Auto insurance is one of the most common forms of insurance. Despite its popularity, however, there are still a lot of assumptions people make about its coverage. This is unfortunate because ignorance (at least in this case) can cost you money. Here are three things many people do not know (but they should) about auto insurance:
You Can Cancel At Any Time
According to a recent survey, nearly half of Americans do not know that they can change their auto insurer at any time. Additionally, sixty percent of millennials (who hold auto insurance) think that they can only switch insurance companies at the renewal date.
Both of these beliefs are wrong because you can switch your insurer at any time. All you have to do is to inform your insurer about it and follow the stipulated cancellation procedure. Some companies may charge you a cancellation fee, but you still get most of your premiums refunded.
You Must Cancel Officially
Another thing you may not know is that even if you are cancelling your insurance at the renewal time, you have to do it officially. Merely failing to renew your policy won’t cut it. In fact, such a move would be disastrous since it may be viewed as auto insurance lapse. An auto insurance lapse can result in fines, credit damage, and even make it difficult for you to get new coverage.
You May Be Entitled to a Diminished Value Claim
A car that has been involved in an accident is usually worth than a comparable car that has never been in a collision. This is usually the case even with accident cars that have been perfectly repaired. In fact, it is one of the reasons car buyers are interested in the accident histories of their prospective vehicles.
For this reason, some states have laws that require insurers to honor diminished value claims. It is meant to compensate you for the reduced value of your car. Note that this type of claim is usually not available for first-party claims. First-party claims are those where your insurance company is paying for the damages. Therefore, don’t forget to ask about them if you are making a third-party claim (a claim against another motorist’s insurance company).
These are some of the reasons you should never buy insurance without understanding the essential provisions of the policy you are interested in. Ask as many questions as you can; after all, an informed shopper is a smart shopper. An auto insurance company, like ESI Insurance Agency, can answer any further questions you may have.