In these tough economic times, we're struggling to make ends meet. I know we have to have car insurance, but is there anything we can do to reduce the cost?
Physical damage coverage (Fourth in a series.)
In our last three columns, we discussed liability coverage, uninsured motorist coverage and personal injury protection, all required by law in Oregon. This column will address coverage for damage to your car.
This coverage pays for direct and accidental loss to your car. It's generally sold in two parts, collision and comprehensive. Collision coverage applies when the damage is caused by an impact with another vehicle or object, or by upset. An example of upset would be a roll over. Comprehensive coverage applies to most other loss or damage. Some examples include theft, storm damage, flood, fire, falling or flying objects, vandalism, and glass breakage. Some policies do not use the term "comprehensive" and call the coverage "other than collision."
Can you save any money on physical damage coverage? Yes, you can. You can reduce your premium by selecting a higher deductible, or there may be circumstances where you may choose not to carry the coverage at all. Let's look at each of these choices.
When you buy coverage for damage to your car, you select a deductible. This is the amount you pay before the insurance company pays anything. For example, you select a $500 deductible and someone vandalizes your side mirror. The cost to replace the mirror is $275. You would have to cover that loss yourself. If the vandalism was more extensive and the total cost to repair is $1,500, you would pay $500 and the insurance company $1,000. You can reduce your premium by selecting a higher deductible, but you need to carefully consider how much you can afford to pay in the event of a loss. Your agent or company can provide you with the different premium amounts for different deductibles.
Sometimes it may not make economic sense to pay for coverage for damage to your car. Most cars decline in value over time and there may come a point where the amount you might recover in the event of a loss is not enough to justify the premium you're paying. Again, you need to carefully consider how much you can afford, as you would be responsible for the repairs if your car is damaged or the loss if your car is stolen. Your renewal bill or policy declarations page will show how much premium you're paying for each coverage. Please note that if you are making payments to buy the car or using the car as security for a loan, your lender will generally require you to buy this coverage.
Another coverage that falls under this section of your policy is loss of use, or transportation expenses. This pays for temporary transportation expenses when your car is out of service due to a collision or comprehensive loss. There is usually a daily limit and a maximum limit. This is also an optional coverage, so if you have other options like a second car or public transportation, you may be able to save premium dollars by choosing not to have this coverage.
If you experience difficulties with your insurance company or agent, our advocacy team is available to assist at 1-888-877-4894.