Insurance World

With all this traveling in and out, back and forth around the maze that is the United States infrastructure, its easy to understand why auto insurance is required in order to own an operate a car. For car buyers, an effort needs to be made on the part of insurance companies to provide information on the different types of auto insurance available. These include bodily injury and liability, collision, comprehensive, full glace, liability, medical coverage, personal injury protection, and underinsured or uninsured motorist.

Liability insurance coverage is imperative to have as a driver. This insurance covers any injuries or damages to property that may occur during an accident. Two types of liability include bodily injury liability insurance and property damage liability insurance.

Medical insurance is different in that it focuses on the driver and passengers of the car. This will cover any medical treatment for the driver and the passengers. In addition, the medical insurance may or may not offer disability insurance and pain and suffering compensation.

Uninsured or under-insured drivers insurance will pay any costs that you or your passengers may experience if an accident should occur with a driver who is uninsured or underinsured.

Collision insurance deals with the cost of damage caused by a collision to your car that may affect the book value. Comprehensive deals more with damage caused by vandalism, natural disasters, theft or other kinds of damage.

There are several other types of car insurance. These include glass replacement insurance, towing insurance etc. These types of insurance are often not required and are not popular as they are often costly.

Now that you know what types of car insurance are out there, the next step is to find a credible insurance agent. The first place to investigate this is through family and friends. Referrals will help you sort those agents that you want to investigate further. You will want to speak with several different agents before you make your final decisions. Ask any and all questions you may have. That is what the agent is there for.

These questions will help to ensure that your agent is being honest with you and to help you understand some of the important variations in the different types of policies.

1. Stop Loss: Definition:The maximum out of pocket you will pay before you have 100% coverage for the rest of the year. For most companies it will be under $5,000. There are a couple of companies that don’t actually offer a stop loss. They will have limits for what the company will pay out but they have no limit to what YOU will pay out. This is the most important aspect to your insurance policy. I have seen people get stuck with $50,000-$200,000 worth of medical expenses without a good stop loss!

Question to ask your agent: What is my maximum out of pocket (stop loss) per year before I have 100% coverage?

2. Deductibles: Some companies will have separate deductibles for different aspects of their policies (testing/laboratory deductible, therapy deductible, chemotherapy coverage, separate accident deductibles, etc.). This is where some insurance companies depend on there being big loopholes so that they don’t have to cover things that may otherwise be covered. Ex: Things that one company may call testing and therapy, may not be considered the same type of procedure by another company. If something falls between categories for different deductibles, you will be stuck paying bill for all of it. You want a plan that has ONE DEDUCTIBLE. This way there are no gaps. You reach your one deductible each year, then everything that is covered under your policy will be covered as your policy states. It drastically eliminates holes in your policy that the insurance company can exploit.

Question to ask your agent: How many deductibles does my policy have?

3. Networks: You want to be in a plan that offers networks. Some companies will offer plans that are good at any doctor, any hospital, anywhere in the country. This is a great selling point but unfortunately, it is also very dangerous. Networks exist for a very good reason. If you have a plan that has big coverage holes in it and you go to a doctor for some reason, anything that is not covered by your policy you will pay 100% of all costs and you will pay 100% full retail price for it. Obviously this can be financially catastrophic. Insurance companies and doctors give their customers/patients what is called ‘Network Pricing”. If you go to a network provider with insurance and something is not covered by your plan, in many cases you will still get the big discount that the insurance company would get just because you have insurance. This is “Network Pricing”. Some companies offer nationwide networks so even if you travel a lot you will never be out of network. This is very important.

Question to ask your agent: If my company doesn’t use networks and I have medical procedures performed that are not covered by my policy, how much will I have to pay? Do I get a discount because I have insurance? (The correct answer to this is you will have to pay 100% of retail prices. If the company does not use networks, any other answer is either wrong or deceptive.)

4. Coverage per period of confinement: Some companies will have definitions for deductibles as “per period of confinement.” Ex: Your plan could have a $1500 deductible but we need to know if it is a yearly deductible or “per period of confinement” deductible. Some companies will list a period of confinement as 90 days. This would mean that if you are hospitalized for the same thing within 90 days you only have to meet one deductible. However, if 91 days later you have another problem with the same condition, you will then have to hit ANOTHER $1500 deductible. In addition, if you have a different medical problem within those 90 days and need to be seen by a doctor, you will again have to hit ANOTHER $1500 deductible!
Again, this is another potentially financially devastating scenario.

Question to ask your agent: Is the deductible a yearly deductible or a per period of confinement?

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