I have Nationwide Insurance, been with them for 22 years, all my driving years. This time the agent said something interesting, so thought I would pass on that information along with other tips. Consider these points and give your carrier a call to check on these "issues."

1. Liability Coverage: "Liability" is the money your carrier will pay to the other driver when the accident is your fault. It is NOT the amount of coverage you have for YOUR MINI. That's "comprehensive and collision" coverage.

One of the biggest secrets that carriers don't want you to know about is that after an initial rate to insure you for liability coverage, increasing to higher liability coverage amounts costs pennies! For example, I went from 100,000/200,000 [$100k per individual, $200k for entire accident or "per occurrence"] to $500,000 / $500,000 for $6 a month increase in premium.

The CSR I was talking to did NOT tell me about the above. I had to specifically ask what the price would be for $500k coverage.

So call your carrier and ask how much extra it cost to increase your liability coverage. Might surprise you on how cheap it is to increase protection to $500k.

2. I have two deductibles on my policy, one for the liability, the other for comprehensive [comp is what protects my car and property] The deductible is what I have to pay out of pocket on a claim.

I have $1000 on the liability portion. I am gambling that A) I won't get in an accident; and B) that the accident will be the other guy's fault so I won't be paying a deductible. [Liability deductibles kick in when you get into an accident and it is your fault, to where your policy will be paying for damages you caused to not-at-fault driver.]

I have $500 deductible on the comprehensive coverage. That gives me a decent comp insurance rate. I think $1000 is too much to pay out of pocket on a claim for my car [e.g., if the car gets broken into, windshield cracks, car gets keyed, whatever.

But another secret is how much carriers make from people who pay to have a low $250 deductible. It's a high profit item for insurance companies because insureds pay a lot in monthly premiums for a $250 deductible but the carriers pay out little in return.

To figure out if it's worth it, you have to figure out how much you are paying for that $250 deductible [compared to the rate for $500 or $1000]. If it's costing you $25 a month additional for a low deductible, it becomes obvious that paying that amount for a few years takes away the benefits of having a low deductible, especially if you are not making any claims.

IMHO letting people buy low deductible coverage is a con game. The carriers make millions in profits from people thinking there is a net benefit to having a low deductible. There is not. The carriers know the odds are in their favor, they will make millions because few people get in accidents compared to the total dollars in premiums collected for what amounts to a $250 insurance policy. You have to think of it as a separate insurance policy. You are in effect buying $250 to $750 protection in return for paying an additional monthly premium. So calculate out what that policy is costing you. Does it make financial sense?

Do the math. If you pay $10 to 20 a month extra for a $250 deductible and you go 15 years without a claim, then have an accident in the 16th year, the carrier would have collected $1800 to $3600 in extra profit if no claims are made and that amount less $250 if a claim is made. Duly note that in some geographic regions or with certain carriers, a $250 deductible won't cost you much.

So up those deductibles, unless you are in accidents or suffer comp claims [theft, vandalism] quite often [in which event you are going to get canceled anyway.]

3. Final tip, which was interesting. When getting a quote on my MINI the CSR asked "Do you want genuine parts for any repairs or after market coverage?" This was surprising because I never had that option before.

Coincidentally, our local news station had just done a piece on how insurance companies are authorizing repairs using after-market parts rather than original parts from the manufacturer.

I opted for genuine, no way I want after-market parts placed on my beautiful car.

On my policy it indicates the parts coverage as "Loss Settlement Endorsement OEM Parts" [OEM means "original equipment manufacturer"]. The cost is indicated at $35 ANNUALLY for the OEM coverage.

4. In this world of uninsured and extremely under-insured deadbeats, make sure to get the max coverage you can afford. Uninsured / Under-insured is a separate provision of a policy, meaning that you have to pay for that coverage SEPARATELY.

The carriers hide this from you too because they don't want you to know how cheap it is to obtain max uninsured / under-insured protection. They rather have you pay the standard amount for minimum coverage [$60 yearly for $15k / $35k coverage] and they don't tell you that to kick it up to $500k coverage is maybe $40 more ANNUALLY!

My policy indicates $500,000 un and under insured coverage is $110 a year. Yes, you can try to save $40 a year, but is the risk worth saving $40?

5. Lastly, many times you won't get an experienced CSR helping you. He or she may not know all the discounts you are entitled to. So ask for a supervisor to go over them. I have been with Nationwide do long that I know what they are and know what to ask for. Plus some carrier computers automatically apply discounts. But you can't assume that.

My discounts, to illustrate what might apply:

Good Driver

Elite Driver Discount [huh? what the hell is this?]

