Are you Covered for Fire and Theft? Car Insurance Tips

January 27, 2012

Are you covered for fire and theft car insurance? The only way to be absolutely certain is to check your policy. That's something most people never do. They simply assume that the coverage is automatically there. Unfortunately, that might not be the case. All too often car fire insurance will only be part of the package (like theft insurance) if you have comprehensive coverage.

1 - What Coverage Do You Have?

If you have comprehensive insurance coverage, then you have fire and theft car insurance. If you only have third party insurance, which is the minimum legal requirement in most states, then you might not be covered for theft or fire. You will probably have to add these on to the policy. It's important to be aware of this, because you can so easily find yourself heavily out of pocket if something unfortunate happens to your car.

2 - Theft Coverage

Even if you have fire and theft car insurance, it might not be everything you think it is. The value of a vehicle depreciates very quickly, right from the moment you drive it off the car lot. What you'll receive if your car is stolen or written off due to fire might well be much less than you imagine. It all depends on the value placed on it by your insurer. If you have a car loan that figure might much be less than you owe, forcing you to come up with the difference. That could be a chunk out of your savings account, even if you have the money.

3 - Fire Coverage

Your auto insurance for a fire will have much the same problem. You could end up owing the finance company if the insured value of your vehicle is less than you owe on it. There's no simple way around this, unfortunately.

4 - Time Delay

Does your fire and theft car insurance include the provision of a rental car while yours is gone or until the insurance company pays up? Unless you've added that to your policy it almost certainly won't. You should consider the fact that it will be around four weeks before your insurance company cuts you a check. That's a long time to be without a vehicle or to have to rent one. To have a rental car on your policy only costs a few extra dollars a year, but if you need it, it can end up saving you a great deal of money.

5 - Deductible

Your deductible also applies to fire and theft car insurance. You'll receive the amount of the insurance company's valuation of the vehicle minus your deductible. The larger your deductible, the smaller the amount you'll receive. This can have a large impact when you have a payoff to make on the vehicle, because you'll receive even less than you'd expected. When setting your deductible you need to take this into consideration and determine whether you can really afford it. Sometimes it can be better to pay a little more for your insurance, knowing you'll receive more if the worst happens.

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