Northsound Insurance

There is a lot to know about auto insurance to fully understand what you're paying for. The following information provides a quick education to help you navigate the twists, turns and choices involved in buying auto insurance (hereafter call car insurance). Coverage that is reviewed here is for your education. You should refer to your automobile policy for the specific terms and conditions of the coverage that you have purchased. Reading an insurance policy has to be the least interesting thing that we can do, but it is a legal contract. It is difficult reading because the language used is not what we use everyday. If you have questions, you should speak directly with a licensed independent insurance agent. Discussing insurance with an agent of a specific insurance company will give you information about their policy, but not necessarily what is in other policies on the market.

I know of one company that includes up to $200 for meals and lodging if you have an accident when you are more that 100 miles from home. Another company pays unlimited towing expenses when mot companies pay up to $50. The wording of who is insured can also vary. The definition of a temporary automobile can be quite different. Renting a U-haul is not covered by some. The following information is general in nature, and does fit most policies written in our state.

Car insurance includes three broad coverage categories designed to protect you from financial loss if you have an accident:

Liability coverage pays for your legal responsibility to others for bodily injury or property damage.

Physical Damage coverage pays for damage to or theft of your car.

Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

If you have an serious car accident, the legal costs could be devastating. Liability coverage offers protection against claims, property damage or bodily injury, to another party that you or a member of your household accidentally (some companies include those who have your permission to drive your car) caused while driving your car. This coverage applies only if the driver is considered legally responsible for the damage.

The question of liability limits is often asked. The answer is simple; buy as much as the company will give you. That may be an exaggeration, but not by much. The reason you have liability insurance is to protect your assets from being taken from you. Most of us have worked hard to accumulate equity in our homes, savings and investments. It would be pound foolish to save a few dollars each year, and then loose a large lawsuit. We have a general rule: insure for at least four times your net worth.

Consider a family that has had a home for several years. They may have $250,000 in equity in that alone. They also have a policy that has a $250,000 limit. That may give them a comfort zone because they have covered their equity. What happens when there is a serious accident that causes a child to loose their ability to walk? What happens if the other driver is a surgeon and has a loss of vision? Fortunately, this does not happen often, but it can. When it does, the plaintiff’s attorney is going to be looking at the assets of the responsible party. In lesser accidents, there is still the issue of how much you own. Your chances of being sued increase directly proportional to your assets.

Another insurance product available is the Personal Umbrella. Please we that section for details.

Medical payments are included here because many people coming from other states have this coverage. We have Personal Injury Protection. It is sort of like Medical Payments on steroids.

The medical payments portion of the car policy assures that you, your family members and passengers in your car will receive necessary medical and dental services resulting from an auto accident...regardless of who caused the accident. It also provides coverage if you and your family members are involved in an accident as a pedestrian.

In Washington, your policy will provide no-fault insurance. This means that you, your family and any passengers are covered under your policy regardless of who is responsible for the accident. This coverage includes medical, surgical, dental, hospital, work loss and certain other related expenses. This same coverage extends to you or your family member in an accident as a pedestrian. There are two choices available. You can select $10,000 or $35,000. The average cost of this lower limit is about $50 per car per year.

Although required by law, the State of Washington allows policyholders to waive this coverage. Many people can benefit from having the coverage, but there are others who have adequate medical insurance, or have the means to pay for any injuries sustained in an accident. Remember, this coverage does not include any pain or suffering, or the loss of earnings beyond the $200 per week.

Uninsured motorist coverage will pay for injury expenses incurred should you, your family members or passengers be involved in an accident with an uninsured motorist. This coverage also provides protection for a hit-and-run accident or an accident with a driver who has less insurance than required by law.

Underinsured motorist coverage comes into play when the other driver is found legally responsible for an accident and has coverage, but not enough to cover your injuries. If your coverage limits are higher than those of the at-fault driver, this coverage will absorb the additional expenses. Un/Underinsured coverage is not identical in all states since each state has its own uninsured motorist laws. In most states this coverage applies to bodily injury only. However, property damage coverage is available in some states.

This is available in Washington, and it covers the same provisions as the above with respect to the damage to your car.

We've discussed legal and medical damages. Another typical loss is the physical damage to your vehicle that can result from an accident. There are two types of physical damage coverages: Collision and Comprehensive.

Collision coverage pays for any damage to your car caused by accidental impact with another vehicle or object...or if your vehicle overturns. The maximum amount to be paid is limited to the actual cash value of your vehicle, which is often referred to as the "local market value," less the deductible. Please remember that the local market value is only a starting point. The actual cost of the car may be more or less depending on the actual condition of the car. There are companies who have different rules on this. Some replace the car if it is less than six months old. Other offer replacement cost on any car at an increased premium. Antiques car are often covered with replacement cost provisions because they do not depreciate.

Comprehensive coverage pays for most types of damage to your car resulting from a situation other than a collision. Typical examples include breakage of glass, falling objects, fire, theft, windstorm, hail, water, flood, malicious mischief, vandalism, or impact with a bird or animal. It even includes sinking. (We have been asked many times if there is coverage if a ferry sinks.) The maximum amount paid is limited to the actual cash value of your vehicle less the "other than collision" deductible.

Most people have very low deductibles on this part, which is not a good idea. If you have a loss every seven years, you are ahead. If you don’t, you will pay more premium in those seven years than the insurance company would have paid you if you had a loss - if you had changed from a $100 deductible to a $500 deductible. That’s right! There is $400 less that an insurance company would pay, so they reduce your premium. Over seven years, you will save over $400 in premium. Our advice: have the highest deductible you can stand without severe pain when you write that check to the body shop.

Please be aware that your policy will not pay for damages due to normal wear and tear such as mechanical or electrical breakdowns and flat tires.

Some coverages are not included as part of the basic auto policy. However, you can customize your policy to your needs by adding the following coverages:

Towing and labor: pays for towing and labor costs each time your car is disabled. Covered labor must be performed at the place where your car is disabled. There's usually a limit to the dollar amount that will be applied to each loss, but some pay “reasonable” costs. This is often included when you purchase Collision coverage.

Rental reimbursement: pays for a rental car if your car is damaged by a situation covered by comprehensive or collision coverage and if your car is out of commission for more than 24 hours. Pyment vary quite a bit. Some companies pay $17 a day, and some pay $40.

Tapes, records, CD coverage: pays up to a certain amount for loss of tapes/CDs used with your car's stereo equipment, as long as they are in your car at the time of loss.

CB radio/car phone: Unless installed by the manufacturer, these items are not covered under your basic policy. This additional coverage pays for loss to your CB or two-way radio/telephone if the equipment is not permanently installed in your car at the time of loss. Some companies cover this with the Homeowners policy.