Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 19, 2021

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Preventing Risk Is Always Worth Your Time

While we may not all be thrilled at the idea of sorting through auto insurance policies in our spare time, but the consequences of staying with a bad insurer or choosing a bad policy can cost you thousands of dollars, not to mention hours of your time and stress to boot. According to annual reports by Allstate, the average driver in America will be involved in an accident once every ten years, and in many urban areas the average is closer to once every five years. Even if you only drive your car a few times a month, it’s well worth your time to make sure your policy is a good one, and that you won’t be at risk of getting left in the dust by a bad insurer. Since most major insurers are competitive with their pricing, it’s very possible to find a good policy from an insurer with low rates; you just have to do some digging to make sure you’re on the right track.

Rather than aimlessly browsing through insurance policies, it’s best to take a pinpointed approach to comparing and contrasting policies to get the best one. Here are some steps to take in order to sort out the bad from the good.

  • Compare a few different insurance policies by requesting copies of policies from some insurers you’re considering. Contact a few insurers and request a sample policy from each. Comparing policies is also an essential part of negotiating the price of your monthly premiums.
  • Look at a specific section of each policy so you can compare how each company handles the same scenario. One of the most telling sections is how an insurer determines the value of your car in the event of a total loss, wherein the damage to a car is greater than its pre-accident value. A total loss scenario is a very real risk we all face, and presents a scenario where a customer can lose thousands of dollars if their car’s value isn’t fairly assessed. This will typically be covered under the Collision section of the policy, or else under a section specifically titled Total Loss. Locate the sections on Collision and/or Total Loss and look for a subsection with a heading like “Payment for Loss”, “Determining Value”, or “What We Pay For”.
  • Avoid very wordy policies with complex language, or policies that use a lot of clauses and exclusions to qualify the terms of the contract. Some bad policies contain language like, “The Insurance Company will determine the market value of your vehicle by conducting its own market assessment based on sales at local used car dealerships. The Insurance Company also reserves the right to hire its own private expert to assess the value of your damaged property. Such an assessment will be binding.”
  • A good policy will be easily readable and straightforward, and might say something like, “To determine your car’s value, the insurer will consider quotes from local car dealerships, private sale listings, and will consider the input of an independent expert hired mutually by the customer and the insurer.” You would much rather have a policy that offers the option for the insurer and the customer to split the cost of an independent appraiser, or to resolve any disputes through mediation. Err on the side of an easily readable policy, one that makes sense to a layperson, one that doesn’t sound like it was written by a team of legal experts and insurance adjusters.
  • Look for sections about “arbitration” or dispute resolution. A good policy allows the insurer and the customer to resolve any disputes using independent experts, arbitrators, or mediators to bring an unbiased viewpoint to the matter. These options are much faster and significantly cheaper than hiring an attorney and going to court against your insurer. Some bad policies exclude any mediation or dispute resolution options, and require that a customer sue the insurer to handle any disputes. By limiting a customer’s options to a legal battle, a bad insurer can get away with more foul play, since most customers won’t have the money to hold an insurer accountable for denying payment or underpaying a claim.
  • “Legal Action Against the Insurer” is a section to keep an eye out for in any policy, good or bad. Some insurers limit the amount of time you have to file a lawsuit against them for wrongdoing or denying a claim. If your insurer denies a claim because they legitimately suspect foul play or fraud, you might have to take them to court to prove your case. Regardless of who’s right and who’s wrong, if you pass this time limit, the odds will be stacked against you, and many lawyers will refuse to take up your case. Whereas most states allow between three and six years to file a lawsuit over a claim or an accident, some insurers limit any legal action by customers to one year.
  • A customer’s obligations to the insurer during a claim can vary between different insurers. Most insurers will honor a claim as long as you allow them to investigate in a timely manner, but you should be mindful of the specific requirements your insurer sets in order for them to pay a claim. Some typical requirements include:
    • Allow the insurer to investigate, take photos, document damage, injuries, etc. within a certain time limit of the accident taking place.
    • File a police report for theft, vandalism, or hit-and-run circumstances.
    • Collect name, driver’s license, license plate, etc. for drivers that run into your car and cause damage, so the insurer can go after them and/or their insurance company.