Do You Understand Car Insurance? Part 1 of 3

No one expects to be in a car accident; however, there are over 10 million accidents in the U.S. every year costing $299.5 billion – on average $61,600 per crash – and medical expenses for a critically injured person can run into millions. To avoid financial ruin, you need to have auto insurance with proper coverage and a reputable company.

Why Buy Through an Agency?

To help you understand the fundamentals of Car Insurance Limits and Coverage. Consumers buying from direct carriers often lack understanding of fundamentals such as limits and coverages and therefore often purchase policies that are too low. For example, if a policy just covers New York’s minimum liability limits, but little more, you will almost certainly receive insufficient coverage during a claim. Even cautious buyers often struggle to know exactly what they need.

An agent, however, can explain exactly what each policy includes and advise you on the right choice. Plus, you can meet in person or always speak to the same rep, rather than making a transaction with an anonymous representative over the phone.

Insurance Before Purchasing or Leasing

Liability coverage is required in order to register a car. In New York, you must show proof of insurance, usually with an ID card, to purchase or register a car. Although some other states do not require this, it is always recommendable. Also, based on the age of the car and certain lender requirements, you’ll need to decide if you want to purchase comprehensive and collision coverage, as well as liability. 

Some things to keep in mind during the purchase process:

  • If you want comprehensive and collision coverage you will need a physical damage inspection if it is not a new purchase. However, if you buy a used car that’s older than 7 years, you do not need this inspection.
  • If you plan on registering your car in NY but purchase it in another state, make sure the salesperson understands the process in NY. NY is very strict with car registrations and insurance and will not issue documents like a temporary registration or temporary plates as other states will.
  • If you finance or lease your car, you’ll need to have a Binder as well as an ID card to finalize the deal. This shows the lender that they are covered on your policy.

An agent can best advise you on all these issues and ensure the process goes smoothly. In fact, the agency can deal directly with the salesperson; all you need to do is turn up to take the car.  

Youthful Drivers

Take advantage of multi-car discounts. If your child lives at home, they are under the age of 25, and they will have their own car, it’s almost always more cost effective to have them stay on their parents’ policies. This allows you to take advantage of multi-car discounts which can provide a substantially lower rate.

For the child’s future, it is also important that they at least be listed on their parent’s policy as a driver as this will give them a history of having insurance. Once they do go out to get their own policy, having had continuous liability insurance is an important factor in determining rate.

Cancelling Policies

In New York, you must hold insurance while a license plate is registered in your name. If you want to discontinue your insurance because you no longer have a car, you need to take your license plates to a DMV office and receive proof that they have destroyed the plate. If you cancel the policy before doing this, you will incur fines and possibly have your license suspended. 

Auto insurance is complicated and can be quite involved when handled on your own. A better option is to seek out an insurance agency to help you with your individual needs. For support with your auto insurance, contact us at George A. Bell & Son.