If you run across the word “excess” when
dealing with car insurance, chances are you're driving a vehicle in
Europe or Australia, where their car insurance policies use the term “excess” where
policies written in the U.S. use “deductible.” Both these terms apply
to the amount a policyholder is required to pay out of pocket toward a claim
before the insurance company pays its portion.
When you first take out your Greensboro Car Insurance coverage you'll be asked to select a deductible amount
if your policy includes collision and/or comprehensive coverage. Vehicle
liability insurance, which is the only type of coverage NC state law
requires you to carry on your car, doesn't have a deductible amount
associated with it.
Why Deductible is Required
Although it may be possible to obtain a
vehicle insurance policy that includes collision and comprehensive and doesn't require
a deductible, this coverage would likely prove to be significantly higher in
cost than a standard policy. By requiring you to have a deductible, the
insurance company is effectively making you share the risk of something
happening to your car. The assumption is that, if you're on the hook for paying
a portion of a claim you make, you'll be more careful in the operation of your
vehicle.
Statistically, the average deductible on car
insurance policies in the U.S. is $500. With a $500 deductible, if you have an
accident and the damage repairs total $3000, you must pay the first $500 before
the insurer kicks in the remaining $2500. If you sustain damage totaling $500
or less, you'll be responsible for paying the entire amount.
Higher Deductibles Mean Lower Premiums
When choosing the deductible amount for your
insurance policy, it's important to consider how much you can comfortably come
up with in the event you have a claim and must produce the up-front cash to pay
your portion of the repair bill. The advantage of selecting a higher deductible
amount is that a higher deductible generally means lower premiums. The reason
for this is because higher deductibles lower the amount of financial risk the
insurance company faces. If you've been driving for years and have never made a
claim against your policy, bumping up the deductible amount to save on premium
dollars may be a good idea. You might be surprised at how much you can save
just by raising your deductible amount from $500 to $1000.
There's an old saying about insurance -
“It's better to have it and not need it than to need it and not have it.” For
some, things like car insurance are simply a “necessary evil.” It's required if
you want to drive legally here in North Carolina but, with so many different
options available, why not just get the least expensive car insurance sold? The
answer to that question can also be summed up with an old saying - “Good things
ain't cheap and cheap things ain't good!” It's just as true with insurance as
it is with those junk pliers or wrenches sold at the 99-cent store. They may
look okay, but using them is a real disappointment.
What Kind of Car Insurance Do You Really Need?
Here in Greensboro, when you buy vehicle insurance you can opt for the least expensive policy, which
provides the minimum amount of liability coverage required by state law,
unless you're leasing or financing your vehicle. The minimum amount of
liability insurance required by state law includes $30,000 bodily injury per
person per accident, not to exceed $60,000 total for all injured parties, and
$25,000 property damage. What you may not know is that this minimal amount of
liability coverage will typically pay only a small portion of the actual
damages in a real-world vehicle accident for which you're deemed
responsible. Any excess amounts for damages will come out of your pocket. It's
recommended you carry approximately five times the minimum required amount of
liability coverage.
If your vehicle is being leased or financed,
the company holding the contract will almost certainly require that you carry
coverage to protect their financial interests. These would include collision
and comprehensive coverage.
Other Things You Should Know About Your Greensboro Car
Insurance
- Personal property damaged
in or stolen from your car, such as a camera, laptop or big screen TV
you're transporting, typically won't be covered by your car policy. Your homeowners or renters insurance may,
however, cover these losses
- While standard homeowners
insurance doesn't cover homes for earthquake damage, if you have
comprehensive coverage on your car it should be covered, as are other
“acts of God,” since these are not the responsibility of the vehicle owner
- If your car is damaged by
wildlife or rodents chewing into your electrical wiring these should be
covered, as is vandalism, under a policy with comprehensive coverage.
Consider carrying comprehensive!
While it's true that the main reason you
have for buying a life insurance policy is for the income protection provided
to survivors in the event of your death, there are actually a number of other uses for life insurance that you may not have considered.
When facing the choice of what type of life
policy is most appropriate for your needs there are two main options – permanent coverage, typically referred to as whole
life insurance or temporary coverage, also called term insurance.
Each insurance type has its own pros and
cons, with whole life carrying more expensive premium costs for a death benefit
equal to that in a term life policy, but term life possesses no cash
accumulation value similar to that of whole life. Generally speaking, term
insurance is best suited to a young policyholder whose income is tight but who
has a young family for whom he or she wants to provide income protection in
case of an untimely death. With term coverage, you're able to get the most
protection for the least amount of premium cost.
Benefits of Whole Life
While premium costs for whole life coverage
is higher than the cost of a term policy with the same face value, whole life
policies contain a cash value provision that slowly accumulates over time.
Since a whole life policy is good for the life of the insured, as long as it's
kept in force by maintaining current premium payments, as the years go by the
cash value steadily increases in an account that is accessible to the
policyholder. The insured can either borrow this money or, upon the decision to
surrender the policy, totally cash out the accumulated amount. By definition,
this makes your term life insurance policy a liquid asset. A side benefit of
this cash accumulation is that it's not taxed as long as the policy is in
force. Even when money from the account is borrowed, that money is also not
taxed as long as the amount withdrawn is less than the total amount of premium
that's been paid toward the policy.
What's a Liquid Asset?
A liquid asset is one that can easily
be converted into cash with minimal impact on its value. The cash accumulation
of your whole life policy falls within this definition. Since a term life
policy has no cash accumulation provision it is not a liquid asset.
