Have you recently been involved in an automobile accident? If so, your vehicle may have been damaged to the point that your insurance company considers it to be "totaled," but what if you don’t agree with this assessment or if you want to keep your car? Are there any steps you can take to help improve your financial standing after you are involved in an accident? The reality is that you do have rights that you may not be aware of having, but you have to decide whether or not it is worthwhile for you to take advantage of these rights.

What Makes My Car "Totaled?"

Put simply, your vehicle will be considered totaled if repairing the damage to the vehicle will cost more than replacing the value. For example, if the insurance company deems that your vehicle was worth $12,000 before the accident, but estimates that it will cost $13,000 to repair it, the company will pay out the $12,000 rather than the $13,000 and will take the vehicle in exchange. Essentially, the insurance company chooses to purchase the vehicle rather than pay to repair it, as repairing the vehicle is not a sound investment. The insurance company will then sell the vehicle in an attempt to recoup some of the expenses. In many cases, this involves selling the vehicle to a salvage shop where it will be sold off for its parts.

Debating the Insurance Company’s Decision

In some cases, you may feel as if the car should be valued at a greater price than what the insurance company is willing to pay. In this case, you may want to negotiate a higher price with the company. In order to accomplish this, however, you will need to demonstrate that the vehicle was more valuable than the insurance company is claiming. Therefore, it is a good idea for you to take photos of your vehicles on a regular basis and to keep any receipts that can be used to show the money you have invested into the vehicle. You may also need to hire your own independent appraiser to determine the pre-accident value of the vehicle. Of course, this will require some investment on your part, which means you need to consider this cost as well as the amount of extra money you anticipate getting in order to decide if this is a good step for you to take.

If you are interested in keeping the vehicle after the insurance company has deemed it totaled, you may be able to negotiate that as well. Whether or not this is possible depends upon the laws in your state. If you are able to keep the vehicle, however, be prepared to receive a smaller payout from the insurance company because you will have to reimburse the insurance company for the money it could have received from the salvage yard.

When it comes time to compare auto insurance policies, it is easy to become a bit confused by what you are looking at.  As a result, accurately and fairly comparing the policies to one another can be difficult.  Therefore, it is important for you to understand the various sections that are included within a standard auto policy and what you will find within these sections.

Declarations

You can take a quick look at the basics of your auto insurance policy in the declarations section.  This section is usually only a page long and contains information about the vehicles that are covered by the policy, the drivers in your household, the amount of your premiums and the basic coverage limits within your policy.

Insuring Agreement and Definitions Sections

The insuring agreement section is where all of the details of your policy are covered.  This section can be somewhat difficult to understand because it may contain terminology that you are not familiar with.  To help you with understanding this section fully, you should consult with the definitions section.  Here, you will find definitions to the terms that are commonly used within the auto insurance field.

Exclusions

The exclusions section includes information about specific situations that are not covered by the policy.  Reading and understanding this section is just as important as reading and understanding the insuring agreement section, as you certainly don’t want to be caught off guard when you file a claim and discover the situation is not covered by your policy.

Conditions Section

Within the conditions section, you will find information regarding the conditions that must be met in order for your policy to remain active.  This section will also describe the conditions that must be met in order to successfully file a claim with the insurance company.

When comparing auto insurance policies, be certain to consider all of these sections and to compare what each policy has to offer.  This way, you can be certain to get the coverage you need without paying too much for coverage that you don’t actually need.

If you are like many people who took out a loan in order to purchase a vehicle, you have probably discovered that the value of your vehicle is now less than what you still owe on it.  In some cases, the gap between what you owe and the value of your vehicle can be quite large, which means you will be left in a terrible financial situation if your vehicle is totaled in an accident.  While this possibility is disturbing regardless of your financial situation, if you are one of the thousands of people who has been left without a job or who is otherwise struggling to make it by, getting stuck with paying on a vehicle you no longer own is even more frightening.  Therefore, if you don’t already have it, you might want to consider adding gap insurance coverage to your auto policy.

What is Gap Insurance?

As the name implies, gap insurance is coverage that is meant to fill the “gap” between what you owe on your vehicle and the vehicle’s current value. For example, if you are involved in an accident and your vehicle is damaged to the point where repairing it will cost more than replacing it, the insurance company will consider it to be a total loss.  Instead of paying for repairs to the vehicle, the company will reimburse you for the cost of replacing the vehicle.  If the vehicle is valued at $10,000, but you still owe $15,000, you will be stuck with having to pay the $5,000 difference.  This means you are still stuck with making a car payment, but you don’t have a car to show for it.  With gap insurance, the insurance company will pay off what you owe on the vehicle if it is totaled rather than only paying the value of the vehicle.

