Posts Tagged ‘auto insurance’

When Should I Drop Collision Coverage?

Friday, February 3rd, 2012

This is a question our clients commonly ask. When does it make economic sense not to insure your car against collision?  Here are our slightly oversimplified rules.

“The 3 Rules of  Tens”

We’ve created these simple rules to help you consider when it’s less risky to remove collision coverage from your Maine auto insurance policy:

  • TEN PERCENT – When collision coverage costs more than 10% of the book value of your vehicle plus your collision deductible.  For example, if the book value of your vehicle is $3,000 and your collision deductible is $500, consider removing collision coverage if it costs more than $350 per year for that vehicle.
  • TEN YEARS – If your vehicle is more than 10 years old, it may no longer have enough value to warrant insuring.
  • TEN TIMES – If you have 10 times your collision premium in a “rainy day fund”, you probably have enough of a cushion to put a sizable down payment on a replacement vehicle. In the example above, if your “rainy day fund” has at least $3500 in it, you might reasonably risk dropping collision coverage. If you don’t, you would probably need the insurance proceeds to help you make a down payment on another vehicle.

When Should You Keep Collision Coverage?

There are some times when you should definitely NOT drop collision coverage:
  • You have a loan or lease on the vehicle. Your loan or lease contract requires you to carry collision coverage for the length of the agreement.
  • You have only one vehicle. Most multi-car families can limp by on one car while one is in the body shop. But, if you’re a 1-car household, you’ll probably want coverage to rent another while yours is being repaired. Also, you’ll definitely need to buy rental car insurance on vacation if you don’t have collision coverage on at least one vehicle on your policy.
  • You’re worried about being hit by an uninsured driver.  If you have no collision coverage, someone hits you and it’s their fault, their insurance will pay. But, what if you are hit by an uninsured driver? Obviously, there’s no one else to pay; if you don’t have collision coverage, you’re on your own to repair your vehicle.  Maine’s ratio of uninsured drivers is quite low: 4%. But, we’re also inundated with drivers “from away” during tourist season. Many other states have much higher rates of uninsured drivers.
As you can see, there is no single answer to the question of when to insure collision or not. It depends on the vehicle, your financial situation, how much collision coverage costs, and your  own risk tolerance.  If you live in Southern Maine and have an insurance question, call Noyes Hall & Allen Insurance at 207-799-5541. We represent many different insurance companies, and are happy to help.

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Posted in Car Insurance, Commercial Vehicle Insurance, Motorcycle Insurance, Personal Insurance, snowmobile insurance | 1 Comment »

What is Auto Loan and Lease Gap Coverage?

Tuesday, December 13th, 2011

Many auto dealers offer low-downpayment options in an effort to sell more vehicles. Because vehicles depreciate quickly, early in the loan term you could end up owing more money than the vehicle is worth. This can be a serious problem if your vehicle is totaled in an accident early in the life of the loan or lease.

An Example of Loan Gap Coverage

Auto insurance companies pay the “actual cash value” (similar to “book value”) of your vehicle. Here’s an example: your dealer offers a sweet  ”no money down” incentive on a $32,000 vehicle. You total it 3 months later in an accident. The book value is $28,000, but you owe  the bank $31,000 on the loan. The bank comes looking for $3,000. Uh-oh.Luckily, you bought loan gap coverage, so the insurance company pays you the amount you owe – regardless of what the vehicle was worth. Not bad, huh?

Some Restrictions Apply

  • Most insurers only sell loan – lease gap coverage in the first few months you own the vehicle.
  • Coverage usually “drops off” after 36 months. By that time, hopefully your loan is no longer “upside down”.
  • Your vehicle has to be a total loss.
  • Of course, you have to buy collision coverage on the vehicle.
  • Loan-lease gap coverage usually costs an additional 6-8% of the physical damage coverage on the vehicle.
Our Maine insurance agency is ready with answers to your personal, business or professional liability insurance questions. For answers, or to get a Maine auto insurance quote, or Contact Noyes Hall & Allen Insurance in South Portland at 207-799-5541.

