly for sentimental reasons.

● Keep The Car and Sell It: Totaled cars have always been good sources for original car parts. The final proceeds, combined with the salvage payment by the insurance company might even surpass the would-be settlement.

Conclusion

To recap:

● “Totaled” simply means that the car is extensively damaged and largely irreparable.

● A car only becomes totaled if: It’s impossible to repair it safely; repair costs surpass the vehicle’s current value; the amount of damage exceeds limits stipulated by state laws.

● So far, 12 to 14 percent of all vehicles reviewed by insurance agents post-accident are ultimately declared totaled.

● Establish insurance providers that you might be filing a claim with.

● Even when it’s visibly irreparable, you should tow the car to the auto body shop nominated by the insurance provider.

● A comprehensive appraisal will outline all damages to the car. Insurance providers subsequently use this report to determine corresponding estimated repair costs.

● Eventually, the vehicle will be considered totaled if the estimated repair costs are equal to or exceed 75% of the ACV.

● In most cases, initial offers are usually lower than the expected settlement. So, instead of rushing to accept, you should seek to further engagement.

● Instead of getting too worked up trying to beat professionals at their own game, simply consult a reputable independent insurance agency. They should have the requisite knowledge and experience to conduct a more fruitful negotiation process.

● All things considered, the settlement should ideally match the actual pre-accident value of the car.

What else do you consider important when handling totaled cars?

With all these elements to consider and evaluate, this procedure is evidently cumbersome and quite demanding. So feel free to contact us. We’ll not only do the heavy lifting for you, but also help secure a bigger settlement check.

You’ve been a good and responsible driver for as long as you can remember. Extremely cautious and conscientious, plus adequately defensive when the need arises.

You’ve also faithfully paid for your auto insurance as required by law, never once letting the policy period lapse.

As far as you’re concerned, you’re fully protected. Driving around cannot possibly be any safer than this, right?

But since accidents are called so because they are mostly never intended, your car is ultimately involved in one.

The vehicle directly ahead of you suddenly stops as you approach an intersection. Then despite your best efforts to hit the brakes, you end up rear-ending it pretty badly.

The damage looks pretty extensive and costly. But since you devotedly cater for the insurance bill, you’re not worried at all. Your insurer will take care of it all.

Then your dominoes start falling immediately you initiate the claim process. First, your insurer proves to be quite slow in responding. But you’re still patient and very optimistic.

Ultimately, the insurer is kind enough to reach a verdict on your application. But unfortunately, it’s all bad news.

Your claim is rejected on a minor technicality that you had previously overlooked. Like a model recall over an accelerator problem that you had adhered to, but failed to update your insurer.

And just when you think it can’t get any worse, you realize that your premiums will be revised upwards.

Essentially, you’ve pretty much paid thousands of dollars’ worth of insurance, but all for nothing. Funds that would otherwise buy you a spanking new car.
The only consolation would be the fact that there are many other car owners in a similar situation.

A study by J.D Power surveyed 11,857 auto insurance customers who recently filed claims across different states. The subsequent customer satisfaction rate ranged between 78.7% and 89.1% among leading companies.

That leaves out a substantial amount of customers who feel that they’d have been better off with other insurance providers.

Auto insurance claimant satisfaction rates. Source: JDPower

Now, of course, we recognize that some claims are rejected due to evidence of fraud. The rest?

Well, the bulk of them are attributed to avoidable mistakes drivers may have committed during the course of their auto insurance coverage.

And that’s just a fraction of affected individuals. As a matter of fact, these errors are even commonamong drivers whose claims successfully sail through.

For instance, many continue to overpay for insurance they don’t even need in the first place.

As an expense that is ranked third highest of owning a car, there is simply no room to make errors with your auto insurance. To help you avoid them, here are some of the most common ones:

1. Selecting Auto Insurance Company by Cost Alone

Most of the ads ran by auto insurance companies focus only on price. And of course, it all makes sense. Auto premiums are already too costly in the U.S, running into hundreds of dollars every year. So who would want to overpay for insurance?

To make matters worse, the rates are still appreciating. All factors considered, isn’t cheap insurance the best thing for car owners?

