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Friday, June 27, 2008

Cosumer Reports: Choosing an insurer that pays

Many people think their auto insurance is just peachy until they have to file a claim. Then they find out whether their insurer pays up quickly or tries to do chintzy repairs.

To find out how insurers stack up, Consumer Reports surveyed 21,228 subscribers who filed a claim from January 2001 through Spring 2004. We found that they're more satisfied with their auto insurers than with most other services we rate. But our survey also found that some insurers treated their customers much better than others. Here's what you need to know to choose and use an auto insurer.

Choose an insurer that topped the Ratings. Five companies showed consistent performance by appearing toward the top of our Ratings (available to subscribers) now and the last time we rated insurers, in 1999.

Stick with a company that treats you well. Twenty-seven percent of survey respondents who had been with their insurer less than one year complained about unfair premium increases after filing a claim, while only 16 percent of those with the same company for one to six years and a mere 8 percent of those wedded to the same insurer for 15 or more years complained. Loyalty seems to count.

Avoid companies that penalize you for filing a claim. About 10 percent of those surveyed said they felt their premiums were "unfairly increased" as a consequence of filing a claim. However, three insurers were cited more often for post-claim rate hikes: Hartford Insurance Company of the Midwest (with 24 percent of respondents complaining), Hartford Underwriters Insurance Company (20 percent), and Travelers Indemnity Company (19 percent).

Don't let an insurer pressure you to use a specific repair shop. Seven percent of respondents said they felt "pressured to use a recommended shop," but only 49 percent of that group was very satisfied with the repairs, while 72 percent of those who weren't pressured felt very satisfied. Twelve percent of Liberty Mutual's customers and 13 percent of those with Commerce Insurance complained about pressure.

Insist on original equipment manufacturer (OEM) parts if you want them. About 6 percent of those surveyed felt pressured by their insurer to use non-OEM fenders, doors, bumpers, and other repair parts. Only 37 percent of those people were very satisfied with the quality of repair vs. 72 percent of those who didn't feel pressured. Four insurers were judged more likely than average to pressure claimants: American Family Mutual (11 percent), Nationwide Mutual Fire (11 percent), Nationwide Mutual Insurance Co. (12 percent), and Commerce Insurance Co. (14 percent).

Do a rate check every year or two. This is especially important if you've experienced changes that might reduce your premium, including getting married, reaching your 25th birthday, switching to a job that requires less commuting, moving to a less urban ZIP code, putting an accident or moving violation three or more years behind you, and repairing a poor credit rating.

Link: http://www.consumerreports.org/cro/money/insurance/car/car-insurance-306/overview/index.htm?resultPageIndex=1&resultIndex=1&searchTerm=auto%20insurance

Monday, June 23, 2008

Erick's Story

Consumer Reports' guide to auto insurance

Many people stick with the same insurance carrier year after year without ever shopping for a better deal. Blind loyalty to one insurer can cost you dearly. In a recent survey, Consumer Reports found that some drivers were paying twice as much for a policy than they would have with another insurer.

Finding the best rates

Comparing premiums is easier than ever, thanks to online services such as Quicken Insurance (www.quicken.com/insurance) and InsWeb (www.insweb.com). While you can also use the Yellow Pages to canvass local insurance agents for quotes, online services let you compare multiple price quotes in minutes.

You should make this price comparison at least once a year. Still, it may not be a good idea to switch companies too often or arbitrarily. Sometimes loyalty pays. For instance, if you've been with one company several years and maintained a clean driving record, you may qualify for a safe-driver discount, which substantially lowers your premium. But if you're contemplating a switch, the new company may be willing to classify you as a safe driver. In addition, you can often get a discount for insuring more than one vehicle—or your home—with the same company.

To get an accurate quote, you'll need to provide information on the car or cars that you intend to insure: the make, model, year, trim line, and the vehicle identification number (VIN). You'll also need to give the age, sex, and recent driving record of all potential drivers. Some companies may also ask where you normally park your car, and inquire about any aftermarket accessories you may have installed to prevent theft. The insurer may independently check your driving history using public documents such as police records, and your insurance history through your current and former insurers.

Buy the right amount

Auto insurance is meant to protect you against catastrophic losses, such as a major accident or the theft of your car. Be prepared to absorb minor losses yourself, and you'll save a lot. Here are tips on separating the essentials from coverage you can probably live without.

Coverage you must have

Bodily injury liability. Should you cause an accident, the "liability" part of your insurance coverage pays the medical, rehabilitation, and, if necessary, funeral bills of your passengers, the other driver, his or her passengers, and any pedestrians involved. It also covers pain and suffering awards as well as legal costs.

Buy coverage that will pay at least $100,000 per person and $300,000 per accident. If you have sizable assets, consider increasing those limits to $250,000 per person and $500,000 per accident. Such added coverage will raise your premium at least 10 percent. Consumer Reports recommends that people with a high net worth have a separate "umbrella" policy to insure against a lawsuit seeking an amount beyond their auto policy's limits. You may need to buy higher insurance limits to qualify for an umbrella policy.

Property damage. This coverage pays to repair or replace another person's vehicle or other property damaged by your car. States typically require only $10,000 to $25,000. We suggest buying coverage of $100,000.

Uninsured and underinsured motorist coverage. This covers medical bills, rehabilitation, and funeral costs, as well as losses for pain and suffering for you or the passengers in your car when an accident is caused by a hit-and-run driver or someone who has little or no insurance. Get the same amount of this coverage as you do bodily injury coverage. That way, if someone who has no insurance hits you, your medical costs will be covered.

