When you are negotiating your automotive insurance policy, your first thought is typically the cost of the premium, not how the vehicle will be repaired in the event of an accident. But, it pays to pay attention to the details of your policy and understand the repair standards that are covered.
The terms of your policy can have a great impact on the price you pay, but it also can impact your vehicle repair. Want a lower premium? Go for a higher deductible and recycled parts. If you want to ensure your car has OEM parts used during the repair, you should check with your insurance company to see if they offer an OEM endorsement which guarantees OEM replacements parts will be used during the repair process. It’s all a trade out that should be based on what your budget can afford, the age of your vehicle and your preferences for your car.
Here are the key policy terms to consider:
- Deductible – Your deductible is one of the biggest determinants in your policy price. Opt for a $1,000 deductible and pay a lower premium. Go for $500 and you’ll pay a higher monthly fee. One tip: if you take a higher deductible, make sure you are saving each month to pay for your deductible in case of an accident.
- Collision Coverage — When your insured vehicle overturns or collides with another object, collision coverage pays for the damage to your vehicle. Collision coverage also may extend to a non-owned vehicle or one rented for personal use that is in your custody or that you are operating. Certain exclusions may apply so it is important to review your policy in detail to avoid any surprises. If you have an older vehicle, you may opt not to carry collision coverage to save on your premium. It’s an important decision that requires careful thought.
- Comprehensive Coverage — If your insured vehicle is damaged due to an event other than a collision, comprehensive coverage will pay for the damage. This includes damages from fire, theft, windstorm, flood and vandalism. If your vehicle is stolen, comprehensive covers transportation and loss of use expenses when applicable. It is important to carefully review your policy for any exclusions.
- OEM Parts — OEM or original equipment manufacturer parts are obtained from the original manufacturer of the car or the supplier of the original part.
- Recycled or Like Kind and Quality Parts – These are parts that are salvaged from the same make and model as your vehicle. These parts are very commonly used during the repair process. Using recycled parts can help reduce the overall cost of repairs.
- Aftermarket Parts – These are parts made by a company other than the manufacturer of the auto, to the automaker’s specifications. Typically, these are less expensive than OEM parts and can save you money on your repair. If you have an older vehicle, a lower value vehicle or one you don’t intend to keep for a long time, this is a good option.
- Rental Reimbursement Coverage – When your vehicle is being repaired, you still need transportation. If you don’t have a second vehicle or transportation alternative, it’s important to ensure your policy includes rental car coverage. Double check the policy for the length and/or total cost of rental allowed to ensure you are fully covered.
- Uninsured/Underinsured Motorist Coverage — If a driver or owner of a vehicle is legally liable for an accident but does not have enough insurance, you can use UIM coverage for injuries, including death, that you, your resident relatives, and occupants of your insured vehicle sustain, up to the limits you select. Certain exclusions may apply.
- Uninsured/Underinsured Motorist Property Damage Coverage (UMPD) — If driver or owner of a vehicle is legally liable for an accident but does not have insurance or does not have enough insurance, you can use UMPD to cover damage to your insured vehicle, up to the limits you select. In some states, UMPD is available as an alternative to collision coverage. Certain exclusions may apply.
- Gap Insurance — As soon as you drive a new car off the lot, it loses a good chunk of its value. If a crash totals it shortly after you bring it home, you owe a dealer or lender the remaining loan amount. Gap insurance pays the difference between what you owe and what you may be paid if an accident totals your brand new car, less your deductible.