Average car insurance appreciation rates. Source: WallStreetJournal

It’s critically important to review insurance costs when selecting a company and its corresponding coverage. But that’s just a single element.

The most important thing should be the insurance coverage itself.

What does the cheap insurance come with? Does cost correspond to the coverage? Or is the insurance company attempting to dupe you by offering reduced rates for an extremely limited coverage?

2. Sticking To Legal Minimum

Auto insurance is a compulsory requirement according to state and federal laws. But, there’s still a substantial group of drivers moving around with uninsured vehicles. Michigan ranks number 4 with an average rate of 20.3%.

Uninsured drivers. Source: CarInsurance

Then there’s another increasingly larger group that only purchases insurance to be on the right side of the law. So they only stick to the legal minimum as stipulated by state legislation.

The thing with the legal minimum is that it’s just that. Nothing more than a coverage that you can get away with when cops flag you down.

In Michigan, for example, the minimum coverage is $20,000 per individual, and $40,000 per incident for injuries. Since property damage is costlier, the minimum coverage every driver is required to carry is $1000,000.

Let’s look at it from a different perspective. In case of a severe accident, the legal minimum would do little to bail you out of consequent liabilities.

So, while it might cost you more, it’s advisable to purchase insurance in line with your precise risk factors.

3. Not Fully Comprehending The Insurance Coverage

Some expressions like “comprehensive coverage” are thrown around quite a bit in the auto insurance industry. Even when they are not applicable.

Additionally, marketing teams are consistently capitalizing on attractive terms, which may be misleading when compared to their corresponding policies. Then just when you get the chance to set records straight during application, you end up ignoring the fine print in the policy document.

Interestingly, 81% of consumers are fairly confident that they know their auto insurance basics. However, and rather surprisingly, 99% of them couldn’t accurately define 10 terms commonly used by insurance companies.

Okay, we know that watching paint dry could possibly be more interesting than reading a policy document word for word. Plus insurance can be complicated even for drivers who directly work in the industry.

But, fully comprehending insurance coverage could save you a lot of problems and money. So seek additional information from your insurer on unclear issues. Alternatively, talk to your independent insurance agent to clarify and advise on all the critical aspects.

4. Not Keeping Up To Date With Discounts

It’s common knowledge that the auto insurance world is laden with numerous discounts and offers for consumers. Thanks to the progressively intense competition between insurance companies.

By now, there are discounts for almost anything. From the number of cars to your kids’ genders. Pretty exciting. But, strangely, many drivers are still yet to capitalize on this competitive environment.

Staying up to date with news on recent price cuts is at the bottom of their priority list.

Even when an overwhelming majority of the discounts don’t apply to your case, you’re bound to find some that you perfectly qualify for.

And that alone could save you hundreds, if not thousands of dollars every year.

So stay on the lookout for any attractive offers not only from your insurer, but also other companies.

5. Shopping For Insurance Without Adequate Self-Assessment

I know. We’ve previously mentioned how important it is to align insurance coverage with your precise risk factors.

But what does that mean in the first place?

Determining all the risks might seem like a pretty cumbersome process. Because, who has time to calculate the number of average miles travelled per year?

Or the number of accidents linked to a specific vehicle make?

As a result, many consumers skip this stage and proceed to purchase insurance blindly.

Self-assessment, however, is not that complicated. It only involves keenly evaluating specific factors that are relevant to insurance companies.

The number of drivers, for example, would be a good place to start. Along with age and type of vehicle.

This should help you identify insurance companies and subsequent coverage tailored to your specific needs.

The Wall Street Journal advises drives to comprehensively calculate the value of their assets, compare possible deductibles, understand state regulations applicable to them, plus consider possible insurance covers that go hand-in-hand with respective policies.

6. Failing To Notify Insurer Immediately After Accident

A car accident can be pretty frightening and disorienting even for seasoned drivers. It might take time to come to terms with the situation, and recollect your thoughts.

That’s why getting in touch with relevant insurance companies could be the last thing on your mind.

And just like many other drivers, you may choose to postpone the whole process to a “more convenient” time.

While accidents can be traumatizing, another sure fact is that insurance companies are in business. If they had a choice, they would rather hold on to their cash and reject all claims.

