What Is The Difference Between Comprehensive Insurance And Collision
Comprehensive insurance is a type of auto insurance that helps to cover costs if your vehicle is damaged by a covered event thats not a collision, such as a fire, falling object, vandalism, and some natural disasters.
For example, if your car is parked in front of your house and a tree falls on it, comprehensive coverage could pay for the costs to repair it. On the other hand, collision insurance covers damage due to collisions, such as hitting another object or vehicle.
While both comprehensive and collision auto coverage help to cover the costs of a damaged vehicle, they cover damage from different causes.
When Do You File A Claim Against Your Own Auto Insurance Policy
When you get into an accident or you discover that your vehicle has been damaged and is in need of repair, the first thing that you need to do is call your own companys claims departments. They will assign an adjuster to evaluate the damage and investigate your claim.
When you call the department, youll inform them of the incident and give them as many details as you have for the claim to be investigated.
If youre filing a claim against your own coverage, it will be classified as a first-party claim. This usually happens when youre at-fault for the accident and youre filing a claim for physical damage. It can also happen when youre not-at-fault or youre in an accident with an uninsured motorist.
Some of the coverage options you can file against include:
- Comprehensive when your car is damaged by a fire, theft, vandalism, flood, or other non-moving loss
- Collision when youre in an accident that youre at-fault for or when the other driver cant be identified
- Medical Payments when youre injured in any type of accident involving a vehicle
- Uninsured Motorist Protection when youre in an accident with an uninsured driver and youre injured
- Uninsured Motorist Property Damage when youre in an accident with an uninsured driver and your car is damaged
- Rental Car when your car is damaged in a loss and you need a rental car as a temporary replacement
- Towing when you need a tow because your vehicle is disabled
Home Insurance Cancellation Rights: How To Avoid Getting Canceled
If you find yourself under the threat of having your policy canceled, you may be feeling stressed and worried. What will you do if you can’t get insurance? If your policy is canceled, you may have trouble finding insurance later or have to pay more in the long run. There are cases where your insurance may start off with plans to cancel you, but if you can explain your case, you might be able to change their mind.
Although there is no sure way to make an insurance company keep you as a client, you can show yours that you are working with it, and try to persuade it not to cancel you.
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When To Drop Collision Coverage
While collision coverage can be useful, there are some cases where the benefits dont quite outweigh the costs.
If youre financing a vehicle, your lender will generally require you to carry collision and comprehensive coverage until the vehicle is paid off.
Once you own your vehicle free and clear, youll have the option to remove collision insurance. You may want to consider dropping this coverage in the following scenarios.
What To Do If Your Home Insurance Company Drops You
As a homeowner, it can come as a surprise to discover that your insurance company has decided to part ways with you. Home insurance companies can drop policies for reasons that run the gamut from changing business strategy to increasing risks in your area.
If you have spoken with your insurance agent and think your policy has been illegally terminated, contact your state insurance department to file a complaint or dispute. If the department finds that the practice is particularly pervasive, they can file an enforcement action or lawsuit against the insurance company for improper cancellation practices.
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Make Things Right Asap
If you can come up with the money to pay your car insurance premiums within a certain time, you might be able to reverse your insurance cancellation and get your auto insurance back with the same provider. This is typically the easiest way to deal with a problem like this.
Underwriting laws are designed to prevent insurance companies from terminating policies without adequate notice or sufficient reason, but even if your insurance provider isnt breaking the law, you can appeal to your state insurance department for help.
But remember: if theres tension like this between you and your insurance company, perhaps its not the best car insurance you can get. High-risk drivers can also benefit from insurance policies that are designed to serve them.
What About Dropping Just One
So, given the cost of collision and comprehensive coverage, and the potential payouts, does it make sense at some point to keep one coverage and drop the other, and can you do this?
The answers: Yes and yes. While insurers generally sell them together, and drivers of older cars often drop them at the same time, Poe and Worters both say that comprehensive insurance is a better value for the money than collision coverage.
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Can My Car Insurer Legally Cancel Or Choose To Not Renew My Policy
Insurance companies must follow state laws and underwriting guidelines before canceling a policy or choosing not to renew one, says Benjamin Blackmon, a former personal lines underwriter.
“In some states, like Tennessee, you can cancel for any valid underwriting reason not specifically excluded,” he says. “Therefore, an insurer would be able to cancel you for a single at-fault accident. In other states, like North Carolina, this would not be the case. Instead, the insurer may be able to remove physical damage insurance such as collision coverage and leave just liability coverage on the vehicle.”
