Hurricanes, floods, tornadoes and hailstorms can wreak havoc your car, as well as your home. But when it comes to insurance, people shopping only for the lowest rates too often don’t notice their lack of certain types of coverage until they try to make a claim.
The number of vehicle losses due to hurricanes, floods, tornadoes, large hailstorms, firestorms and other severe storms nearly doubled in the five years between 2001 and 2005, according to ISO's Property Claim Services (PCS) unit, the recognized authority on insured property losses from catastrophes in the United States, Puerto Rico and the U.S. Virgin Islands.
The number of reported claims for vehicle loss from natural disasters recorded by PCS increased steadily, from 485,150 claims in 2001 to 982,350 claims in 2005, for a total of 3.3 million losses over the past five years. PCS's numbers track auto insurance claims on vehicles with insurance policies that include comprehensive coverage, which covers damages or loss due to natural disasters, catastrophes or events other than a collision with another car.
"Drivers spend a lot of money on auto insurance and it is important for them to be as familiar as possible with what their coverage includes when they're making their purchase decision," said Bill Moak, President of the BBB Mississippi. "But too often, people shopping only for the lowest rates don't notice their lack of certain types of coverage until they try to make a claim."
The best advice is to be prepared to know what your auto insurance covers and what you should do if your car is damaged in a storm by following these tips:
- Know what your insurance covers. Be familiar with the details of your coverage. For example, don't wait to find out that your policy doesn't include comprehensive or won't automatically cover costs for emergency roadside assistance or a replacement rental car.
- Report damage as soon as possible. If your car is not drivable, your agent or claims center may be able to save you time and money by having the car towed directly to the repair facility instead of to a temporary storage facility. In addition, arrangements may be made immediately to provide you with a replacement rental car, if your policy includes this coverage.
- Know what your deductible is and any other additional charges before authorizing work. Expect your insurance adjuster, claims representative or repair facility appraiser to review the damage with you and explain the repair process, including the use of original or generic auto parts. Before authorizing repairs, know what your deductible is, as well as any additional charges you will be expected to pay once repairs are complete.
- Ask about warranties on repairs. Ask whether your insurer has a repair facility referral program that offers a written limited or lifetime repair warranty backed both by the repairer and insurer for as long as you own your vehicle.
- Do business only with a reputable company. Obtain insurance from companies, independent brokers or direct marketers that have a proven track record of handling auto insurance claims effectively. Get a referral or contact your Better Business Bureau or Mississippi Department of Insurance.
According to the Insurance Information Institute (I.I.I.), a non-profit organization, comprehensive coverage will reimburse you for loss due to damage caused by something other than a collision with another car or object, such as fire, falling objects, catastrophic storms, vandalism, or contact with animals such as birds or deer. Flooding also is covered by auto insurance, as long as your policy includes comprehensive.
Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. States do not require that you purchase comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.
"But, even if you have comprehensive coverage, it is not always guaranteed to meet your individual needs," says Carolyn Gorman, vice president of the I.I.I. "For example, you may be surprised to discover that after a storm your auto insurance does not automatically cover the cost of a replacement rental car while your car is in the repair shop or you wait for authorization for a new car from your insurance company."
She added that an individual could end up paying as much as $1,000 to rent a replacement car. "But rental reimbursement coverage, which is only a couple of dollars a month, covers the cost of a rental car while your car is being repaired or you are waiting for authorization for a new car. This means that renting a car for one day can cost more than one full-year's coverage for rental reimbursement," Gorman said.
As part of a nationwide consumer education program, entitled Wiser Driver Wise Up, the Council of Better Business Bureaus and the Insurance Information Institute have teamed up to inform and educate drivers to review their auto insurance policy annually to make sure they have adequate coverage for various types of incidents, including severe storms. The "Wiser Drivers Wise Up" program includes a detailed Web site at http://wiserdrivers.com/
The Council of Better Business Bureaus says that some of the least expensive options may not be mentioned to those shopping for the lowest premiums. In addition, since many people purchase automobile insurance several years prior to making a claim, they may forget what their coverage includes. If they don't have the coverage or don't know to ask if the cost is covered when they make a claim, they can end up paying more than they anticipated.
Understanding the differences in insurance coverage can be confusing. "Many of us think that we have adequate coverage, but most of us don't find out until after we contact the insurance company what is not covered," says Moak.
Both the Insurance Information Institute and the Council of Better Business Bureaus advise drivers to take a few minutes to read their policy or talk to their insurance agent once a year to make sure they have the coverage they want and need. The best advice is not to assume anything when it comes to insurance. If a specific coverage is not listed and explained in the policy, the loss probably won't be covered. For more details, go to http://www.iii.org/individuals/auto/a/basic/.
