FAQ

AUTO

Am I covered if I rent a car?

It depends.  First of all, you can only extend coverages that you have on a vehicle.  So if you have an older car with no Comprehensive or Collision, your liability could extend to a rental car but not the physical damage.  Also, make sure you’re in a state/country/province that your company will cover you….generally the US, Canada, and territories of the USA are covered, but not Mexico or other foreign countries.  Two other considerations you could ask the company about are ‘Loss of Use’ and ‘Diminished Value.’  Companies are more frequently covering the Loss of Use now (the amount the car company charges you per day that they were not able to rent that vehicle while it was being repaired) but it is not guaranteed.  You also may face a ‘diminished value’ claim where if you have an accident and the car company goes to sell that vehicle in the future, they bill you for the amount that they had to take less than full value because it had been in an accident.  We recommend not renting from those that charge for diminished value, so make sure you inquire.  At the end of the day, the broadest coverage would be buying that of the rental car company in addition to your primary policy….but you have to decide if you want to go with what you have.  Hopefully these factors can help you make an informed decision.

Should I take “Full Coverage” off my car?

Generally when people refer to ‘full coverage’ it’s the Comp and Collision that a lender (bank, credit union, etc) is requiring you carry on the vehicle in case it were to be damaged in a covered loss.  But you also may have these coverages without a lender on the vehicle because of the overall quality and condition of the vehicle.  But at some point depending on the premium charged for these coverages, in a year or two (or more) it can cost the amount that the vehicle is worth.  We suggest you look online or at a local dealer to get a value to your vehicle in the current marketplace.  Then decide if the coverage is for you.  But we also urge you to consider the following options:

 Delete Collision but keep Comprehensive.  Comprehensive (aka ‘Other than Collision) is almost always cheaper than collision.  It’s designed generally for non-moving type things (theft, vandalism, etc) but can also come in to play with deer or other animals and windshield replacement.  Comp still provides some physical damage, albeit limited.

 Consider a different type of Collision:  There are 3 kinds of collision, Broad, Regular/Standard, or Limited.  Broad means you only pay the deductible if you’re 50% or more at fault or responsible in an accident, Regular/Standard means you pay no matter who is at fault, and Limited means if you are at fault, there is no coverage.  We recommend Limited when a car is older but may still have some value.  Regular is cheaper than Broad, but not always a fit.

 You should consider these options, and remember that you may in the long run come out ahead, but if you do have a loss, would you have wished you paid a little now or a lot later?

Do I need to add my kids to the policy when licensed?

YES!  While not everyone subscribes to this practice, you can run the risk of having a claim denied for not adding a youthful (or other household) driver.  Many companies have protocol in place that will pick up the new driver, but it’s still your responsibility to disclose within 30 days. 

Can I let someone else drive my car?

Generally, yes.  But you should verify that person is licensed (meaning active and in good standing) and insured elsewhere.  If so, and if they have your permission, they can legally drive your car.  But you want to be careful as you can be held accountable for their actions with your car.

Do I have to be insured?

In Michigan, yes.  There are exceptions, such as if you don’t have a vehicle and do not drive, but if you do, and have regular use of a vehicle, you are required by Michigan law to insure that vehicle.  Even going one day without (aka a ‘lapse in coverage’) can be costly moving forward.

What is the Michigan Catastrophic Claims Association (MCCA) and do I have to pay for it?

In Michigan, you have no limit to the amount of benefits you can receive if involved in a motor vehicle accident.  Your insurance carrier is responsible for the first portion, around $500,000.  This amount changes year to year, but is the coverage on your policy referred to as Personal Injury Protection (PIP).  There’s also a charge for MCCA, which as of July 1, 2016 was $160 per vehicle (up from $150 in 2015).  This is for all claims that exceed the underlying threshold that the companies pay.  You currently do not have the option of NOT paying MCCA. 

Why does my premium go up (or stay the same or not go down) on my car that’s getting older and worth less?

Generally most losses for physical damage are partial losses rather than total losses, and your car still costs as much or more to repair.

HOME

Why is my home insured for so much more than I can sell it for?

On a home policy, as is the case with most insurance, the purpose is to get you back to where you were before the loss.  This means replacing your current home with one of similar construction, size, features, etc.  Depending on the market for building new homes, you may see a variety in the cost to purchase vs the cost to rebuild.  Many times building new is pricier than what you can buy, but not always.  When we write a new home, a Replacement Cost Estimator (RCE) is required which is a guideline of what yours should be insured for.

Do I need flood insurance?

If you’re required, and you have a mortgage, your lender will let you know.  You also may not have a mortgage but could be in a flood zone and not know.  Or, you could not be required to have but simply want it.  Flood is a program run by the Federal Government and administered by many different means.  But it covers when surface water comes into the home through an opening or other means.  Flooding is not covered by a standard home policy.

What is back up of sewers/drains or sump pump failure?

This is an optional coverage that we recommend in a variety of situations, but is different than flood.  But you may experience a sewer back up or drain back up, or even a sump pump that quits and cannot get rid of the water in the crock.  Consult your agent depending on your particular situation to see what they feel is best for you.