by P. Andersen, 10/1/14
Reading the Chappaqua Daily Voice, this story jumped onto our radar. It isn’t surprising that auto insurance is expensive in our region, but the story made us think about the auto market in general here in New York.
Something that you will hear a lot is that auto insurance has become “commoditized”. When competitors offer a product with no discernable differences, price becomes the only factor that matters. The commodity concept is what Geico focuses on – how much you can save? The study that is referenced, which can be found here on the ValuePenguin website, points out the expense associated with auto insurance in the region, but fails on a few other fronts. When all you talk about is price, you lose sight of the bigger picture of risk, protection, and security for you and your family.
Auto Insurance is an Important Insurance Policy!
First of all, I want to mention that this study uses some very low insurance coverage numbers. If you live in Chappaqua (or Armonk, or Harrison, or Greenwich, or Scarsdale), you likely have more to protect than those low limits allow. You have more to risk, and far more to lose with low limit insurance – and the study actually INCREASES the numbers from what New York requires! Hello, maybe it is time to talk Uninsured/Underinsured insurance coverage? Next weeks blog, read it here next Wednesday! For now, just know you NEED IT!
You will hear me often talk about the professional guidance Levitt-Fuirst offers our clients, and how this professional knowledge is essential to making good insurance decisions. This is also true with the supposed commodity personal auto insurance. For a well-off family, the auto insurance you carry could be a huge benefit – or problem – when a big auto claim hits. Having an insurance expert explain the coverage options to you, and make recommendations to you based on your particulars, might mean the difference between being covered for a major claim and suffering a large out of pocket expense.
Let’s look at some examples…
Some vehicles are unique, and their value is higher than what you would expect for the make and model. Under these circumstances, you should be directed toward agreed value coverage. Blue Book values are the standard basis for insurance reimbursement, but a standard blue book value coverage could cost you when your unique auto’s value far eclipses the blue book. Perhaps you read about this concept in our Antique Auto blog?
Also, did you know that you can stipulate that only OEM parts are used in the repair of your vehicle? Private Label parts may not have the same high standards as the parts that were used to build your car originally, and could impact the quality of the vehicle after repair. Diminished quality means diminished value of the vehicle after repair as well…
What about rental insurance? When does it kick in, how long does it last, how much comes out of your pocket? Rental cars are expensive; a few weeks of a car being in the shop could cover several years of the savings garnered by not having this coverage (or having a poor version, with economy cars and 1 week limits).
Or the big one – do you have enough auto insurance to reach your umbrella coverage? Umbrella policies often stipulate that the underlying auto policy have limits as high as $500,000 in order for a claim to be covered – that low limit policy that saved you a few hundred dollars may cost you $400,000 during a lawsuit!
Commodity? No, I don’t see auto insurance as a commodity. I see it as any other essential coverage, and the more you have to lose, the more you have to think about what the policy protects you from. This doesn’t always mean excessively high premiums either – a lot has to do with you and your driving record, the people in your household, the other policies you have with the particular carrier. The simple fact is, you should talk to us. We are your trusted advisor for a reason…