And with 30% of insurers claiming that they are not adequately prepared against fraud, companies are now alert more than ever before.

Only 7.4% of auto insurance claims are flagged as potential frauds within the first 125 days. Then the percentage keeps rising steadily with every new day.

It would be in your best interests to contact your insurance company immediately after an accident. The earlier the report, the easier it is to investigate and prove circumstances surrounding the accident.

Some companies even have strict guidelines on acceptable time frames for reporting an accident. Late reports, therefore, could mean automatic claim rejection even when they are genuine.

7. Prematurely Cancelling Previous Coverage When Switching Insurers

If you’re conscious about offers by different insurers, you’ll ultimately land a much favorable deal. Better than what your current insurer can offer.

Now that’s a good position for any policyholder. Unfortunately, it introduces a dilemma. Should you go ahead and cancel your current cover before switching providers?

It’s normal to be excited about switching insurance providers. But don’t let this cloud your judgment, then end up cancelling your current insurance coverage.

This mistake alone can cost you quite a lot of money, and disqualify you for discounts. Without an existing cover, the insurance provider you’re shifting to will consider you as a high-risk consumer.

Even a day after cancelling your previous coverage could result in substantially spiked premiums. Consequently beating the whole purpose of shifting camp.

The best way to manage this is maintaining a continuous coverage. Hold your horses until you successfully obtain a new policy before you finally cancel the old one.

8. Automatically Renewing Current Policy

On the flip side, if you’re not that keen on new offers, you may end up sticking with your current insurer for quite some time.

This is quite prevalent among individuals who are too busy to shop for alternative covers. And that, of course, translates to cycles of automatic policy renewal.

At first, it may not seem like such a bad idea. After all, aren’t loyal customers rewarded with cheaper rates?

A study by J.D Powers, however, suggests otherwise. Staying in your coverage comfort zone can cost you up to $300 with each renewal.

It’s rather interesting that old policies continue to attract the biggest premium increases.

Basically, the longer you stay with your insurance company, the more you stand to lose. And the vice versa is true.

Therefore, prepare to pack up your bags and leave before the next scheduled renewal period.

9. Not Engaging an Independent Insurance Agency

We’ve covered quite a number of common mistakes. But one pretty much sums them up- failing to engage an independent insurance agency.

Independent agents, unlike their captive counterparts, work for you. They don’t look out for insurers’ interests.

So their core job is to help you avoid all these mistakes.

In addition to providing critical advice on auto insurance, they interpret insurance policies, engage multiple providers to secure the best possible rates, facilitate application and shifting, plus offer much needed professional guidance when filing for claims.

If you’re engaging a reputable firm like Signature Insurance, you can rest assured that you’re not a victim of any of these mistakes.

Conclusion
To recap:
● The customer satisfaction rate ranges between 78.7% and 89.1% among leading insurance companies.

● As an expense that is ranked third highest of owning a car, there is simply no room to make errors with your auto insurance.

● It’s critically important to review insurance costs when selecting a company and its corresponding coverage. But the most important thing should be the insurance coverage itself.

● 81% of consumers are fairly confident that they know their auto insurance basics. However, and rather surprisingly, 99% of them couldn’t accurately define 10 terms commonly used by insurance companies.

● Even when an overwhelming majority of the discounts don’t apply to your case, you’re bound to find some that you perfectly qualify for.

● Self-assessment only involves keenly evaluating specific factors that are relevant to insurance companies.

● It would be in your best interests to contact your insurance company immediately after an accident. The earlier the report, the easier it is to investigate and prove circumstances surrounding the accident.

● Without an existing cover, the insurance provider you’re shifting to will consider you as a high-risk consumer.

● Basically, the longer you stay with your insurance company, the more you stand to lose. And the vice versa is true.

● Independent insurance agents’ principal job is to help you avoid all these mistakes. In addition to providing critical advice on auto insurance, they interpret insurance policies, engage multiple providers to secure the best possible rates, facilitate application and shifting, plus offer much needed professional guidance when filing for claims.

Which other mistakes do you think are quite prevalent among auto insurance policyholders? Feel free to share with us.