Most standard insurers won’t cancel coverage after just one accident, he adds, unless there are other mitigating circumstances.
And if you’re involved in an accident but you’re not at fault, your insurance company usually won’t cancel your policy, says Christopher Paradiso, owner of Paradiso Financial and Insurance Services in Stafford Springs, Connecticut. “It may only affect your insurance if the party that hits you doesn’t have insurance and you need to put in a claim using your own collision coverage.”
So long as the accident occurs before the actual cancellation or nonrenewal date your insurer indicates, your insurer is obligated to cover the claim based on the limits stipulated in your policy. Nevertheless, other incidents could lead to claim denials.
Can An Insurance Company Cancel Your Policy Without Notice
An insurance company is technically not allowed to cancel your policy without notice. Notification of cancellation or non-renewal is required by lawbut each state has different guidelines on what constitutes adequate notification.
In some states, ten days notice is considered enough. In other states, its 20 days.
One potential way your policy could get canceled without notice is a matter of communication failure. For example, if you opt for digital correspondence instead of snail mail, your renewal or other emails could wind up in your junk folder. If that happens, you wont receive the noticebut the insurance company has done its job of reaching out to you.
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Claims Disputes And Refused Coverage
In some cases, the auto insurance company might decide to deny your claim. They might give you a detailed explanation, or they might not. If they don’t, you will have to weigh your options. Is it worth it to dispute the case? How much money you would lose if you had to pay everything out of pocket? If you have a deductible of $500 and the claim is for $650, you might save time and hassle just settling the dispute.
There are certain reasons why an insurance company might refuse to pay out your claim or renew your policy, according to WalletHub. Here are the most common ones:
- You acted negligently and could have avoided the accident.
- Suspected fraud.
- Mistakes or dishonesty on your original car insurance application.
- False reports on your car’s condition or the mileage.
- Not disclosing accidents or damage to the car.
- Too many claims in a short period of time.
- Too many speeding tickets.
- Bad credit rating and nonpayment.
- Letting your policy lapse.
- Too many road traffic violations.
You might feel like it is unfair for the company to deny your claim or renewal, but they make decisions based on your risk level. You cannot force them to take on a risk they are not prepared to take on. Just part ways and find an alternative company that is prepared to provide you with the right coverage. Read our tips on how to shop for the right car insurance.
Reasons To Drop Full Coverage
You should think about dropping your full coverage insurance policy if:
- You drive a high-mileage car. Quote Wizard notes that the value of your car drops with the rising odometer reading, which means that older cars with lots of miles do not need the protection of full coverage.
- You struggle to fit the cost of auto insurance in your budget. Generally, you should try to balance affordable coverage with financial protection in case of a crash. Talk to your insurance agent about stepping down from full coverage to save money without dramatically increasing your risk level.
- Your car is worth less than the cost of your full-coverage policy. Coverage.com recommends checking the value of your vehicle against your monthly premiums when making this auto insurance decision.
- You have relatively high risk tolerance. You prefer to save a few dollars each month in exchange for the financial burden of paying for accident repairs yourself.
- You rarely drive. If you don’t put many miles on your car, you have a much lower risk of damaging your vehicle in an accident than someone who commutes daily.
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Relax You Have Options
Take a deep breath before you tackle the problem. The great news is, you have options! Learn more about your situation before you start making frantic phone calls. Everything is going to be okay.
There are many reasons why your auto insurance company dropped you. The most common reasons for insurance cancelation include:
- Non-payment. Did you forget to pay for your car insurance? The most common cause of cancellation by the insurance company is nonpayment of your premiums. Some insurance companies will allow you to pay your balance within a specific time frame and reinstate your policy.
- Too many accidents or traffic violations. Insurance companies can cancel or non-renew a customer’s insurance for major traffic violations such as DUIs or violations that result in driver’s license suspension, or for making too many claims on their insurance within a certain time span.
- No reason. No reason isn’t much of a reason, we know, but many states allow insurers the right to cancel your car insurance within the first sixty to ninety days of your policy without having to state a reason. Insurance companies will often do this if they find discrepancies in your policy application, so it pays to be honest when you first apply for a car insurance policy.
You might be able to fix the situation right away depending on the reason you were dropped. If you can pay your bill, pay it. Otherwise, call your car insurance company and ask if you can work together to find a solution.