Air Bag Discount

Anti Theft Device

New Vehicle Discount

Persistency Discount [but for the word "discount" I'd wonder what the heck this is. What, do I NOT call too much, so I get a discount for not bothering them?]

My policy for the entire year is $970. I think that's pretty good for being in one of the highest risk areas in the Nation, San Francisco Bay Area and The City.

 

I know that the prices of everything out there in California is higher than other places but geez... Is that $970/year for just your Mini? I pay $880/year for $300k/$600k liability, $0 deductible comprehensive, towing and labor, $250 deductible collision, rental car reimbursement and I don't have to pay extra for OEM parts. I will not accept less than OEM. Here's the rub. That's on my 2007 MCS, 1995 F-150 2wd longbed extended cab pickup and a 1998 Chevy Venture van (extended version). I've been with them for 22 or 23 years, I've never had a moving violation and my only at-fault accident was 16+ years ago.

You do have good points about deductibles but the way I see it is, what if something does happen on one of those rare times when I really don't have or can't afford to spend that extra cash? I do have 2 other vehicles to drive but neither of them gets the kind of mileage that Tug does.

 

Yes, it's just on the MINI. San Francisco has some of the highest rates in the Nation due to the City being filled with tourists and no one knowing how to drive on the confusing streets and hills. Lots of accidents here, daily.

I have seen crazy low rates that others have paid elsewhere in the Nation, but this is SF. A two BR condo with one parking space, no view, on my block goes for $1.8 million and the sellers get multiple offers above asking price, even during the current real estate slump. In contrast my friend in Sacramento bought a 6500 SF "mansion" in Granite Bay for $1.1 million.

On the deductible, yes, that is how they sell low deductibles, with fear. But it's a gamble for sure. I don't know that it's a gamble, may be too strong a word.

One needs to do what Consumer Reports says to do. How often do you get in accidents? If it's more than once every few years or so, then getting low deductibles does not make financial sense. What CR says to do, that we never do, is to take that money saved when NOT paying the extra premium to have low deductible and sock it away into a savings account. Odds are that the savings account will increase significantly and exceed the $250 that you are saving by not having, for example, a $500 deductible.

On OEM, the point of the news story was how few people realize that their insurance policies permit the carrier to use after-market parts in repairs, notwithstanding that most people would object to that. But if the policy says the carrier can use after-market parts, the insured can't do anything to stop them from doing so.

So people should 1) check their policies or call the carrier to find out what the policy allows in terms of uses of after-market parts; and 2) if after-market parts are used, if the carrier has the option to purchase extra coverage to where OEM will be used instead.

It's not really a matter of one insisting that only OEM parts are used. If the policy says OEM parts do NOT have to be used, the insured's protests will fall on deaf ears. In fact, on the news piece they interviewed some people at body shops who were angered to find out that their cars were repaired using after-market parts. But they said there was nothing they could do because their insurance policies allowed the carriers to do such.

 

I was in an accident on 2006 that damaged the drivers door and rear quarterpanel. While the insurance guy was looking at the damage and we were talking about what could be fixed (quarterpanel) vs replaced (driver's door) I mentioned I wanted OEM parts. He said that for MINIs that wasn't a big deal since OEM is really about all that was available. The big drawback was that it took twice as long to repair since parts had to come from the UK.

 

Was that in 2006 or on your 2006? I assume in 2006 on your 2005.

I suspect that as time goes on there will be after-market parts available as the MINI numbers increase, justifying production of parts, if in the two years since your accident such parts have not started to appear.

That would be cool if after-market parts makers have not bothered with the MINI.

I noticed that on eBay there are sellers peddling after-market headlight assemblies. I don't think they are OEM.

http://tinyurl.com/3g9wgx

 

It was in 2006 on my 05 cabrio. (I can type, but my computer can't spell so you never know what my posts will say. )

Things like lights and such I expect will get aftermarket items faster than body panels. In my case, I needed body panels and interior panels and parts and there were only OEM parts at that time.

 

One comment: Just because liabiltiy insurance is cheap to increase doesn't mean it's worth it for everyone. It's cheap for a reason - it's not that likely that many people will need it. I think Consumer Reports recommended a minimum of $100k and increasing that if you have a lot of assets someone could try to go after.

If you don't need it, $6 a month wasted is still $6 a month wasted. Doesn't matter a whole lot to an individual, but if everyone spent an extra $6/month on insurance that they didn't need the insurance companies would be a whole lot richer.

 

You are right to an extent. No need to over insure. My tips are geared to people that have assets in excess of their insurance.

