In my previous posts regarding car insurance, I mentioned the fact insurance policies are very similar. If you purchase insurance from Geico, their policy is similar to Travelers, and Travelers policy is similar to Safeco’s policy, so forth and so on. Well, guess what, if you’re shopping for car insurance today, you’ll quickly realize that this has changed. Insurance companies now offer different policies for different budgets and customer types. As a consumer, understanding the differences between auto insurance policies are more important than ever. Because, purchasing the lowest priced policy could be tragic during a claim.
The Limited Auto Insurance Policy
Recently, a number of Texas auto insurance carriers have developed a limited auto insurance policy. This auto policy limits all the traditional coverages and leads to more denied claims than any other policy type. Some of the limits to these basic policies include the following:
- No coverage for rental vehicles and temporary substitute auto policies.
- Coverage exclusions for household members and drivers not listed on the policy.
- No 30 day grace period for newly acquired vehicles.
- No coverage if you loan your car to someone else.
Understanding these differences are extremely important; especially if you have friends or family members in your household with bad driving records. Companies that offer the limited auto policies have one rule: “If you live in the household, you must be rated on the policy, otherwise you are excluded from coverage.” In Dallas, these policies are normally sold through agents or agencies that advertise $29 per month policies. If you’re shopping for the cheapest auto insurance policy, then you’ll probably get a limited policy. Buyer beware!
Standard Auto Insurance Policies
Standard auto insurance policies generally fall into the “been there done that category.” This policy type is the most written policy in Texas. The standard policy provides coverage for the car and driver listed on the policy along with drivers given permission to drive a covered automobile. Purchasing a standard auto policy means you get the coverage normally excluded from the limited versions. Standard policies are sold and offered by agents and agencies of all types. Whether your policy comes from Travelers, Safeco, Allstate, or Geico, policies like this are the most commonly sold policy.
Deluxe Auto Policies
When it comes to purchasing a deluxe policy, no two deluxe policies are the same. To differentiate themselves, companies like Allstate, Safeco, Progressive, and The Hartford now offer deluxe versions of their standard policy. These policies offer the same benefits as their standard counterparts with an added bonus. The added coverages include many of the following:
- Pet Insurance
- Accident Forgiveness
- Vanishing deductibles
- Free roadside assistance
- Annual (12 month) policies
- Dividend payouts for maintaining clean records
- New car replacement programs
- Guaranteed renewal regardless of the number of claims or accidents
It’s important to realize that each company’s deluxe (or platinum) plan varies from the other. While some companies’ offer platinum benefits at no additional charge, other companies charge more for the added benefits.
With this information, you are armed extremely powerful information. No two auto insurance policies are created equally. Looking for the lowest price could mean that you purchase a limited auto policy. Is this the right policy for you? The next time you’re shopping for insurance, keep in mind that auto insurance now comes in many different shapes and sizes.