Stop getting ripped off on warranties and insurance payments. Most insurance companies don’t want to tell you this… So well will.
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Insurance can be complicated. Many people look at the price of or get a recommendation from a loan officer and they don’t do their research. But with that mindset, you can end up with a policy that is as useful to you as Adam Gase is to the Jets. In other words, not useful. In this episode, Matt from State Farm shares some important advice on insurance.
- When buying car insurance and warranties, don’t look at payments, look at policy.
- Consider breakdown insurance for expensive appliances like air conditioners.
- Have an insurance agent, not just an 800 number. A personal agent who knows you will make sure you have the right coverage for your unique circumstances.
- Your life insurance through work is great to have, but not enough. Consider additional life insurance.
Car Warranties and Insurance: Policy, Not Payments
When buying car insurance, most folks think about what it means for their wallet on a monthly basis — what the payments are that they’ll be making. But they don’t look at what the policy actually covers, and what that means for their out-of-pocket costs when something happens and they actually need to use their policy.
Steve and his auto shop have seen numerous scenarios where customers had insurance but it didn’t address their needs. For example, a customer got locked out of his car and needed roadside assistance to help get the keys out, but his Geico policy didn’t cover roadside assistance. So, he had to pay a significant amount to get a towing company to help him. Another customer had a bad transmission, but the cause of the issue wasn’t covered by insurance, so they only would pay for a junkyard transmission and ⅓ of the labor costs. So, the customer ended trading in the car instead of getting the fix.
Breakdowns happen, and if you are only looking at your payments, you might be in trouble when the time comes to actually use your policy.
Why should I meet personally with an insurance agent?
You never know when an accident is going to happen. You can be healthy, a sage driver, in a sound home, but something can still happen. Insurance can be a savior in those circumstances.
To emphasize this point, Matt shared a sad but important story of a customer who was driving to a red light and making a right on red. While he was turning, someone darted across the street to try and get out of the rain, and the driver hit the pedestrian. So, the pedestrian sued the driver for $900,000. But the driver didn’t end up paying a cent—his insurance did. With an umbrella policy, State Farm covered the driver’s fees because he had met with an insurance agent and bought the best policy given his assets.
All insurance looks the same until an incident comes up when you have to use it. An insurance agent can help explain what you’re paying for in a policy and why it is useful. Why are some policies cheaper? You pay for what you get and cheaper is usually cheaper for a reason.
Myth: I don’t need life insurance, I have it through work.
There’s a common myth that individuals don’t need to buy life insurance because it is offered as a benefit through work. For companies, life insurance is a great benefit to offer. Group plans are inexpensive to get, but like other forms of insurance, they are inexpensive for a reason. Did you know one percent of life insurance policies from work payout because the employees typically leave their job, get fired, or can’t work anymore and therefore become ineligible for those payouts?
Additionally, payments from work policies are typically lower — 1-2x income compared to the recommendation of 7-10x income. If you have a supplemental policy beyond work, you can set your family up to pay off mortgages or other major expenses that may arise should something happen to you.
Myth: The color of my car affects the cost of my insurance.
Does the color of your car affect your cost of insurance? No. What does make a difference? Make and model of your car and your personal driving record. Certain cars and models are more likely to be in accidents and your personal driving history is a predictor of your likelihood to be in an accident in the future.
Myth: My older car is safer because no one wants to steal an older car.
Newer cars are actually getting higher discounts on insurance because of safety and security features built into the car. While older cars may seem less desirable to take, the weaker security features make them easier to break into.
Should my spouse and I share a policy?
Matt recommends separate policies for spouses. While you can plan to stay together forever, you never know what can happen. With separate policies, you give yourself security in the circumstance that you do in fact get a divorce. Confident you’ll stay together forever? You can still make your spouse the beneficiary of your policy and only change it if something changes.
Til next time gang! Stay Healthy and Drive Friendly!