I have seen accidents where medical costs on someone severely injured have exceeded $500,000 limits.

And that's not including the huge sums if one totals a luxury car.

But yes, if one does not own a home, does not have much in assets, a $100k policy probably makes sense. I know there's a lot of drivers in California who have state minimums, which is something like 15k / 35k. It's really low, whatever it is.

Those people just assume they will walk away from responsibility for the damage they cause and file bankruptcy if they get in a serious at-fault accident. Those circumstances are why I pay even more money to the carrier, for under-insured drivers.

 

That's nice that you're trying to help everyone with insurance advice, some of it is good, some it it, not so accurate. Some of it, I hope everyone already knew... because if you didn't... yikes, you probably shouldn't be driving ! Also, it's very tough to give blanket advice an auto insurance because state regulations vary a great deal in many aspects.

1. ronmichael is correct. Just because Liability coverage is relatively cheap, doesn't mean everyone needs 500/250/500 in coverage. You need to balance the cost of the coverage with your needs. The more assets you have, the more protection you need for those assets. Talk to you agent or another insurance professional about your specific needs. Generally, 300/100/300 coverage is good for the majority of people.

2. Liability coverage does not have a deductible. You're confusing that with your Collision coverage. I also carry $1000 deductible on my collision coverage. I do that because for the same reason as you... I'm betting on myself not to have an at-fault accident, but more importantly, because I have assets to cover my deducible without hurting myself financially. Also, the money I save over the years of accident-free driving more than make up for that amount I would have to pay if I do cause an accident. Not everybody is in that same boat.

Also, keep in mind that if you are a victim of an Uninsured Motorist (includes hit-and-run drivers), the lower of your State's UM deductible and your Collision deductible will apply.

Also keep in mind that in States with Comparative or Contributory Negligence laws, you need to keep this in mind when selecting your Collision deductible.

Your Comp deductible is TOO HIGH. That's a relatively cheap coverage (compared to Collision coverage) and there are many claims that fall under the Comp umbrella and none of them are your fault. You have very little or no control over these types of losses [hail, theft, vandalism, objects falling on your car (includes rock damage from cars ahead), etc, etc).

And if you think Insurance companies pay little out in Comp claims, you are sorely mistaken. Comp claims outnumber Collision claims by a long shot.

3. This is one of those areas that varies a great deal from State to State. Insurance is not mandated federally, it's regulated on the State level. States dictate to insurance companies the minimum standards they must adhere to when repairing vehicles. So your advice on researching OEM part repair coverage will only apply to very few of our NAMmers.

4. No, don't get the max coverage you can afford. Get the coverage that is smartest for your personal situation. What is right for me, might not be right for you, and vice versa.

Uninsured and Underinsured coverage also varies greatly by State. Some States make it optional, some make it mandatory. Most only offer one, not both, but the coverage applies in both situations. Generally, your Liability coverages should be carried over to your UM/UIM coverages.

5. Discounts not only vary greatly by State, but also by Insurers. Most people do a good job of researching this and agents will do a very good job of making sure you get your earned discounts... after all, they don't want you going to another carrier, so they want your premiums to be as low as possible, lest you shop around.

Again... you mean well and I'm sure some people appreciate your advice. But people... please speak to an insurance professional and do your own research when selecting he Coverages and Deductibles that are best for YOU.

And please, don't make it out like Insurance companies are keeping secrets from the public. That's not only wrong, it perpetuates the misconception that the Big Bad Insurance Company is out to get me and geez, they're not there to help me. Not only is it wrong, but this kind of thinking is one of the reasons Insurance Fraud is so out of control in this country. And that costs all of us a LOT of money. No, we're not out to get you nor are we keeping secrets. Do some agents not explain every coverage in great detail ? Sure... for many reasons. If you want to know more, just ask them.

 

I have zero deductible on my comprehensive because it cost very little more ($40 every 6 months) and most comp claims are below $500. If I'm gonna pay anything for comp, it better be something I'll get to use. Given the windshield issues with MINIs, I'd rather be safe than sorry...

 

you guys have some cheap yearly insurance costs ha ha ha

 

Well, my main point was to mention the OEM parts issue because when I insured my new MINI last week or so, Nationwide asked me the question, OEM or after-market.

Did not mean to get into the subtleties of insurance coverage, deductibles, coverage amounts, etc. But because I have seen the damage to people who are uninsured, under insured or out of luck because of an aspect of their policies, I tend to get the max coverages. For sure, there's an argument to be made to get minimal coverage.

To each their own on how much insurance they carry.

