Just as there are many types of cars, there are many different types of auto insurance policies, and many different ways to cover your car. For instance, most people don’t need to cover their “daily driver” car the same way they would cover their classic car or exotic auto. Let’s go over some different car insurance options together, so you go to bed smarter than you woke up this morning.
Usually, your every day car is covered by an actual cash value or “ACV” insurance policy. Most every day cars spend their lives both stuck in traffic and depreciating, so this is the most cost effective way to cover then on your insurance policy. ACV coverage means that you get paid the actual cash value of your car at the time of a loss. That means that you should reasonably be able to purchase another car of like kind should you have a claim. The one thing you should always consider is getting “gap” coverage if you are upside down on your auto loan. Lots of insurance companies offer it if you ask at time of purchase. Gap coverage covers the difference if you owe more than the ACV of your car.
The second type of coverage available to you is Stated Value coverage for your car. This type of policy allows you to tell the insurance company that your car is worth “X”, and then allows them to pay you up to that amount in the event of a loss. Yes, I said “up to”. That means that if the insurance company can make a case for paying you less than the value of your car, they will. We hear lots of people (and even some insurance agents) confuse stated value insurance with agreed value insurance – but in the simplest terms, and stated value policy just gives the insurance company a discussion point at claims time. It does not guarantee you the full value of your vehicle at the time of loss.
In order to guarantee the value of your vehicle at the time of loss, you must purchase an “agreed value” insurance policy. Yes, you can get an agreed value policy on your daily driver car, if you choose to do so. However, the agreed value policy is usually intended for a collector car. Classic insurance., custom car insurance – even exotic car insurance is all written (or should be) on an agreed value insurance policy. Since agreed value policies are very specific in the coverage they offer, they are also very specific in their terms. Does your car qualify ? Are you interested in agreed value coverage? Then contact an insurance consultant today and discuss your needs.
See? Like I said, smarter than when you woke up this morning.
McKinney, Texas put on a great car show on the 4th of July, 2015. As usual we ran into lots of classic car insurance customers, and even some modern collectible car insurance customers. We love going to shows, and nothing makes your heart swell with American Pride on Independence Day more than an incredible lineup of (mostly) American steel.
The last time we got together, I tried to explain how the deductible works, and some things that you should consider when choosing a property deductible. I’ll wait if you want to go back and read it again. Go ahead. Done? Good. Now that you have chosen how much deductible you are going to pay in the event of a loss, we can talk about when to use them.
We will start with the easier of the two – your auto insurance. I want to start the restof this article by saying this; you pay for insurance to protect your things. Sometimes, a claim just needs to be made. With auto insurance, mist claims are worthwhile, because you have had an accident. The only claims we caution clients to consider avoiding are windshield chip claims. While they won’t raise your rates directly, they can be problematic if we need to quote your policy with other companies. Unless your windshield is broken, it is best to pay for the chip repair yourself. With other claims, my personal rule of thumb is to consider the payout – if you have a $500 deductible, do you really need to make a $600 claim? Those types of claims are pretty rare on auto policies, due to the rising cost of auto repairs. Also, remember that most car insurance policies now come with some form of roadside assistance, and if you have to use that service, it does not count as a claim.
The big question you should ask yourself when it comes to homeowner’s insurance claims is whether or not the claim is “worth it” or not. Just like with auto insurance, if you have an $1100 claim and a $1000 home insurance deductible, it’s probably not “Worth it” to make a claim. Most home insurance policies here in Texas have a 1% wind and hail deductible, so if you are in a $130,000 home, then you probably have a $1300 deductible. However, a hail claim doesn’t “count against you” for rate purposes. A water claim or a burglary claim, on the other hand, will increase your rates, so it’s imperative to consider what the claim is worth before you call the insurance company. Your first call should be to our office to chat with one of our consultants about your claim.
In fact, we even have a “claims advocate” here at The Phoenix Insurance to help guide you through the claims process. Hopefully, you will never need the advocate’s help, but if you have a claim and have any questions, concerns, or needs, he is here to help you understand the claims process, and make it a smooth one. Whether you have had an auto accident or a water claim on your home, our claims advocate is here to help you get made whole again as quickly and painlessly as possible.
We meet quite a few people that have a “special” low mileage car that they keep for driving on the weekends, or because it was just the first car they bought new. There are essentially four different types of cars that can be written on a “specialty” collector car insurance policy – and these categories are the same whether you live in Texas, California, Arizona, New Mexico, Missouri, or anywhere else.
1. The Antique class car is at least 25 years old in original condition – or close. It can certainly be restored, but it must not be significantly altered from the stock configurantion. If it was fast to start with, and that is original to the vehicle, then it counts as an antique. A 1973 Mustang Mach 1 is in the same class as a 1981 Toyota Corona. One is cooler, but we won’t judge you for liking Mustangs.
2. The Modified Auto class is made up of cars that are at least 20 years old, or a replica of a car. These cars can be extensively changed from original, hot-rodded, customized, or made up of random parts you picked up off of the side of the road.
3. The Classic car class consists of original unmodified vehicles that are “younger” at 15-24 years old. This is where you can place your fully restored 1988 Nissan Maxima that you drive on weekends to show off for the ladies. This car also needs ot be original and unmodified to fit this category.
4. The Exotic Car class is a “newer” car, less than 14 years old. these cars are either luxury or performance automobiles, must be considered collectible to qualify, and must be appreciating in value. this would include cars like Vipers, Lamborginis, Ferraris, Corvettes, and so on.
Remember that when you are trying to decide if your auto needs a “specialty” policy that you must have an every day car to drive. If you saved your pennies to buy the Corvette you have always wanted, I hope you kept your Neon to drive most of the time. Specialty auto policies are generally mileage limited, so you have to have something else to make a chicken soup run with. If you have a special car that you only drive on weekends, you really do owe it to yourself to look into a classic car policy – if you qualify, you can get a great policy for less than $200 a year. That is a full coverage policy with a zero deductible. That makes the Daihatsu you keep in the garage a whole different animal, doesn’t it?