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Buzzwords and commercials- the auto insurance truth

By snyderinsur43431045, Sep 22 2015 09:06PM

You’ve seen the commercials for insurance, right? Accident forgiveness, checks for safe driving, diminishing deductibles, new car replacement or waiver of depreciation?

What you may not know is

a) Versions of these benefits are available from nearly every insurance carrier, and

b) You have to pay an additional premium to have the benefits.

That’s not to deter you from buying them. Ask your agent about cost and benefits- you may find some are worth it to you, others might not be cost effective. You can only get “new car replacement” if you purchase your vehicle new and add the coverage immediately. Then, if the vehicle is totaled within the designated time frame (6-18 months, depending on the carrier), your settlement should be equal to cost of a new, similarly equipped vehicle.

Accident forgiveness is usually included in a package with one or more of the abovementioned benefits, and can also be packaged with some others, like increased death benefit (as result of auto accident), extended rental or extra travel expenses. Essentially it does what it says—if you bought this benefit and you have an at fault accident, your rates won’t go up. Read your policy and explanation carefully- your policy might have to be in force for a set time frame before this benefit “kicks in”.

A diminishing deductible benefit is usually inexpensive and can reward your good driving. If you have a $500 collision deductible when you apply for coverage, that deductible will diminish by $100 each year you are claim free, until no deductible would apply. If/when you have a collision loss, the diminished deductible applies and then re-sets back at $500. Again, each company has a different set of rules, so ask your agent for details.

Another popular endorsement that hasn’t made it to the commercials, but is often a good value is called “Gap Insurance” or “Loan/Lease Coverage”. Whether you’ve bought your car new or used, if you have a loan on it, you expect that your loan should be paid off in the event of a total loss. Sometimes, the car depreciates faster than you make payments and you end up owing more than the claims settlement for your vehicle. This Gap Insurance will take care of that, so you’re not making payments on a vehicle you no longer own.

Nearly every auto insurance company offers additional benefits for a cost. The best approach is to talk to your agent and don’t be afraid to ask about these or other special endorsements. You might find you’re glad you did.

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