I do know that I see on TV all the time with disasters that people are sobbing because their insurance was not going to be adequate, they did not carry the protection [e.g., Iowa floods, Santa Cruz fires] or that they did not bother to check on their coverages.

So it seems to me the norm that people don't think about their insurance coverages, they shop on price alone. They just try to get the lowest premium possible.

As to getting help or advice from the carrier or a sales agent, here in California I have seen many a lawsuit against insurance companies and their sales agents because of bum or inadequate info given to the insured.

Here is an interesting article if you want to read about claims practices of insurance companies. I used it in an insurance bad faith case. Not the kind of stuff that instills trust in the insurance industry

http://www.heartinsanfrancisco.com/Exhibit329ICPRedacted.pdf

Whatever, like I said, the thread's intent was to discuss OEM parts and I ended up saying too much to the point I got finger wagging from the insurance pros. Guess I should have just shut up.

 

When insuring my MINI last week it did not dawn on me to check what lower deductibles would cost.

Thanks for posting. I am going to call my carrier and see what $250 or even zero would cost.

A few years back when I had a different vehicle I was quoted about $150 a year for $250 instead of $500, which was in line with what Consumer Reports said at the time. Because I have not had an incident in over 10 years, I figured, like CR says, that paying the $150 a year was not worth it.

I suspect everything here in San Francisco is simply more expensive because all kinds of sheet happens to cars around here. E.g., even in my snobby neighborhood cars parked on the curb are broken into all the time [tourists who don't know to not leave anything visible in their cars.]

I'll post back what my carrier says.

 

Well, I hope no one looks at posts on a free forum as "blanket advice." I am assuming most people have not even read what we have written. In any event, my advice was to max insure, so can't see the harm in that "advice" except for the $ in savings from not paying additional premiums.

Dunno if people should be faulted and banned to "should not be driving" status for not knowing the subtleties of their insurance policies or state regulations.

Alas, coincidentaly I just got in the mail my insurance changes [declarations] - for the MINI:

Yep, as you say, no deductible on the liability portion of the policy. Not that I would ever want to benefit from that, since that means I got in an accident that is my fault.

Comprehensive - $500 deductible.

Collision - $1000 deductible.

Calling the carrier now to check on the comp deductible.

 

OK, here's the scoop, just got off the phone.

The lowest my carrier Nationwide goes on comprehensive deductible is $100.

That will cost me an additional $42 a year. So I made the change.

The CSR on the phone explained that he always recommends low deductibles on comp coverage because it is a "non-rating" coverage. He explained that when I make a comp claim [that is, anything other than a collision claim] that Nationwide does NOT count that as an accident or "negative" against my record or policy.

In other words, any comp claim I make will not cause my insurance rates to possibly be increased.

He recommended I keep my $1000 collision deductible because I also purchased the "Waiver of Collision Deductible" that is costing me $8 a year.
Odd, because I never bought that nor had it explained to me.

He said it was by default "automatically" included on California policies, but he is not aware that other States have it. Apparently California regulators felt that it was not fair to insureds that if they got in an accident involving an uninsured motorist, that that would require me to pay my $1000 deductible, even though the collision was the fault of the uninsured driver.

So carriers have for California a "mini policy" within the policy that pays my deductible that I would otherwise have to pay when in an accident involving an uninsured driver.

Just an example of how complex this can all get.

Bottom line, getting down to $100 deductible on comp is costing me $40 a year. So hopefully I will need to make some claims in the next ten years or so.

 

Wow... you've been busy, Michael.

I didn't read all three of your posts... sorry, I'm on vacation and just popping on here for a few minutes.

From what I did read, don't take my post so personally. I intimated you were trying to help, but yes, as you admit, you probably went a little too far in offering up advice to people on their coverage elections without fully informing them or even being fully informed yourself. While you may think it's of no harm because nobody is going to take your post for the gospel and go change their coverages without first confiding in an insurance professional.... why take the chance that even one person might ? Just reminding them to make sure they're adequately covered and to talk to an insurance pro would have been far enough, IMO.

And the point you continue to go back to is a good one, I didn't debate you on that. But again, very few States offer up that option of purchasing OEM-only parts. And, personally, if I lived in one that did, I would not spend the extra money on that coverage, even if it were only $10 a year. Why ? Because many times the non-OEM parts are as good, or better than OEM parts (shhhhhhhhhh, don't tell MINI I said that !!). And often times, those non-OEM parts are made at the same factory as the OEM parts, they just bear a different manufacturing stamp.

Not to beat you up. I don't beat people up who are trying to help. Just trying to make sure people are informed correctly.