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Posted in Car Insurance, Finance, Personal Insurance | No Comments »

Does Your Maine Insurance Policy Cover Wind Damage?

Friday, July 23rd, 2010

The National Weather Service confirmed on Thursday what many Mainers knew Wednesday night: tornadoes touched down in southern Maine, causing widespread damage. Our Maine insurance agents have been busy answering clients’ questions about damage ranging from fallen trees to wind damage – even lightning damage. Their first question, of course: “Does my insurance cover my windstorm damage?”

Whether you have Maine homeowners insurance, auto insurance, or business property insurance, the answer is usually “yes”, subject to the level of property coverage and deductible on your policy.

Windstorm Coverage in Maine
A tornado is just wind – vicious, frightening, powerful, damaging wind whirling in a funnel cloud. Many insurance policies cover wind damage to buildings or vehicles. It doesn’t matter if it’s caused by a gale, nor’easter, tropical storm,  hurricane, microburst or tornado. Some limited policies exclude wind damage – again, it doesn’t matter what kind of storm caused it.

Types of Wind and Storm Deductibles
Every property and auto policy has a deductible. On personal and commercial vehicle  insurance policies, wind is covered if you purchase “other than collision” (sometimes called “comprehensive”) coverage.  This coverage varies by vehicle.

Some property insurance policies have specific deductibles for wind. In Maine, it’s common to see these types of storm deductibles (from least to broadest insurance coverage):

  • “Wind Deductible” – Any wind damage is subject to a flat dollar deductible – usually a higher amount than your normal deductible,  or a percent of the amount of your property insurance.
  • “Named Storm Deductible” – Any damage caused by a storm that the National Hurricane Center has given a name is subject to a special deductible (see “wind deductible” above for some examples). Other wind damage is covered, subject to the regular policy deductible.
  • “Hurricane Deductible” – Any damage caused by a true hurricane is subject to the special deductible. Other wind damage is covered, subject to the regular policy deductible (usually a smaller deductible).

Insurance companies have different criteria for underwriting the peril of wind damage. A Maine independent insurance agency has access to many insurance companies, which gives you the most options.

We’re happy to answer your questions about property insurance for your home, auto or business. Contact Noyes Hall & Allen, or call us at 207-799-5541.

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Posted in Business Insurance, Business Property Insurance, Car Insurance, Commercial Vehicle Insurance, Condo Insurance, Homeowners Insurance, Renters Insurance, Weather | No Comments »

How to Insure a Golf Cart in Maine

Monday, August 18th, 2008

Higher fuel prices continue to inspire Americans to find another way to get from here to there. An Associated Press report in last week’s Press Herald talks about the growing use of golf carts as alternative transportation. Increased golf cart use has led to a corresponding increase in emergency room visits -12,000 a year – as energy-sipping buggies brave public roads with their larger, faster cousins.

Several Maine jurisdictions, including Chebeague Island, have passed ordinances allowing use of golf carts on some public roads, subject to restrictions. Some of our clients who live in these communities have been required to provide evidence of liability insurance in order to use their golf carts on local roads.

If it’s licensed for use on public roads, Maine Law requires the owner of any vehicle subject to registration for use on public roads to purchase liability insurance. Just one problem: homeowners policies only cover golf carts being used on your land, or when you’re actually playing golf (on a golf course!); and you can’t add a golf cart to a standard auto policy. What’s a frugal consumer to do?

Some insurers have introduced special policies, similar to motorcycle policies, for Maine golf cart insurance. They provide the liability and uninsured motorist coverage that are required by Maine Law. There have been some reports of agents issuing insurance ID cards for carts without the proper coverage. Make sure that you have a policy specifically listing your golf cart, and specifying that it covers use on public roads. Otherwise, if you become one of the 12,000, you might find your trip to the ER is even more expensive than you thought.

For more information from a Maine insurance agency about insuring a Maine golf cart, contact Noyes Hall & Allen Insurance at 207-799-5541.

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Posted in Car Insurance, Personal Insurance, Transportation, Trends | No Comments »

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