Coverage you'll probably need

Collision and comprehensive. Collision coverage pays to repair or replace your car no matter who or what caused the accident. Comprehensive pays to repair or replace your car if it's stolen or damaged as a result of a storm or other natural event. Coverage kicks in for the amount above your deductible. Choose the highest deductible you can afford to pay out of pocket—at least $500. Once the cost of this coverage equals 10 percent of your vehicle's book value, you might want to cancel it, since you will collect no more than your vehicle's market worth. Antique vehicles or cars with collector value sometimes are insured through a separate rider; or you may have to find a separate, specialty insurer.

Personal-injury protection. PIP reimburses you for lost wages and in-home care needed as a result of an accident. If you have separate health and disability policies, you can buy just the state-required minimum for PIP. The other policies should cover the balance of your needs.

Medical-payments coverage. Sometimes called med-pay, this covers medical bills for you and your passengers, regardless of who's at fault. When this coverage isn't automatically included in your policy, its costs are minimal. You may not require any if you have good health insurance. To protect passengers who may not have their own health coverage, you may want to carry at least $5,000 of this coverage.

Additional types of coverage

Roadside assistance. This coverage pays to have your vehicle towed. If you already have an auto-club membership or your car's manufacturer provides this service for free, don't buy this extra coverage.

Rental reimbursement. This coverage typically costs $30 per year and pays for a rental car—usually for up to 30 days—if your vehicle is stolen or is in the shop for repairs sustained in an accident. There's usually a cap on the amount you're reimbursed per day and per occurrence.

Money-saving tips

Ask for the top tier. Insurers sort customers according to their likelihood of filing a claim, then assign them to one of several categories commonly referred to as tiers. Top-tier customers who have had few or no claims in the past several years and live in neighborhoods where auto-theft rates are low, for example, can easily save 15 percent or more off the standard rate. But simply because you qualify initially or improve your driving record doesn't mean you automatically get top-tier status.

Check rates before you buy a car. The difference in premiums between one car or truck and another can be substantial. Much of that has to do with the cost of repairing collision damage, which can vary greatly even among seemingly similar vehicles.

Get equipment discounts. You may qualify for extra discounts if your car has current safety equipment such as air bags or antilock brakes. Also check about anti-theft equipment such as an alarm system, which can get you a break on the comprehensive part of your coverage.

Group your policies. Most insurers will give you a multiple-policy price break if you let them write your auto, home, and personal-liability coverage.

Improve your driving skills. Completing a certified defensive-driving course can reduce your premium in some states.

Kid factors. If you have children who drive, you'll save if they get good grades or if they attend a school located more than 100 miles from your home and don't use the car there.

Group discounts. Insurers award discounts to low-risk consumers who share a common affiliation such as a membership in an employee group, a company pension fund, or an alumni association. These so-called affinity discounts can be sizable, so if they apply to you, it pays to take advantage of them. Ask your insurer if any groups to which you belong qualify for such a discount. Alternatively, ask representatives of the groups if they work with any insurance companies.

Keep repair options open. Some insurers insist you use generic replacement parts or encourage you to bring your vehicle to certain body shops in an effort to cut claims costs. While this arrangement may lower your premium, you may want to preserve your flexibility by insuring with a company that lets you decide which parts are used (original equipment or aftermarket copies), and who does the repairs. In tests a few years ago, Consumer Reports found none of the aftermarket replacement bumpers tested fit as well as factory-original bumpers or stood up as well to low-speed impacts. We also had trouble making generic fenders fit properly.
Copyright © 2004-2008 Consumers Union of U.S., Inc.

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Everything old is new again!

After The Accident:

Steps to Take After a Car Accident

Although car accidents are more prevalent in the winter months, what you need to do after an accident never changes. Obviously it is hard to think clearly after a car accident so it is important to know before you get into an accident what to do first and what questions may need answered.

This checklist will help you know what to do after a car accident. It is best to review it now and then print it out and keep a copy with you in your car.

Determine the Extent of Damage or Injuries

Try to stay calm. Panic can make others panic and the situation worse. There needs to be a calm person to determine the extent of damage and to determine if there are any injuries that need immediate medical attention.

File a Car Accident Report with the Police
Even in a minor accident it is important to make sure there is a legal accident report.

Do not leave the scene until the police file a full report.

Discuss the Car Accident Only with the Police

With everyone all shook up it can be hard not to talk about what just happened, but that can also lead to you not thinking clearly and accurately about what happened. It is important to limit your discussion of the accident and not to admit any fault or liability. You should talk about the accident with the police and your insurance agent only.

Get the Facts

This is the part most people know to do, but often forget to after the accident for one reason or another. It is important to get names, address, and phone numbers of everyone involved in the accident. A description of the car and license plate number can also be helpful, but make sure you also get their insurance company and the vehicle identification number of their car. Don't just assume the license plate number will do because most insurance companies only record the type of car and the vehicle identification number, not the license plate number.

Call you Insurance Agent

Call your agent or insurance company's 800-number immediately, even at the scene with the police if possible. Sometimes the police officer can give your insurance company more accurate information rather than information you may not be recording properly because you are upset by the accident. This can save you a lot of time later waiting for your claim to be processed.

What Is Diminished Value?

Dear Bernard's

Maybe you can help me with something. After my wreck, a friend of mine said I should file a "Diminished Value" claim with my insurance company.

I didn't know what it meant, but I asked the other guy's claim adjuster about it and he said, "Naw. you don't need that. It's just a big headache and you won't get anything anyway."

Was he yanking my chain or is it something I should follow up on?

-Stan Dodson