Insurance World

When buying insurance, most people ask for “full coverage” without knowing what they’re asking for. What’s the problem? There is no such thing as “full coverage”. While understanding your coverage is important for everyone, it is vitally important if you’re driving a Mercedes, BMW, Bentley, Rolls-Royce, Porsche, Viper, Ferrari, Lamborghini, Lotus, or Aston Martin.

If you’re driving an expensive, exotic or high-performance car, you will want to make sure that after an accident you receive OEM parts, OEM paint, the ability to repair your vehicle at the auto body shop of your choice, and the amount of money needed for the repair.

Repairing an expensive car with non-OEM parts and/or improper workmanship will result in substantial diminished value. With expensive cars, even a proper repair will result in diminished value. What is diminished value? It is the lowered market value of a vehicle subsequent to repair. For instance, a Porsche or Ferrari will be worth less after an accident, even after it has been properly repaired. For research on diminished value, see http://www.hurt911.org/accident/car-accident-car-value.html

You do not want to get into an argument with your insurance company as to whether or not your vehicle can be repaired or should be totaled. Often, insurance companies will want to repair your car, when you think it should be totaled. If the insurance company agrees to total your car, most insurance policies only provide “actual cash value” insurance coverage which would only give you with a payment based on the current replacement cost of your vehicle, less depreciation (the decrease in the value of your car due to use, deterioration and the passage of time).

In the event that an exotic or high-priced car is totaled, the best replacement coverage is “agreed value” or “stated value”. The only insurance companies I have found to offer agreed value insurance are Chubb and MetLife.

Chubb’s web site states: “You and Chubb can agree on a value and lock it in for a full year. That’s the exact amount you’ll receive if your car is stolen or totaled in a covered loss. Never mind the “book” value. We even waive the deductible. No haggling, no depreciation, no deductible, no problem.”

MetLife’s web site states: Equivalent New Automobile Replacement for Total Loss is offered for vehicles within the first year of purchase or the first 15,000 miles, whichever comes first.

What’s the difference between Chubb’s “Agreed Value Option” and MetLife’s “Equivalent New Automobile Replacement” coverage? For high-value cars, Chubb is definitely the better choice. Chubb offers its agreed value coverage every year and readjusts the agreed value upon policy renewal. From what I have seen, the adjusted agreed value even years and over 100,000 miles later is substantially higher than actual value. Additionally, on a different topic, Chubb also offers up to $1 million of underinsured coverage, which is also vitally important. Make sure you ask your Chubb agent for the maximum underinsured coverage.

For average value new cars, MetLife is a good choice. MetLife does not offer its Equivalent New Automobile Replacement coverage after the first year or first 15,000 miles. For drivers of most new cars, this is still a good value because it is not uncommon for someone to total their new car soon after purchasing it. Usually, just driving a car out of the showroom can result in as much as $10,000 depreciation.

In general, may people understand that having life insurance in any form is a necessity. The policy of life insurance is an excellent method of providing protection for your family members in the event of your death. While many people understand that is important to have life insurance they may not understand that there are many different types of policies available in the world today.

One type of life insurance policy is called “Whole Life Insurance”, this type of life insurance is effective provided you continue to make the monthly payments upon the premium. This is a very popular type of life insurance because it allows you to build a cash value on the policy and is on a basis that is tax-deferred. The way this works is that a portion of the premium you are paying is put into an account of savings that the policy invests into. All interest that is earned upon the policy is put into the savings and helps to build the cash value. Once the cash value reaches a higher level, you could be required to pay the premium after age or you could be allowed to borrow against that cash value.

Another attractive benefit of having a whole life insurance policy is that your premium will always remain the same. At no time will the amount change at all, therefore as long as you continue to pay the premium each month, you will remain at the same amount for the entire time. If you choose to take a loan out on the cash value you have earned, the only difference you will have to pay is paying back that loan. One downside to this policy is the fact that you will have no control whatsoever over how the company chooses to invest the dollars you pay on your premium.

Another type of life insurance is the term life insurance policy. This policy is selected for a specified amount of time. If you should happen to pass away during the term of this specified time, then your family would then receive payment in the form of a lump sum as the contract specifies. Typically, the premiums upon this type of policy is far cheaper than other types and it does not allow you to build any type of cash value. With this type of life insurance, your premium can change or increase on a yearly basis and it generally does increase each year. It is the more expensive type of insurance that is available however it will provided your family with complete protection in the event of your death.