Insurance Basics
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Details make a difference

Details that might seem small or insignificant when you shop for your policy can make a big difference when it's time to write that premium check or make a claim. A handful to consider:

Loss-of-use coverage: What this really means is that the policy pays for a rental car while your car is out of commission. Often, this is optional. But if you're suddenly without a car, it can be worth its weight in gold. Find out if you're covered, how much you'd be given per day and for how long.

Repairs: Can you take your car to any garage for repairs, or does your insurer have a list of preferred shops? Will the shop use brand-name parts for your car or after-market parts (not made by the company that manufactured your car)? If you prefer one over the other, do they expect you to pay the difference? And if your car is repaired with after-market parts, will the warranty still be valid? Check your warranty requirements and make sure that you are comfortable with the way a company handles accident claims before you sign on the dotted line. And contact your state insurance office to see what the rules are regarding repairs where you live.

Gap insurance: If you lease a vehicle or buy a car with little or no money down, investigate gap insurance. A gap policy covers the difference between what you owe and what the vehicle is worth. In a serious accident, for example, if it would cost more to repair the car than it's actually worth, the insurance company could simply write you a check for the current value of the car. But what if you owe more than that? Gap insurance can make up the difference.

Umbrella policy: This is a special policy over and above your auto coverage that you buy to protect your assets in case you are liable for a high-dollar amount of property damage or injury to another. If you set it up properly, once the limits of your auto coverage are tapped out, the umbrella policy would kick in and cover the remaining liability. If you have important assets, such as a home or investments, umbrella policies, which are available for a few hundred dollars annually, are a good way to keep from losing them to a liability claim.

Alternative dispute resolution: Many companies mandate arbitration or mediation if you have a dispute. So ask what, if any, legal rights you might be giving up if you sign.

Credit history: Some insurers look at your credit and use it to calculate your premium. "There is a correlation between good credit" and a lower risk to the insurance company, says Jeanne Salvatore, senior vice president of public affairs for the Insurance Information Institute. The better the credit, "the less likely somebody is to file a claim," she says.

But not every company factors credit into the premium equation. So if you have credit problems, shop around.

Car and driver: One way to keep your premiums low is to put only those people on the policy who need to be on the policy. Once your teen graduates or gets his own insurance, take him off your policy. (And if they go off to school for most of the year and won't have access to your car, you could get a break for that, too.) If you have young drivers in the house, that's one more reason to shop around. "Different insurance companies will treat teens differently in terms of underwriting," says Salvatore.

One of the biggest things people overlook when shopping for a new car is what kind of insurance premiums they will be paying. So if you've narrowed it down to a handful of choices, call your agent and have her run the numbers for you.

Find out if adding any special features like side curtain airbags or an anti-theft system could make a difference. If you're adding a young driver to your policy, you can get more bang for your insurance buck by putting them in something sturdy and safe, as opposed to a speedy sports model or an SUV that might be prone to roll over.

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