Insurance FAQs

Insurance FAQs. Frequently asked questions about insurance, provided by Austin Insurance Group.

Get Car Insurance Facts

Get Car Insurance Facts

Purchasing auto insurance can be confusing. Knowing some car insurance facts can help you make the right choice.
Car Insurance Facts

Below are six car insurance facts to help you plan and possibly save you money:

1. Car Rental Insurance

Car Insurance Facts - Car Rental InsuranceWe’ve all experienced the insurance pitch at the rental car counter. The agents encourage you to purchase car rental insurance, referred to as a collision damage waiver (CDW). Rental car agents often receive incentives to sell it. The good news is that you usually don’t need to purchase it, assuming you have full coverage on your own car, which commonly includes comp and collision.

If you are driving a vehicle with liability only, have a “limited” policy or no insurance coverage at all, CDW will be required.  Many credit card companies offer rental car insurance protection as long as the entire rental car transaction is charged to that specific card. So, make sure to check with your credit card company or personal auto insurance company before denying CDW coverage

2. Lending Your Car to A Friend Could be Costly

Consequences of Lending a Car to A FriendIf you lend your car to a friend and they have an accident, it’s your responsibility.  Even if they have their own insurance, it usually only covers damage to the other vehicle, not yours.  So, you will have to file a claim with your insurance company, not your friend’s AND  you’re also responsible for your deductible. This type of  accident could possibly raise your rates, even if you were not in the car. So think twice  before handing over your keys.

3.  Your Credit Score

Credit Scores Affect InsuranceYour credit score is reviewed by your auto insurance company.  Statistically speaking, you’re more likely to file claims based on a shaky credit history.  Ff you are responsible with your credit and make payments on time,  you’re less likely to make regular claims.   So your credit score plays a major role in determining rates.  Usually credit score information may result in higher premiums, even if you have a perfect driving record and no accidents.

4. Will You Get Your Cars True Value?

True Car ValueIf you get into an accident and your car is “totaled,” it’s your insurance company’s responsibility to provide you with enough money to purchase an equivalent car.  Every car is different, with things like mileage, condition, and repairs play a  vital role. You should always keep a documented vehicle history, so you can present repair and maintenance receipts in the event of a dispute. Make sure the amount you and your insurer settle on includes sales tax for the purchase of your replacement automobile. This is sometimes left out by insurers, and replacing your car should not come with additional tax costs. If you have a classic car make sure you have classic car insurance that provides replacement value coverage, otherwise you’re putting your investment at risk.

If you get into an accident and your car is deemed repairable, make sure to ask for diminished value compensation. This will pay you for the loss of market value that your vehicle incurs due to the accident and repairs. Once your car has been in an accident the value goes down, even if completely repaired to like new condition. Most people don’t want to risk purchasing a car that’s been in a major accident, and this substantially hurts your re-sale value. It’s always a good idea to check with the car insurance company to see if they offer diminished value, prior to purchasing a policy.

5. Marital Status

If you are single, divorced, or even widowed, your marital status can affect your auto insurance premium.  Many auto insurance companies give discounts for being married because statistics show that unmarried individuals are more prone to accidents.

6. Where You Live

Your zipcode is one of the major considerations your auto insurer looks at when determining your rates.

Living in urban areas can greatly increase the rates you pay for auto insurance.  The chance of accident or auto theft are significantly lower in rural areas. Whereas, things like limited parking, traffic, and larger numbers of uninsured motorists are factors for individuals living in the inner city. Some areas may result in auto insurance rates that are more than double their rural counterparts.   It’s unfortunate, but expect to pay more if you move to the city.  And if you have a choice, compare insurance rates in different zip codes to see how much of a difference it makes.

Ask Austin Insurance Group: All Risk Insurance or Named Peril

All Risk Insurance vs. Named Peril Policies

What is the difference between all risk insurance policy and named peril policies?  Read more to find out the difference and why we recommend the all risk home insurance policy.

