J Wood Insurance Blog
J Wood Insurance Blog
If you made it here, I hope this helps you on your insurance journey. Some of this may not age well in this new world of high inflation but most will help you become a better and more judicious consumer. Cheers!
1. Liability coverage is the most important part of your policy.
Sure, comprehensive and collision coverage is important for your vehicle, but a lot of people want to only buy the liability coverage that is mandated by the state. The difference between minimum coverage and 50/100 is often only 5 to 10 dollars per month more and gives double the coverage.
Imagine your vehicle is involved in a serious accident and the driver of your vehicle was at fault. If the person in the other car was seriously injured and had to go to the hospital, the medical bills often would far exceed the 25,000 dollars in coverage that a minimum coverage policy would pay out. You could be left on the hook for the remainder of that person’s medical bills.
My Recommendation: 50/100/50 liability protection should be as low as you go. You should explore higher coverages whenever you renew and if you are shopping make sure the agent doesn’t dumb down the coverage to make the sale.
2. Uninsured motorist/underinsured motorist coverage should be mandatory on every policy.
We recently spoke with a customer who used to buy his insurance directly from the carrier. He didn’t understand the importance of uninsured/underinsured motorist, but he loved how cheap the policy was. After he was hit by another driver who was uninsured, he was left with a totaled vehicle and no payout from the insurance company. Uninsured/underinsured motorist covers you in case someone who does not have insurance should get in an accident with you or in a hit and run accident.
My recommendation: Don’t cut corners on your auto policy. Always ask for uninsured/underinsured motorist and be wary of any agent or company that tries to sell you a policy with out this coverage.
3. Roadside coverage is great! But only if you barely use it!
Roadside and towing coverage is a great add on to your policy but be careful how often you use it. Every time you use this service it can be considered a comp claim and can hurt your insurance score and cause your insurance premiums to be high.
My Recommendation: If you use this coverage a lot because you have multiple cars then go ahead and get AAA. If you rarely need a tow then this can be an extremely cheap coverage for you.
4. Buying Direct Is Great For Insurance Companies And Terrible For You The Customer!
It does not matter whether you buy your insurance directly or buy it from an agent, it will cost pretty much the same. So why wouldn’t you go with an agent? They are experts on what is in a policy and more importantly (if they are a good one), experts on the company they are representing. They can help you find the most value in a policy and warn you if something important is missing. Would you go to court without a lawyer? So why would you go around an agent when they are literally a free resource to you. A good agent can advise you on how to handle claims, help you with payments, get on the phone with the insurance carrier on your behalf if you have a problem, inform you whether something is covered with your policy and help you adjust your coverages so that they fit you and your needs. If you buy direct you are a number on a screen with no one to look out for you.
5. Understand the difference between a captive agent and an independent agent.
A captive agent can only sell you one company. They represent some of the most well-known insurance companies out there (State Farm, Farmers, etc.) but they can only offer you one policy for one price. If you do not fit perfectly into their little box then you are out of luck, your agent can only offer higher deductibles or less coverage if your premiums are too high. There are some great captive agents out there, but why build a relationship and trust an agent who can only offer one product?
Alternatively, an independent agent contracts with many different insurance companies. They know what each company’s “appetite” is, which is insurance jargon for the type of customer that they prefer. They can work with you over the years and move you between companies as your life changes (get married, have kids, buy that new boat you always wanted, etc..) to keep your insurance rates down.