Do I Have To Keep Paying My Auto Insurance Premium Even After The Insurance Company Says My Vehicle Is A Total Loss
Yes, you have to keep paying your insurance premium even if your vehicle is declared a total loss until you return your license plates to the Registry of Motor Vehicles. Your auto policy does not end until you return the license plates to the Registry of Motor Vehicles . If you don’t have your license plates because your auto was stolen or because your auto and plates were destroyed in a fire, you must go to the nearest Registry of Motor Vehicles office and get a lost or stolen plates receipt. You must give the receipt to your insurance company to cancel your policy and stop paying your premium.
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Always Read The Fine Print When Canceling Insurance
The majority of insurance companies make canceling a policy a fairly straightforward process. However, others may require some attention to detail.
Here are a few details to check:
Cancellation fees: Some car insurance companies charge a cancellation fee. The fee can range from $25 up to a short-rate fee, which breaks down to 10% of the remaining policy premium. As an example, if you signed up for a 12-month policy and canceled after nine months, you would be on the hook for 10% of the remaining three months.
Notification: The notification period can vary from canceling immediately to requiring 30 days notice to dump your policy.
Cancellation letter: As mentioned earlier, some insurers require a cancellation letter while others may be satisfied with a verbal cancellation over the phone. Your policy should spell out what you need to do to properly cancel your policy.
What’s The Average Cost Of Full Coverage Insurance
Remember, there’s no single policy considered “full coverage.” Your price depends on a variety of factors, such as:
- Your age
- Your vehicle’s age
- What type of car you drive
The average annual rate for full coverage car insurance is $1,548 compared to the moderate basic liability coverage of $620. Here are a few policy price statistics broken down by state:
- Florida has the highest annual full coverage rate at $2,587.
- Michigan has the highest average of basic liability coverage at $1,219 compared to the average annual premium for full coverage of $2,105.
- Ohio is the cheapest state to buy full coverage at an average premium of $998.
- Some of the other cheaper states to purchase full coverage are Indiana, Alaska, and Idaho. Prices in these states range between $1,000-$1,200.
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Can You Fight A Car Insurance Policy Cancellation
You can challenge your car insurance company after receiving a policy cancellation notice. You could first call your insurance company to discuss whether your insurer might be willing to keep your policy. Depending on the reason for your cancellation, you may be able to reach an agreement with your carrier.
However, if contacting the company proves unsuccessful, you may want to contact your state insurance department to file a complaint if you believe your policy has been canceled unfairly. Depending on the state, you may be protected from cancellation for specific reasons, such as your age. The state insurance department might investigate to see if the cancellation was justified.
Dui Or Dwi Convictions
Nothing good comes from driving under the influence of drugs, alcohol, or controlled substances. Insurance companies are more likely to cancel the policy of a driver who has been involved in an accident while driving impaired. Such drivers, if allowed to retain a drivers license, can expect their car insurance premiums to skyrocket. If canceled, it is often extremely difficult to find a company that provides coverage to drivers with DUI or DWI convictions.
Buy Your Homeowners And Auto Coverage From The Same Insurer
Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. But it still makes sense to shop around! You may save money buying from different insurance companies, compared with a multipolicy discount.
Can My Insurance Company Cancel My Policy If I File A Claim
No. The company cannot cancel you for filing a claim, but they can choose to non-renew your policy if they determine you are too much of a risk. The company must issue a non-renewal notice directly to you or to your agent at least 45 days prior to the expiration of your policy. It is then your responsibility to find a new insurance company to provide you coverage.
The company can cancel you if you do not pay your premium or if they learn you provided false information on your application. In this instance, your company must send you a notice at least 20 days before the effective date of the cancellation. A notice sent by regular mail with a certificate of mailing receipt obtained from the Post Office is enough. Certified or registered mail with a return receipt is not required.
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You Used The Car For Commercial Purposes
When you sign up for car insurance, you provide information that helps the insurer determine what coverage you need and how big of a risk you present. If you use your vehicle in ways other than what you state on your policy agreement, it could result in cancellation.
Using your car for commercial driving when you only paid for private driver coverage is one way to catch the attention of your insurance company in a bad way.
Many drivers work for services like Uber or Lyft without changing their insurance policies to reflect commercial driving, and it doesnt always end well.
An entire Reddit thread revolved around an insured party being dropped from their policy because of driving for Uber with the insured vehicle. One commenter said, The existing insurer dropped me like a hot potato after 35 years the moment I used the R word.
But while its frustrating to deal with, its well within the insurers right to cancel you based on your driving habits.
Further, if you get into an accident while on the clock with a ride-sharing service, your insurer can refuse to cover the incident. Fortunately, hybrid policies are often available for ride-sharing drivers. You just need to shop around for the best coverage and pricing scenario.