From Ask an Agent

“I highly appreciate your offer to assist clarifying home insurance for my house. Will you please check out the attached offer and tell me what is different than AIG one?” — W.S. (Austin, Texas) 3/9/16

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Basically, insurance companies write two kinds of policies for homeowners:

  • all risk insurance
  • named peril policies

All Risk Insurance Policies

All risk insurance policies are also referred to as an open peril policy or comprehensive policies. (All risks are typically HOB and HO3 policy types) vs. (Named peril policies, HOA policy types).

An all-risk insurance or open peril policy covers everything that’s not “excluded.”  Every thing is covered except what is specifically excluded in the policy. The all-risk insurance policy usually costs more than the named peril policy because it offers more coverage and is more comprehensive. Under an all-risk policy, the burden is on the insurance company to prove that the peril causing the damage is not excluded.  If it’s not excluded, coverage applies. Since the limitations and exclusions are the key to determining what coverages are provided by an all-risk policy, it could be called a “named exclusions” coverage. The most common perils excluded in an all-risk policy include:

  • Earthquake or earth movement
  • War
  • Flood, seepage, mudslide, and sewer backup (and sometimes surface water that builds up after heavy rains, underwater springs, groundwater, burst water pipes, overflowing toilets, and wind or wave-driven water)
  • Boiler explosion
  • Governmental seizure or destruction of property
  • Off-premises utility service interruption
  • Building ordinance or law
  • Seepage or leakage of water over a period of time
  • Electrical damage to electrical devices
  • Wear and tear; rust, corrosion, fungus, decay, deterioration, hidden or latent defect smog; settling, cracking, shrinking, or expansion; nesting, infestation or release of secretions by insects, birds, rodents or animals
  • Damage to building interiors by rain, snow, sleet, ice, sand, or dust unless the roof or walls are first damaged – except damage by thawing of snow, ice or sleet
  • Mechanical breakdown
  • Theft of building materials and supplies not yet attached to buildings
  • Employee dishonesty
  • Pollution

Named Peril Policies

Named peril insurance covers only  what is specifically noted in the policy. For example, if it doesn’t say you’re covered for backup of sewers or vandalism damages, you are not covered. The named peril insurance policy only covers certain and specific perils, and this type of policy is usually less expensive  than an all risk home insurance policy.

A typical named peril policy typically would cover:

  • fire
  • hail
  • windstorm
  • aircraft
  • vandalism
  • smoke

Earthquake and Flood insurance are two other common type of named peril policies and are written as separate policies.  When your property insurance coverage is written on a named peril basis, the burden is on the insured.  You must prove that one of the named perils caused your loss

Which coverage is the better choice?  Lenders recommend an all risk home insurance policy.

If you’re paying a mortgage, you probably do not have a choice.   Most lenders require that you protect your investment with a comprehensive policy, all-risk policy.

For others, the type of insurance to purchase should be need-based depending on the type of property you have and your location.

The advantage of an all risk home insurance policy is that it covers you in the event of a loss you did not predict. Even though it will cost more, in a world where freak accidents happen, the broader your insurance coverage, the better off you’ll probably be.

Just be sure to read the fine print so that you’re clear about the stated exclusions.

Ask Austin Insurance Group to compare policy types for you. Or visit The Texas Department of Insurance to see for yourself.

All risk insurance vs Named Peril policies - Get an Online Home Insurance Policy Quote now.

Or get a free review today, call 512-339-2901!

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An Independent insurance agent combines personal service and professional advice with Progressive’s low insurance rates plus superior claims service.

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Why buy from an Austin independent insurance agent?

•Independent insurance agents offer knowledgeable advice and guidance for all your insurance needs. Auto, home, life, business, or another type of insurance.
•An independent insurance agent will customize insurance policies to suit your individual needs.
•Independent insurance agents can compare quotes from several competing insurance companies, including Progressive. This gives you the option to compare prices and coverages, and then choose the combination best suited for your needs.

Austin Insurance Group, your local Austin Independent Progressive Insurance Agent, lives and works in your community, we understand the types of things that affect your life and your home, life and auto insurance needs. We value the relationship that we build with you, and will work to serve your best interests.

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