How Do I Get Gap Insurance Coverage?

You may be surprised to learn that there are actually a couple different options available for obtaining gap insurance.  When you purchase your vehicle, the lending institution may offer gap insurance coverage to be included with your lending agreement.  Or, the car dealership may sell gap insurance coverage to you with your purchase.  Another option is to contact your insurance company and to have gap insurance coverage added to your policy.  Regardless of where you purchase it from, gap insurance coverage usually does not cost a whole lot.  Therefore, it is a good idea to add this coverage to your policy, just be sure to compare offers in order to select the least expensive option.

President Obama grabbed some headlines recently after touring a car plant in California, where he was quoted as saying “The 1908 Model T – think about this – the 1908 Model T earned better gas mileage than the typical SUV in 2008. Think about that:  100 years later, and we’re getting worse gas mileage, not better, on SUVs.”

Some critics have maintained that the President’s comparisons are unfair, as the 1909 Model T was much lighter and less powerful.  Furthermore, the modern-day SUV has a number of features that weren’t even invented in 1909, such as improved safety equipment, emission controls, antilock brakes and more.  Still, the President’s comments echo the way many people feel about SUVs – including your insurance company.  The reality is that you can expect to pay more if you are an SUV owner, not only in gas but in insurance coverage as well.

SUVs and Auto Insurance Costs

If you own an SUV, you can generally expect to pay a higher price for your auto insurance coverage than you would if you had a car.  In fact, research has shown that SUV coverage costs about 10-20% more than the coverage for other automobiles.  This is largely because SUVs are so large and powerful, which means you will cause more damage to the other vehicle if you are in an accident than you would if you were driving a car.  Since this means your insurance company will have to pay out more to make the necessary repairs, your insurance rates are increased.

Guzzling Gas in Your SUV

SUVs will also hurt your pocketbook when it comes to fuel mileage.  While critics may find Obama’s comparison to the Model T to be unfair, this doesn’t change the fact that most SUVs are far less fuel efficient than most other vehicles on the road.  Although we have recently experienced a huge break at the pumps, gas still is not cheap and paying to fuel up your SUV can become quite costly.  Therefore, if you are in the market for purchasing a new vehicle and finances are tight, you might want to avoid purchasing an SUV.

Many people have heard horror stories about their auto insurance policies getting canceled or their premiums being increased to insanely high amounts after filing a claim.  But, is there really a need for you to be concerned about terrible things happening to you if you file a claim, or is this simply a myth that leads to a whole lot of unnecessary worry? 

Changes to Your Premiums

Depending upon the type of claim you file with your insurance company, it is possible that your premiums will be increased.  If your vehicle is damaged because you ran into an animal or if you are in an accident that is not your fault, your insurance premiums should not go up.  If you are involved in an accident that is considered to be your fault, on the other hand, you may see an increase your insurance premiums.  This is because research has shown that you are more likely to be involved in an accident in the future if you have been involved in one in the past.  This puts you in a “higher risk” category that results in a higher insurance rate.

The amount your premiums increase will vary from one insurance company to the next.  Some will automatically increase your rates by a certain percentage, while others will use a math formula to help them determine your rate increase.  Therefore, if your rates are increased after filing a claim, it is a good idea for you to do some comparison shopping with other insurance companies.

Getting Your Policy Canceled

The risk of getting your auto insurance policy canceled after filing a claim is actually far less than most people think.  While it is certainly possible that your insurance company will cancel your policy if you file several claims within a short period time or if you file a particularly large claim, most people do not need to be concerned about a cancellation when filing an auto insurance claim.  If you have ran into a streak of bad luck and you are worried about your auto insurance policy getting cancelled, you should consider whether or not the payout you will receive from your claim is worth the risk.  For example, if you have $1,500 in damages and your deductible is $1,000, receiving the $500 benefit may not be worth the risk of losing your policy or being faced with a rate increase.

When trying to save some money on your car insurance premiums, you might consider eliminating the comprehensive coverage on your policy.  While this might be the right step for you to take in order to save some cash, it is important for you to understand what comprehensive coverage is and why you might want to keep it as part of your policy.  This way, you can be certain to make the best decision possible.

