The word “comprehensive” means something very clear to you and me. The difference between “our” definition and the one your insurance company uses is often like night and day. Here’s some inside tips into the inner workings of car insurers so you can get what you deserve.
You have an “insurance history” just like a “credit history”
You’ve probably heard about a “credit history” – a document showing financiers, utilities and retailers if you’ve defaulted on loans, bills or were late paying anything else. These credit histories follow you around for many years and determine your eligibility for finance. If you’ve ever had insurance, you have an insurance history. This lists every claim you’ve ever made, and helps insurers set your premium in some cases. Your insurance history comes into play when you need to claim.
Don’t rewrite your own history
If you “fudge” your claims history when taking out a premium, an insurance company is well within their right to refuse it if you’ve had an accident. This could leave you on the hook for thousands of dollars. For the same reason, don’t give your insurer a laundry list of claims going back donkey’s years. If they only ask for three or five years’ worth of claims history – give it to them honestly. You should also disclose any other drivers that might use the car, too.
“Market value” is a broad term
When insuring your car for “market value,” you probably think of it in terms of a seller. When it comes to insurance companies, they’re thinking about buying your exact car for a bottom of the barrel price. Insurance underwriters have special computer programs and teams of people working out the “market value” of your car. The write-off payout might not cover what you owe on your car loan. To prevent this shortfall, you should either:
- Do your own research and come up with a reasonable market value
- Take out “GAP” insurance to cover the “gap” between the payout and your remaining loan balance
- Find an insurer that provides agreed value coverage
- Take your insurer to arbitration or mediation
Bad drivers pay more
It’s standard practice in the insurance industry to raise your premium by 40% after your first at-fault accident. This can vary, though. Some insurers “forgive” the first accident and offer “rating one for life” if you’re accident free for many, many years. Even so, if you have an accident, chances are you will pay more. If someone other than you drives the car and crashes it, you’re liable to pay the excess AND foot the higher premium. Either put that person on your insurance (as an added expense) or don’t lend out your car!
They won’t cover your iPhone
Don’t rest easy Android users – they won’t cover your Galaxy S6 or HTC One, either. Or your tablet, your gym bag, your headphones…they won’t cover any damaged or stolen items in your car. Some home and contents insurance policies cover stolen items from cars – it’s best to check with your provider.