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Auto Insurance: Beyond the Basics

from Ownby Insurance Service, Inc

by Stephanie Olsen - Central Insurance Companies on Sep 29, 2016

Auto insurance and the value of your car is always a hot topic. It seems every TV, billboard, and radio ad has promised to solve your auto insurance needs. One ad says that you won’t be driving around in three quarters of a car after an accident with their coverage. While it’s true you won’t get far with only three wheels on your car, what are these ads really saying? Isn’t your vehicle just a means for transportation or is it truly an investment? Is it possible it can be both? Your opinion on this may shape the type of auto insurance you seek.

Beyond your basic limits for liability, if you select physical damage coverage and your vehicle is involved in an accident, there is a possibility it could be a ”total loss”’ which means the cost to repair your vehicle exceeds its actual value. A typical auto policy includes Actual Cash Value, also called Market Value, which determines the value of your vehicle at the time of the loss. This value is determined in a number of ways including use of valuation guides and the claims adjustor’s estimates. This is what the above mentioned ad is referring to when they say three quarters of a vehicle. You aren’t getting out of your car what you paid for it. This can cause added frustration and confusion after an accident. What can you do to prevent this?

The good news is you do have options! Many companies offer a variety of replacement cost options to suit your needs, including an option that will pay to replace your vehicle with a new car of the same make, model and equipment if you have a total loss—provided the vehicle has been owned by you less than one year. Broader coverage includes Agreed Value which is where you and the insurance company agree on the value of your vehicle at the time you take out the insurance policy. In the event of a total loss, that is the amount you are paid. Agreed Value provides great peace of mind from knowing you will get the full amount with no dispute over the value. Many insurance companies are offering an agreed value loss option.

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