Tag: No-Fault Automobile Insurance

Shopping for Insurance: Quality versus Cost

People typically purchase insurance because they have to, not because they want to. For the most part, consumers are happy to obtain the minimum required insurance coverage at the lowest price they can find. That is, until a claim comes along. Only then do they discover that buying the cheapest insurance available wasn’t such a bargain after all.

The quality versus cost argument is nothing new especially when it comes to insurance. Consumers who pay less tend to get less, whether in the form of coverages, limits or financial security. And, when people choose cost over quality, it usually means they are uninformed about what they really need.

As a full-service independent insurance agency, it is our job to help our clients understand their insurance needs. We evaluate, compare and quote various options from multiple insurance companies so that our clients have the right information before making a decision. Though many still choose cost over quality, it is important that they understand what they may be sacrificing.

Low Premiums

Would you rather have automobile insurance that protects you from damage caused by someone who is uninsured or underinsured? Uninsured Motorist Coverage is commonly excluded from a policy to reduce the premium. Rejecting GAP coverage or electing non-stacked coverage are other ways to save money. But these choices come with a risk. When shopping for insurance it’s better to determine what coverage is desired, see how much that coverage would cost, and work with an independent insurance agent to help get the coverage you need at a cost you can afford.

Financial Stability

Although cost is important, the financial strength of an insurance company may be more important. Financially weak insurance companies are more likely to become insolvent or go bankrupt, which means that their policyholders are less likely to get their claims paid. Though purchasing insurance from a financially weak company may be cheaper, how valuable is the money saved on premium if there is no money to pay a claim? An independent insurance agent can help you evaluate the financial stability of the insurance companies you are considering.

Customer Service

Insurance companies don’t typically assign an agent to their customers. Each time you call you speak to a different person which means you have to explain your situation over and over. Look for an agent that offers personalized service. Those are the agents who are willing to go the extra mile to get you what you need. For example, at Setnor Byer Insurance & Risk, our commercial clients enjoy complimentary access to our risk management services to help them manage the risks associated with owning a business.

A solid understanding of your insurance needs is the key to overcoming the quality versus cost argument. An experienced and reputable independent insurance agent can help you purchase insurance that is both economical and effective.

If you would like more information about our insurance products, please contact us.

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What is “No-Fault” Auto Insurance?

No-Fault Automobile Insurance is designed to reduce the overall cost of insurance by making quick payments to individuals injured in an accident regardless of fault and by limiting the right to file lawsuits after the accident. Though relatively straightforward, the concept of No-Fault insurance is commonly misunderstood because there is a lack of uniformity among the minority of states that operate under a No-Fault system.

In its purest form, No-Fault Automobile Insurance, which is also known as Personal Injury Protection (PIP) or First-Party Benefits, allows policyholders to recover damages directly from their insurance companies even if the accident was their fault. In exchange for automatic insurance benefits, those injured in the accident cannot sue for damages under tort law.

This “pure” form of No-Fault insurance does not exist. Instead, approximately a quarter of the states adopted their own laws by adding No-Fault type provisions into their traditional insurance system.

In these states, individuals injured in an accident can typically recover damages from their own insurance company even if they were at fault, but the amount they can recover is limited by statute. The kinds of damages are generally limited to medical reimbursements, lost wages and other out-of-pocket expenses. Non-pecuniary damages, such as pain and suffering, cannot be recovered.

These states also allow lawsuits if the injuries meet a minimum threshold of severity. The minimum severity required to file a lawsuit, which can vary by state, can be expressed as a verbal threshold that defines the seriousness of the injury (“severe and permanent”) or a monetary threshold based on medical costs incurred.

Other states have their own variations of No-Fault Automobile Insurance, such as:

  • Add-On: Some states allow drivers to add insurance coverage allowing them to receive benefits from their own insurance company regardless of fault while preserving their right to sue in tort.
  • Choice: In these states, drivers may choose a No-Fault Automobile Insurance policy or a traditional policy.

With all the possible variations, including changes to existing laws, it is easy to see why No-Fault Automobile Insurance is often misunderstood. Nevertheless, when it comes to automobile insurance, it is important to know what the law requires and what the law provides.

If you would like more information about No-Fault Automobile Insurance, or if you would like to discuss your insurance needs, contact us.

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