Understanding Comprehensive Coverage

When carrying both collision and comprehensive coverage, policy is often referred to as providing “full coverage.”  You may not realize, however, that you are not obligated to carry both collision coverage and comprehensive coverage.  Rather, you may choose to carry just one and not the other.  While collision coverage provides you with protection if you are involved in an accident that is your fault, comprehensive coverage provides you with protection if your vehicle is damaged due to an “act of God” or if it is damaged by an “unknown party.”  Examples of situations that are covered by comprehensive coverage include:

· Damage caused when hitting an animal
· Fire damage
· Flood damage
· Hurricane damage
· Theft of the vehicle
· Vandalism of the vehicle

It is important to note, however, that comprehensive coverage may have certain exceptions in place that may prevent your vehicle from being covered in certain situations.  Therefore, you should be certain to read the policy thoroughly before signing it in order to be certain you are truly getting the coverage you need.

Deciding if Comprehensive Coverage is Right for You

When it comes down to it, deciding whether or not comprehensive coverage is right for you is a financial decision.  When making this decision, you will need to consider the cost of the additional coverage as well as the value of your vehicle.  If your vehicle is still worth thousands of dollars, paying a few hundred extra dollars a year for comprehensive coverage is worthwhile.  If your vehicle is older or simply is not worth a whole lot anymore, the extra financial burden simply will not be worth it.  Remember to keep in mind the cost of your deductible when determining whether or not you should carry comprehensive coverage.  If you aren’t sure of the value of your vehicle, visit the Kelley Blue Book website to get a better idea of its value.

When shopping around for auto insurance, you may be a bit confused by all of the options you have available for your policy.  One of the options you will have is to add what is referred to as “collision” coverage to your policy, but what exactly is collision coverage and how do you decide whether or not this type of coverage is right for you?

Understanding Collision Coverage

Carrying collision coverage on your auto insurance policy is often referred to as carrying “full coverage” insurance when added along with comprehensive coverage. This is because collision coverage provides you with reimbursement if your vehicle is damaged in an accident, even if you were at fault for the accident.  If your vehicle is damaged to the point that repairing it will cost more than replacing it, the insurance company will consider it to be “totaled” and will reimburse you for the cost of replacing the vehicle.

Deciding if Collision Coverage is Right for You

Not surprisingly, adding collision coverage to your auto insurance policy will increase the cost of your monthly premiums.  Therefore, you need to decide whether or not the extra cost is worth the trade off.  In order to come to this determination, you need to take a closer look at the value of your vehicle compared to the amount of your deductible.  In addition, you need to consider your financial situation and whether or not you would be able to afford to replace or repair your vehicle if it is involved in an accident.

Generally speaking, older vehicles or other vehicles that are not very valuable do not warrant carrying collision coverage.  If your vehicle is valued at $2,000 and you have a $1,000 deductible, for example, the $1,000 you would receive in actual payments if you filed a claim probably isn’t worth the added premium costs.  If your vehicle is still valued at several thousand dollars, on the other hand, the extra cost of collision coverage will certainly be worthwhile.

With today’s economy, it has never been more important to find ways to lower your auto insurance costs.  After all, every dollar must be stretched to its absolute fullest.  While there is no way to completely eliminate the cost of auto insurance without giving up your driving privileges, you will be happy to know that there are several things you can do to help get your costs lowered.  Here’s a look at the three most important steps you can take to lower your costs without sacrificing coverage.

Shop Around

The most important step you can take toward lowering your auto insurance costs is to simply shop around.  You may be shocked by the difference in price quotes you will get from one insurance company to the next.  Taking the time to do a bit of comparison shopping is certainly worthwhile for those who are looking to save money on their car insurance premiums.

Make Changes to Your Policy

Making a few simple changes to your car insurance policy will help you continue to have the coverage you need without paying unnecessary extra expenses.  Simply increasing your deductible can help you save a substantial amount of money on your premiums.  Remember, the deductible is the amount you are responsible for paying if you need to file a claim.  Therefore, unless you are someone who is prone to accidents, the odds are good that you won’t find yourself needing to pay out the deductible.  Therefore, increasing the deductible by a few hundred dollars in order to save yourself a few hundred dollars in annual premiums is a profitable tradeoff.

In addition to increasing your deductible, you might also want to consider reducing the amount of coverage you have in place.  While you certainly don’t want to decrease your coverage to the point where it will leave you in a financial bind if you need to file a claim, there may be some coverage that really is not necessary.  For example, if you have a $1000 deductible and your vehicle is only worth $1,500, carrying full coverage may not be worthwhile.

Consider Your Vehicle Purchase

If you are in the market for purchasing a new or used vehicle, you should also carefully consider the vehicle you will purchase. Those vehicles that are most commonly stolen, those that are more regularly in need of repair and those that are considered to be sports vehicles will be more costly to insure than other vehicles.  Before you buy a new or used vehicle, contact your insurance company to make certain insurance coverage will be within your budget.